No more London one-bedroom at below £200,000 within 3 years
Price growth is highest for Outer London properties, JLL research reveals.
Residential property prices are growing rapidly in many parts of the British capital, both in Inner and Outer London.
New research from global real estate services firm JLL found that only 12 percent of London postcodes have average prices of less than £200,000 for a one-bedroom flat.
If current rates of price growth continue, one can expect that there will not be any one-bedrooms at below £200,000 within three years. This presents a significant barrier for many first-time buyers hoping to buy property in London.
House prices rise by 21 percent in some areas
The average price for a one-bedroom in London now ranges from under £200,000 to over £1 million, largely depending on where it's located.
While the most expensive apartments are found in traditionally high-value Inner London boroughs, such as Kensington and Chelsea as well as Westminster, it's the outermost boroughs that are experiencing the greatest price growth overall.
Barnet in the north; Harrow in the north-west; Bexley, Greenwich, Lewisham and Bromley in the south-east; Croydon in the south; and the more centrally located Southwark all saw prices soar by more than 21 percent during 2016.
However, prices increased to a lesser degree in most parts of London. A few areas also recorded a price growth of minus 3 percent compared to the previous year.
London rents start from £900 per month
It's not only property prices that are on the rise across London – rental rates are up too.
JLL found that average rents for a one-bedroom ranged from less than £900 per calendar month to over £2,400. The most expensive rents were again found in Inner London boroughs, with cheaper rents being farther afield.
Similar to sales prices, rental growth was also found to be higher in Outer London, as high as 10 percent in several postcodes. The notable exception is Hammersmith and Fulham in Inner London, which recorded the highest rent increase of more than 12 percent year-on-year.
Housing shortage needs to be resolved
It also doesn’t help aspiring homeowners on the lookout for affordable London properties when there is a critical imbalance between the supply and demand.
Even as more first-time buyers are looking towards the outer boroughs, the demand for better value housing in these areas is also rising, but at a rate well in excess of the rate of wage growth.
JLL UK's Residential Research Associate Director, Nick Whitten predicts that if this trend persists, there will be no London postcodes left where a one-bed flat averages less than £200,000.
“A significant increase in housing delivery of all tenures is needed to address this issue and ensure London can continue to thrive as a global capital,” he adds.
Thankfully, new developments such as the Nine Elms regeneration are helping to meet this rising demand for affordable property in Central London. This mixed-use area will create 20,000 new homes in prime Zone 1 locations by 2025, with prices up to 40 percent lower than surrounding districts.
Get more insights with JLL's London heatmaps
JLL's London heatmaps are a handy visual guide for comparing residential property prices and rents across all areas of London. Provided by Rightmove exclusively for JLL, the figures show how prices, rents, growth rates and yields relate to one-bedroom apartments in London over the four quarters of 2016.