New data published today reveals that the house price gap between inner and outer London has shrunk to its smallest in a decade as a result of the pandemic-induced prioritisation of space over location.
The average cost of a home in inner London is now £599,000 versus £452,000 in outer London, a 33 per cent difference and much reduced from the 50 per cent registered in 2013. The last time values shrunk to such a margin was in 2010, according to the analysis by Hamptons International.
“The outperformance of London’s peripheral boroughs is a complete reversal of the recovery following the 2008 crash when it was central London which rebounded quickly,” says David Fell of Hamptons.
“The cooling of inner London dates back to 2014 and the introduction of stamp duty, with extra taxes on overseas and second home buyers. This has been compounded by the coronavirus, the absence of foreign buyers, and a shift to the super suburbs. I expect this pattern to continue throughout 2021. The question is, how small will the inner–outer price gap get?” he says.
London house price hotspots
As many as 21 of London’s 33 boroughs are in the throes of a mini boom, each hitting a new house price record over the last year, and most of these hot locations are in the outer suburbs.
Buyers, in the hope that they will not have to return to the office every day, continue to upsize in the cheaper and less dense parts of the capital, spurred on by the memory of the lockdowns.
Prices in areas such as Haringey, Merton and Waltham Forest are at an all-time high. The regeneration of the east of London over the last decade has also fed into price rises on that side of town, Fell adds.
Where are the biggest discounts and for how long?
On the flip side, the analysis shows there are 11 boroughs where property is cheaper now than it was at the last peak. Property prices in Kensington and Chelsea are £120,600 lower than they were in 2018 when values in the area were at an all-time high. This is the biggest Covid-triggered drop across the 33 boroughs.
Price falls in Westminster were also sizeable, £116,800 down on 2018. Values in Camden, Hammersmith and Fulham and Tower Hamlets are languishing below their recent peaks, completing the top five areas by discount. Wandsworth, Barnet, Brent, Harrow and Kingston-upon-Thames and Hackney complete the list of 11.
Kingston and Harrow buck the trend of outer boroughs outperforming. “They are already relatively expensive and have their own town centres,” Fell explains. “Therefore, it is not a great leap for some residents to move away from London life into the Home Counties and get much more for their money,” he says.
So, is now the time to take advantage of lower prices in some of the more central areas? There are early indicators that with the reopening of hospitality and culture, and companies planning a return or part-return to offices, demand to live in inner London is beginning to return.
“Prices in prime central London nudged up 0.4 per cent in the first quarter of the year... this suggests that the market has bottomed out and is ready to resume its recovery,” says Frances Clacy of Savills.
Homes & Property explores those boroughs where the post-pandemic recovery has lagged behind the rest of the capital.
Average house price: £617,220
Discount on its last peak (2017): -£16,600
The collection of mini property markets across Wandsworth are all performing differently. “We have seen central London buyers drawn to the abundance of green open space on the roads in between the commons and the fabulous bars and restaurants along Northcote Road, such as Numero Uno,” says Amelia Lambrianou of Marsh & Parsons.
In the more urban Wandsworth Old Town, where gardens are smaller, sales have been slower.
Consultant Pippa Jones bought her upstairs flat just off Clapham Northside four and a half years ago. It was tired and run down and she gutted it, taking the 720 sq ft, two-bedroom home to 1,250sq ft, adding a loft conversion and a roof terrace. “I completely reconfigured it by raising the ceiling heights, striping it back to the bare brick, and reversing the stairwell. It is now an open and social space with a boutique hotel feel, plenty of warmth and a roll-top bath in the bedroom,” says Jones. Follow her interiors ideas at @thelittlepipcompany on Instagram.
She put her home on the market just a few weeks ago to look for another project to do over time. In just a few weeks, she is into second viewings with the possibility that it may go to sealed bids.
“Spacious homes that are really beautifully finished are selling well especially if they are close to outside space,” Lambrianou adds.
Jones’s three-bedroom, two-bathroom home is on the market with Marsh & Parsons for £1,100,000.
Kensington and Chelsea
Average house price: £1,342,830
Discount on its last peak (2018): -£120,600
House prices are down eight per cent in Kensington and Chelsea on their last local peak of 2018. This has been due to uncertainty of Brexit, compounded by the absence of overseas buyers during the pandemic.
