It’s true; house prices have been rising, but according to Chesterton’s Residential Observer, it’s perhaps not as fast as we first thought…
The report revealed that the house price growth in England stagnated a little to just 5% in the 12 months to May.
However, Investors have no need to worry about the decrease in growth.
The rate that prices have been increasing in London are still steadily rising. In fact, areas such as Hackney, have seen a meteoric increase in the last twenty years, with the borough’s properties increasing more than eight times in the last twenty years. According to the report, despite most of central London’s boroughs facing an almost non-existent value increase, there are some areas, namely Southwark, Kensington and Chelsea and Westminster, that have all increased at around the same rate as the Greater London regions. This means that the demand for property hasn’t wavered and that foreign investors should still look towards London boroughs, which dominate the country’s list of the most expensive property locations. A recent example was Lee Kum Kee, a Hong Kong food company, who paid £1.3bn to purchase the ‘walkie talkie’ building – The highest amount ever paid for a British building, showing that despite recent house prices trailing off, foreign investment is still very strong.
For renters, this steady increase doesn’t necessarily mean higher rent demands. A startling highlight from the report showed that only 14% of renters spent more than 50% of their income on rent, with the average asking rent for one and two bedroom flat costing £1,758 and £2,500 respectively.
So, despite these new figures showing that property value in the UK could be on the verge of reaching trailing off, investors shouldn’t be put off if they’re thinking of dipping their toes into the UK Property market.