London’s Outer Boroughs Lead Affordability Rankings in CBRE’s Hot 100
Global real estate advisor CBRE has revealed which London boroughs ranked highest across housing, population growth, development, and sustainability metrics in 2023, in its annual Hot 100 report.
The report, which highlights the latest trends in London’s residential market, suggests that London’s population will grow by circa 148,000 in the next five years. Tower Hamlets is likely to experience the greatest growth in residents, followed by Camden and Greenwich.
First Time Buyers and the Rental Market
Barking & Dagenham ranked first in terms of first-time buyer affordability, with the lowest average house price of £326,700. This was followed by Bexley at £351,200 and Croydon in third place, where the average price of a first home was just under £358,000.
In London's rental market, private rents rose by 6.9% in the year to November 2023, according to the ONS, representing the highest rate of growth since the London data series began in 2006. The average rent in London now sits at £1,890 per month.
The most affordable borough to rent a home in 2023 was Bexley, with the lowest average rent at just under £1,500 per month. Sutton ranked second at £1,538pcm, followed by Hillingdon at £1,555.pcm. In contrast, the most expensive areas to rent were Westminster and Kensington and Chelsea at an average of £2,833, and £3,250 per month respectively.
Residential Supply
Housing development in London fell further in 2023, with only 10,350 new homes completed across the capital to the end of September. This is 48% lower than total completions in 2022 and around half the level of the ten-year average.
The research found Newham recorded the highest level of construction starts and completions with 1,700 homes. This was followed by Barnet with 1,003 and Haringey with 907 homes. CBRE also analysed Build To Rent (BTR) construction completions across London in 2023. The borough with the highest level of BTR development was Newham, with over 1,000 homes completed. Wandsworth ranked second, followed by Barnet.
It is estimated that 17,000 more affordable homes are needed in London each year, providing low and modest-income Londoners with high-quality homes. In 2023, Southwark delivered the highest number of affordable homes at 510. In second place was Croydon, with 270 affordable homes completed, followed by Hounslow at 230.
Energy Efficient Boroughs
Energy-efficient homes in the UK form a critical component of reducing carbon emissions and supporting sustainable communities. CBRE ranked the proportion of homes in London that were rated with an EPC of C or better*. This also gives an indication of which boroughs are best future-proofed against potential new regulations.
The research found that 52% of homes across the capital were rated C or above. Tower Hamlets has the most energy-efficient housing stock, with almost 80% of its homes rated C or above. The City of London and Southwark followed at 67% and 65% respectively.
Even though new EPC targets for private landlords were scrapped last year, there are numerous benefits of owning or renting a home with higher EPC credentials. Properties with a higher EPC rating will generally speaking be cheaper to run as it is much easier to save on energy usage – something that has become particularly important in a period of heightened cost of living
Last year, we saw muted demand in the sales market and strong growth in the rental market. London has an enduring appeal as a place to live for both UK and international residents, driven by business opportunities, tourism, education, and connectivity. While our capital’s population is tipped to grow, the need for additional housing is not being met with the required supply. Our research shows that many of the Borough’s tipped to see the greatest population growth are not ranked in our top ten for delivery of housing and build-to-rent. For first-time buyers and those looking for affordable rental options, London’s outer boroughs provide the most opportunity. Interestingly, some of these outer boroughs are where we’re expecting to see the most housing supply delivered
About CBRE Group, Inc.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2022 revenue). The company has approximately 115,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.