Property Remains a Great Investment in the Right Locations
Despite media reports of a property slump, the demand for buy to let homes in East London shows no sign of abating.
Over the past decade, the housing market has been one of the few sectors to remain healthy and to generate consistent returns for investors. Little wonder, then, that there are now an incredible two million private landlords in the country who own one or more investment properties.
Pay too much attention to the national media, and you would be forgiven for thinking that the market is about to crash and burn. However, while scare stories about a property crash might be good for selling newspapers, the indications from letting agents in Ilford suggest that property remains a sound investment, provided you remember the three golden rules of location, location, location.
Fixer upper prompts a bidding war
The health of the market was brought into sharp focus by a property that was sold at auction last month. South Park Road in Ilford is prime buy-to-let territory. It’s a peaceful location, with established Victorian terraces to one side and the green space and lakes of South Park to the other, yet Seven Kings station is only a 15-minute walk.
When a fixer-upper became available at auction, it attracted plenty of interest. The house was structurally sound, and had double glazing, gas central heating and off-street parking. However, it was in need of modernisation and decorating throughout. Auctioneers had set a guide price of around £330,000, but this came and went. The packed auction house could only look on as it finally sold for an astonishing £430,000.
Billionaires abandoning the City?
The above example demonstrates that the right property in the right place is always going to attract interest. If you look more closely at the recent media coverage that is shouting about London prices going through the floor, it is interesting to note exactly where these properties are.
Cross referencing data from the Office of National Statistics and the Land Registry shows that the City of London, Kensington and Chelsea and Westminster all saw prices tumble dramatically – by almost 25 percent in the case of the City. Given that these are the premium locations favoured by the super-rich, it suggests that there are other things at play here that go beyond the dynamics of the broader housing market.
Macro-economic factors related to US trade policy and the potential implications of Brexit are two examples. For most of us, they constitute an interesting topic for discussion over dinner, but for billionaire foreign investors, they can be significant indicators in deciding whether to buy or sell.
The only way is up
Seeing one property in a perfect location vastly exceed its reserve makes for an interesting case study. However, the broader picture for East London is one of clear and sustained growth. In May 2016, the average price of a house in Ilford was £341,000. In May 2017, it was £384,000 and in May 2018, amid all the news of declining values, it was £408,000.
The same pattern can be seeing in neighbouring areas such Barking and Romford. It goes to prove two things – one is that there really is no better investment than bricks and mortar. The other is that you should be cautious about believing everything you read in the paper.