Going by the average performance since 2008, last year can be deemed as a success story for British property. In the New Year (2014) expectations are pretty high and all await a big traction in the property market and its roaring back to life. House prices rose across the board in the UK by 7.7 per cent. In London it was 10 percent and above.
High-priced rental options are plenty in London. But the lower end is lacking affordable rental homes. London has relatively high rents as a proportion to a person’s income. This makes newer, high-priced rental options unattainable to many. The supply needs to augment at the Middle and low income, long-term renters as demand is increasing.
Of late the new trend is that rental prices inch up slowly compared to purchase price in many up market areas. In many prime central London locations rental returns have crashed to below three per cent.
Rents are rising. Housing shortage coupled with soaring rents is taking a toll on many young people who are finding city rentals unbearable. That is forcing many employees away from cities where the jobs are available. People migrating to black spot cities with an eye on job opportunities are mainly feeling the heat of spiraling rents. According to a survey England’s top 9 cities have employees spending an average 36 percent of their salary on rent. In London again, it is the highest with renters spending 50 percent of their income on rent.
Considering the fact that there is a reasonable difference in rentals across many London localities, a right approach can be to do a proper homework on various boroughs. A tenant with an economy budget can look for a borough with reasonable rental prices where the rents rise can be marginal. Kingston upon Thames and Lewisham are two upcoming areas in this respect.
Expectations of 2014
Year 2014 is expected to do well in the property price sector. Rising confidence in the market may trigger another bout of abnormal price rises. Regional disparities can also play out and may exacerbate with the Government’s ongoing scheme of Help to Buy.
- Rise in Prices: Year 2014 may see a spurt in prices
- Greater London: Greater London will catch up with prime central London locations.
- Expansion: Considerable expansion of commutable area in the capital will impact on property prices and rentals. While the central London will see a rise of three per cent in area, while rest of England will see a four percent increase.
The limited supply of properties in contrast with rising demand will be a harbinger of change. Mortgages have become cheap and interest rates are stable. That is why the musings of property auction in London are circulating to the countryside with many new hot spots in a shining mode.
The bounce-back effect is stronger in many provinces. In areas like Cotswolds and North Yorkshire, the price levels have just breached the erstwhile 2007 peak. So, incredibly reasonable country houses are available compared to pricey London apartments. In 2014 the country house market is expected to stabilize further.
People are already taking advantage of the capital growth in London. The rush is palpable in the Cotswolds where the investors are making a beeline. Places such as Wiltshire, Stratford upon Avon and Leamington Spa are also attracting property investors as they offer good value for investment.