Martin's Mailbox: Prime suburbia

Martin's Mailbox: Prime suburbia



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It remains to be seen what impact – if any – the Olympics have on London property prices. I suspect it will be negligible. While the Games are undoubtedly attracting many well-heeled foreign visitors to the capital, it isn’t as though London needs to put itself on the map. It’s already there.

What London has is uniqueness. As a leading – arguably the leading – world city, London exhibits a dynamic found nowhere else in the UK. This upsets a lot of non-Londoners, but it’s a theme that’s set to run and run. The price of property is perhaps the clearest illustrative example.

It’s a well-appreciated fact that London prices, particularly those for centrally-located properties, have consistently out-performed the national market. The reason why is equally well-appreciated and helps explain why many bridging lenders focus so narrowly on London. But are we beginning to see a shift in favour of the slightly less glamorous suburbs?
 
While prime central London continues to do well – posting annual long-term price rises of more than 10 per cent – data just released by a leading London-based estate agency suggests it’s now being outstripped by less central locations.

Comprising areas as relatively diverse as Balham, Brook Green and Barnes, property prices in these suburban districts are growing by an average 0.4 per cent faster than the average growth seen in prime central locations, such as Kensington and Chelsea.

One obvious cause behind this is the ‘ripple effect’ whereby even wealthy buyers are driven from the centre to other neighbourhoods because of prices beyond their reach and a dearth of available stock. In turn, prices are pushed up in these new sought-after locales making them the new prime London.

As a lender, we’ve seen some hard evidence to support these assertions. We’re receiving an increasing level of enquiries from brokers keen to explore opportunities on bridging deals outside prime central postcodes. Typically involving properties or developments in the London suburbs, Home Counties and wider southern England region, they’re usually of a very high quality but demanding of specialist expertise and ready funds to get them across the finishing line. Not all lenders can oblige.

It can only be to our advantage to see continued diversification away from London W1, SW1, SW7 and the other glamour codes. Sweet honey pots they may be, but their inherent demographic limitations make them alone too small a target for deal-hungry lenders and brokers.

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