London property prices have been on a tear in the past few years, with annual increases in London exceeding those in the rest of the UK.
Based on data from the Nationwide HPI, we can see that London house price growth has been higher than the rest of the UK for the past 7 years:
*2015 figures are based on Q3 data pro-rated for the full year
However, London is a big place, and so looking at averages isn’t always the best way to approach the more local markets.
Instead, we are going to look deeper a few local areas within London to see what house prices and investment yields have been doing in the past year.
Local Area 1: Croydon
According to Zoopla, house prices have increased in Croydon, London by 26.4% in the past 5 years, and only 3.7% in the past twelve months.
Compare that with “London” in our table above and you can see that house prices haven’t increased quite as quickly than elsewhere in the capital.
The average price paid in the area is just shy of £290k, compared to the average price paid across London of a staggering £538k.
This could therefore be a possible investing hotspot for people looking for a bit of value. There are some big changes in progress as well, showing that the area has come a long way since the 2011 riots. Two big shopping centres are opening up in the area and it also has its own “Tech City” which is being called The Silicon Valley of South London.
The cheaper prices and status as an improving area may also lead to higher yields for any potential buy to let investors.
Local Area 2: Clapham
A more established and up-market area, Clapham has an average price paid in the past twelve months of £774k. The value change in the area in the past 12 months is only 0.3%, whereas the last five years show growth of over 38.5%, which is more in line with the overall London market in that period.
According to property wire “the prime south west London property market (including Clapham) has changed dramatically from a year ago with more domestic buyers and homes taking longer to sell”. This could be good news for investors who are worried about the market volatility seen in the past few years due to the increase in foreign investors.
To find out more about Clapham, you should consult the local market specialists James Pendleton Clapham.
Local Area 3: Twickenham
In the weeks before publishing this article, Twickenham has delivered some very disappointing “returns” for English rugby fans. However, it would possibly be a little more kind to property buyers.
The average price paid in the past twelve months is £597k. The value change in the area in the past 12 months has been 3.6%, whereas the last five years shown growth of 29.6%, which is more in line with Croydon than Clapham.
The area has a good mix of new build and older housing, and of houses and flats. The beauty for investors looking for investment fundamentals is that the area is close to rapid train links into and out of London, and is close enough to be convenient for Heathrow airport but without suffering from the noise.