The UK market continues to be resilient despite entering a period of economic turmoil brought by Brexit fears. In certain areas of the country house price growth has slowed down completely, and even turns to a negative in certain areas. One area that is experiencing dramatic falls in house price growth is London. Evidently, the country’s capital has suffered, and the location that has been long regarded as property gold has lost its shine significantly. Unattainable asking prices have led to reducing appeal, leading investors from around the globe to depart from the capital and move up North in the search of lucrative investments.
London was once regarded as the top location for investors to capitalise on the expanding region. Affluent areas full of wealthy residents, a growing population, and a thriving business sector have all contributed in creating the ideal location for investment. More recently, the big smoke has fallen short as increasing pressure has reached boiling point. Skyrocketing prices, weakening profit margins brought by rental yields, and a decrease in the potential for adequate capital appreciation has all had a detrimental effect on the capital and its property performance. The North is becoming an increasingly more attractive proposition, which further highlights just how poor London has become over the years.
In March 2018, it was confirmed that London was the weakest region for house price growth and that for the fourth quarter in a row, the North of England recorded a stronger annual house price growth than the South, with the South having experienced the slowest growth since 2012. The difference in performance between the North and the South could be because of the Northern Powerhouse, an initiative set to bridge the divide between the two ends of the country.
The demand for property is increasing in the North compared to London, as lower entry prices make the location a more enticing opportunity for residents and investors. In London, prices had dropped by 1% compared to a year ago and it was recently discovered that 54% of London postcodes had registered annual price falls.
London house prices are significantly higher than the UK average. The average price for a home in the UK is £232,554, which is a 3% rise on the previous year in 2017. In Central London, the average price is £1,824,261. This is leading to a smaller number of people buying their first home as the average age for people buying their first house has increased to around 30 or older.
Diminishing London prices highlight just how prosperous other areas of the UK truly are. Whilst an annual fall of 0.3 per cent in September 2018 was evident in London, house prices in the UK rose by 3.5% in the year to September, a 3.1% rise from August the same year. Liverpool, Manchester and Birmingham experienced house price growth above 6% per year, which are used as a comparison to draw conclusions of a dwindling property market in the capital.
Property investment companies like RW Invest have noticed a significant shift in the locations that are standing appealing for potential investors. Rental yields and strong opportunity for capital appreciation is only evident in the North, resulting in properties In London falling short of expectations and demands and leaving no comparison between the two ends of the country.