The London market has not been a favourite of investors over the last few years, but signs have been emerging that the capital might once again be a strong buy to let destination.
New research from Knight Frank shows that there was an 11% year-on-year rise in the number of tenancies agreed on prime London properties, in both central and outer London, compared to the previous year.
The higher-value market in particular is performing strongly with the agent reporting a 13% monthly rise in the number of deals worth between £1,000 and £4,000 a week. May was similarly strong, with Knight Frank reporting that the strongest rental growth could be found in the £2,000-per-week bracket in outer London.
These strong results are backed up by Rightmove which, in its latest quarterly rental tracker, showed the average London asking rents grew by more than 8% year-on-year. This represents the biggest annual rise in London ever recorded by Rightmove.
A separate report from JLL goes into further detail, showing that property price growth in South East London are going to be particularly good news for investors. More than 35,000 homes are in the pipeline according to the research and it is likely that many will be snapped up by investors as demand for high quality rental accommodation is high.
The company notes that significant transport infrastructure improvements including a proposed extension of the Bakerloo Line and dramatic changes to the Old Kent Road corridor are likely to get the go ahead. When you combine that with relatively low entry prices in the area and proximity to Central London you have the perfect recipe for attracting young professional renters.
The high level of demand seen in South East London is being replicated across the rest of the capital and is one of the main factors underpinning the impressive growth in property prices.
Returning to the Rightmove data we can see that the number of rental properties coming to market has fallen dramatically. The year following April 2016 saw a big rise, but since then the number of available homes in London has fallen by 33%.
It is no coincidence that this fall in available stock has happened over the same time period as rental growth has skyrocketed; if there aren’t enough homes then people are willing to pay more to secure what is available.
All of this means that now might be the perfect time for investors to return to London and begin to consider the capital’s property market again. If you are interested in investing, have a look at our available tenanted investment opportunities today!
