At this time of year, landlords and property investors are looking hard at the prospects for 2021. We often get asked about the next property hotspots and where to buy property in London.
Traditionally, this would have been a time for upbeat forecasts but the pandemic and the recent surge in cases in the capital has made economic forecasting difficult — and that has a knock-on effect on property forecasting. Add in the frustrations of delays to a Brexit closure and forecasters unsurprisingly agree to disagree on the best places to invest.
Despite the uncertainty, there have been encouraging signs of price and yield increases around London, particularly in the outer boroughs where work-from-home buyers and renters see opportunities to move to larger properties where the home office is a more realistic proposition.
According to Zoopla, “We have seen rising demand for three-bed homes and larger houses in London. And the availability of this type of stock across a wider range of price bands is reflected in these locations.”
Portico’s top picks for where to buy in London in 2021
That trend is reflected in our experts’ top two picks for the best investment spots – Barking and Dagenham in the east and Sutton in the south west. View all our currently available properties for sale in London.
Barking and Dagenham
Barking and Dagenham has seen an increase in yields this year giving an average yield of 5.4 per cent. Prices have increased by 3 per cent since 2019 with an average house price of £315,000. Current property consists mainly of properties built after the 1930s and houses with large bedrooms selling for around £800,000.
There is considerable development in the area, which is widely considered to be the cheapest place to buy property in London. Planners have set a goal of 50,000 new homes and 20,000 new jobs to be created in the next 20 years, which represents strong growth prospects.
The two main areas of development are Barking Riverside, one of the largest projects in London, and Barking Central. Barking Riverside is the transformation of two former power stations with plans for around 10,800 new homes and a new ecology centre and wetlands site. Barking Central will see 272 new one and two-bedroom apartments and three-bed homes conveniently located for Barking Station with underground, overground and National Rail services, as well as the town centre facilities.
2 Bedrooms, 1 Bathroom
Pittman Gardens, Ilford, IG1
View property details.
Sutton has also seen an increase in yields this year giving an average yield of 4.4 per cent. House prices have increased by 3 per cent from last year with the average price £449,000.
Sutton is also seeing considerable development, with around £410 million invested in the area. The borough’s location makes it very attractive. It has a village feel with affordable properties.
With renters looking for more space and access to outside space, Sutton is ideally placed. Surrey is close by, but the area has easy access to the rest of London — Victoria Station is just 30 minutes away.
The Harringay Ladder consists of 20 streets in N4 and N8, between Green Lanes and Wightman Road - graphically representing a ladder, hence the name. This is an area of interest due to its proximity to Crossrail 2, which although is currently on hold with budget commitments elsewhere, once reinstated the route will pass through Turnpike Lane or Wood Green Tubes, both already on the Picadilly Line. With the expansion of Ultra Low Emissions Zone (ULEZ) to beyond the North Circular, this is likely to help bring plans for the scheme forward again. Refurbished homes on the Harringay Ladder can expect to achieve up to £800/sqft, whilst those yet to be modernised are generally listed at just above £500/sqft.
The ULEZ will be bound by the A406 (North London Circular) and A205 (South), this will, in turn, benefit the areas that border and are already well-positioned for commuters such as; Ilford and Barking, Barkingside and Highams Park.
The borough of Merton is close by, and comparable in performance to Sutton. In fact, Zoopla puts it above Sutton in terms of price rises as the leading location in London with an annual rise of 3.2 per cent on a July to July basis.
Merton is described as a leafy South London borough with many attractive older houses, green spaces, good transport links to central London — and Wimbledon as a close neighbour.
While house prices are more than 33 per cent above the London average at more than £820,000, average rental of £448 per week is more than 20 per cent below the London average.
Redbridge on the eastern fringes of London recently featured in our Market Insights series as an area with fast growing potential. Property prices here are not only affordable, they are likely to grow at a strong rate over the next few years thanks to the imminent completion of Crossrail.
Properties sell quickly in Redbridge too. Zoopla put the average property price in Redbridge at £453,526 in December. That represents an increase of 1.51 per cent since September, but was 1.5 per cent lower than December 2019. Flats fetched an average of £354,472 with terraced houses averaging £199,293.
Rightmove predicts that prices in the area could rise by as much as 17 per cent by 2024.
While the Homelet Rental Index found that rents across London had fallen by 4.4 per cent year on year, compared to an average rise of 2.9 per cent across the whole of the UK, Redbridge was among the few London boroughs to achieve an increase.
Newham, also in the East, is the fastest growing London borough by population. With a 25 per cent increase since 2015, most of it in the 25-29 age group, it’s a vibrant community with wide-scale regeneration around the Olympic Park, Westfield and Stratford Station as key drivers for growth.
In West Ham, there is further current and planned regeneration on a massive scale. That includes a £1 billion 26-acre project at Twelve Trees Park which will provide almost 4,000 new homes, shops, leisure facilities and creative studios by 2033. One-bedroom flats are on offer for around £527,500 and two-bedroom homes at around £730,000.
The former West Ham football stadium, now known as Upton Gardens, has been redeveloped to provide almost 850 new homes with completion set for 2022. One-bedroom flats will cost around £365,000 and two-bedroom flats from £455,000. A further development on the site of a former gasworks has permission for 2800 new homes.
2 Bedrooms, 1 Bathroom
Aldborough Road South, Seven Kings, IG3
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Haringey in north London is the site of a number of important new developments. Tottenham Hale is currently the largest with 2000 new homes set to be built in an area that will feature new offices, shops, cafes and a refurbished station, Transport links by the Victoria Line are fast and there is abundant green space close to the Lea Valley Regional Park.
Clarendon is a new ‘village’ with plans for 1700 new homes, plus offices, restaurants and bars. Prices will range from £350,000 to £716,000. Meridian Water is set for massive growth over the next 20 years with planned investment of £6 billion going into 10,000 new homes on a 210 acre regeneration site.
Portico can help
From this brief review, it’s clear that 2021 and beyond could see substantial movement in the London property market with economic conditions hopefully improving, pent-up demand and buyers and renters looking for more space to live and work.
The Stamp Duty Holiday is unlikely to be extended so we would encourage any home owners looking to buy to remortgage while interest rates are low. The shock short-notice change in Wales from a Land and Transaction Tax (LTT) rate of 3 per cent to 4 per cent has led to speculation that we could see the same in England for buy to let properties.
If you would like to discuss investment opportunities or find out more about any of these investment hotspots, please contact us on 020 7099 4000. For a free online property valuation, click here, or give us a call if you’d like one of our Sales Managers to come round and value your property or rental property.
Read More: Where to buy property in London in 2020