“The number of sales in Kensington and Chelsea last year was half that of the 2014 peak,” says Charlie Bubear of buying agent Hutton Bubear. Domestic families headed to the leafy south-west super suburbs for more space, he explains, and as a result the gap between prices in the borough and Fulham closed. “There are, however, green shoots and the real game changer will be the lifting of travel restrictions. With a relatively cheap pound we will then see the return of the overseas buyer,” he says.
Particular pockets have been busy, according to Becky Fatemi, founder of Rokstone. “Houses with large gardens or access to communal London squares in Notting Hill and Holland Park are selling fast, and often incite bidding wars. Buyers want a different way of life now and space has edged out location as a top priority.”
A more realistic part of the borough for new home buyers is Maida Hill and Westbourne Green towards Paddington Academy. The Brick is a minimalist tower made from Danish brick. Comprising 28 apartments, it has a vast communal roof terrace with herb gardens, planters and seating overlooking west and central London. Prices start from £695,000 (Rokstone; 020 7580 2030).
Average house price: £1,000,560
Discount on its last peak (2018): -£116,800
Great swathes of Westminster are protected and therefore the supply of new homes is always limited. Along with the opening up of hospitality and culture, this will drive house prices up 21 per cent over the next five years, according to JLL.
“People are gravitating back to the vibrancy of Westminster,” says Kate Flynn of JLL, citing the appeal of the open spaces of St James’s Park and Green Park, transport links and famous restaurants.
New venues include Henry’s Townhouse — a Grade II listed, seven-bedroom property that was once owned by Jane Austen’s brother Henry and can be hired by groups or corporates in Marylebone — and the Nobu Hotel on Portman Square.
The cheapest bit of the borough is towards Edgware Road. There are apartments for sale in the 109-unit Carrick Yard on the edge of this regeneration zone. The scheme is built around a garden courtyard and has a co-working lounge, concierge and cycle storage. Prices start from £595,000 (Savills; 020 7409 8756).
Average house price: £823,730
Discount on its last peak (2019): -£71,200
Demand to buy in Camden is starting to return too. “In the last month we’ve seen the return of people who had moved out of London temporarily but now want easy access to the City,” says Elias Raymond of Savills.
Buyers are drawn to the local lifestyle with Camden Market’s shops, stalls, bars and cafes and The Farrier pub in a restored Grade II listed former hospital. Residents escape the buzz along the Regent’s Canal Towpath. “Buyers tend to be young individuals or young families and we’ve seen instances of students buying, occasionally buy jointly, to be close to the West End universities,” Raymond adds.
Hammersmith and Fulham
Average house price: £740,270
Discount on its last peak (2017): -£40,900
The heightened demand to live close to green space has sent young families to leafy parts of Fulham over the last year looking for terraced houses and flats with gardens. The most popular spots are close to Parsons Green and Eel Brook Common, according to Emma Stead of Savills.
Buyers can expect to pay around £900,000 for a two-bedroom cottage. “Those in search of value will concentrate their search further from the Tube and towards the Hammersmith borders,” she adds.
There is a two-bedroom maisonette with a private garden for sale for £795,000 on the other side of Bishops Park and Fulham Palace with Marsh & Parsons (020 8012 5593).
Average house price: £458,830
Discount on its last peak (2020): -£20,900
Flats have proved much harder to sell than houses in the pandemic. The first-time buyer — typically in their twenties or thirties who purchase apartments — are more likely to have been put on furlough than older generations.
The lockdowns have also pushed them to skip the first rung of the property ladder and buy a small family house, if they can. This hit the Tower Hamlets market which has a high proportion of new build flats and is home to Canary Wharf. “Demand in Canary Wharf, like other parts of London with a strong office market, temporarily dipped during the coronavirus. But it is coming back to life,” says Knight Frank’s Raul Cimesa. A new Amazon Fresh store has opened on the business estate, only the fourth in London.
“First-time buyers are returning to the more residential parts of Tower Hamlets,” says Robert van Toor of LiFE Residential. “But over time we expect to see an increase in demand for apartments in Canary Wharf for professionals who want to settle here long term.”
PR man Tom Hawkins and his partner are selling their two-bedroom flat in a gated development in Poplar for £390,000. They are looking to move to Barnet or Enfield to be closer to grandparents as they have a baby on the way. He has noticed viewings start to pick up in line with the vaccination programme.
“The best thing about Poplar is being right on the canal. Left takes you along the water to Limehouse Marina and historic pubs and the other way is the Olympic Park and Hackney Marshes,” he says. Hawkins’s favourite pubs are the Star of the East, with its big beer garden, and the Angel of Bow ,which delivered Belgian been during the lockdowns.