Increased Demand for London Living Commands Sharp Increase in Sale and Rental Prices, says CBRE
· Average house price in London reached £516,285 in 2021
· Average London house price is predicted to grow 19% over the next five years
· Average London rents are predicted to grow 14% over the next five years
· All 33 London Boroughs have experienced rental growth over the last five years
Global real estate advisor CBRE has launched its annual London Borough residential research report, providing a comprehensive guide to the housing market and demographics in each of London’s 33 boroughs.
The London Borough report, now in its eighth year, provides data and local market insights on the lifestyle measures for each borough, including the number of shops, restaurants, ‘outstanding’ primary schools, train stations and the proportion of open space.
Rental Market
According to the report, all 33 London boroughs have benefitted from rental growth over the last five years. Average rents increased by 14% across all properties, however Kensington and Chelsea, City of London, Camden and Hammersmith and Fulham saw the largest rental increases at 34%, 31%, 28% and 28% respectively. The average asking rent in London for a 2-bed flat is £1,791 per calendar month. Ongoing demand for private rental housing is contributing to positive forecasts for rental growth, particularly in central London, and CBRE expects average rents to increase by a further 14% over the next five years.
Sales Market
In addition to promising rental growth, the London sales market has also been buoyant. The report shows that the average house price in London reached £516,285 in 2021, representing 10% house price growth over the last five years. The boroughs of Richmond upon Thames, Waltham Forest and Redbridge achieved the highest increases of 21%, 21% and 20% respectively.
CBRE forecasts prices to grow by 19% over the next five years, demonstrating the long-term resilience of the London residential market. With 39% of London considered open space, 14,755 restaurants and cafes, 638 public transport stations and 482 ‘outstanding’ primary schools, there is an array of fundamentals that highlight London’s appeal to potential buyers.
Despite the uncertainties that the London residential sector faced due to the pandemic, the rental growth figures that we have seen over the past five years confirm the general strength of the market. We have seen a strong start to 2022 as workers return to the office, and we anticipate particularly strong demand in the London rental market this year.
The pandemic has influenced a sharp increase in demand for outer London locations as working styles and property preferences changed, with many buyers choosing to be in London’s suburbs, with closer proximity to green spaces.
Our London Borough report shows once again that London can offer something for everyone, from students and first-time buyers to families and those seeking investment opportunities. For investors, yields are proving attractive and even in the toughest of markets, London remains one of the most prosperous cities in the world.