London property investment has been a popular choice for decades, with the British capital’s high property prices rising, record rental income and large tenant demand making it a haven for investors from around the world. However, in recent years, London’s shining reputation as an investors gold mine has been somewhat tarnished. Is investing in London a good idea in 2019, or can better investment opportunities be found elsewhere?
Many people once chose London property for its exceptional capital appreciation, and there are some stunning examples of investors who have done very well due to London property investment. Over the past ten years, London house prices rose by an incredible 72%, with many investors experiencing huge gains. Consequently, the number of foreign investors who own London property has more than tripled over the last two decades.
However, in 2019 the forecast for London property is rather gloomy. Recent research by Reuters suggested that house prices in London would fall by 1.7% in 2018, continuing to fall by a further 0.3% in 2019, regardless of a Brexit deal. Shares in London housebuilding firms have fallen, the number of property transactions is down, and the number of new homes built has also fallen. House prices in inner London have been down by 2.5% year on year, with an inactive market and a narrowing north/south divide. Other factors have also played a part in this reversal of London’s fortunes. Increasing stamp duty, stricter lending policies and Brexit uncertainty have all had an impact.
Some may think that falling house prices in London may present an opportunity for a bargain, however, with London prices being so much higher than the rest of the country, this simply isn’t a possibility. Despite price falls across the capital, the average London property price, as of October 2018, is still an incredible £483,400 — more than double the UK average of £217,900. In other cities prices are far more affordable. Over in Liverpool, the average property price is around £121,000, £131,000 in Newcastle, and £167,700 in Manchester.
London property has never been particularly strong for value for money, but it is also worth looking at what house prices in other parts of the country are like for comparison. When looking at house price growth over the last 12 months, Manchester boasts a 6.2% rise, Leicester a 7.7% rise and Liverpool a 6% rise. London sits at 0.1%. For investors, it is important to consider how much growth potential a property has, and when it comes to London property prices, it looks like they may have peaked.
London property will always be valuable, and current circumstances are mostly to blame for the issues London’s property market is facing. However, if you are looking to invest now, London property is probably not the safest bet. Buy to let property in other UK cities like Liverpool and Manchester, sold by RW Invest, are providing far better opportunities than London at the moment. With strong rental yields, house price growth and affordable entry prices, investors would be wise to turn their attention away from London while it stabilises and look to cities in the North for lucrative investment opportunities.