The past couple of years have been challenging for homebuyers due to high property prices, especially in London.
House prices crept up 0.2% last month, according to Nationwide, but many people are wondering whether house prices will fall later this year.
According to the latest data from the Office for National Statistics (ONS), the average price of a home in London with a mortgage sits at £496,000. This is down from £516,000 when compared to a year ago, but still considerably higher than the UK average house price in April of £284,000.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Despite high mortgage rates and inflation eating into deposits, London still has its appeal – but estate agency Foxton’s reveals buyers are increasingly moving to different parts of the capital compared to the one they originally planned to settle in.
Its data shows 39% of homebuyers are shifting to different areas of London, after registering their interest in a specific area. The estate agent says this is the highest number of buyers it’s seen switching locations in the past five years.
Find out which London areas have proved to be the most popular, and whether now is a good time to buy in London.
Which London locations are buyers moving to?
According to Foxton’s, these are the top 10 locations in London that homebuyers have moved to between January and December 2023, after initially starting their house hunting in a different area.
| Location in London | Percentage of buyers switching to this area |
|---|---|
| Shoreditch | 5.6% |
| Canary Wharf | 5.3% |
| Islington | 4.1% |
| Brixton | 3.3% |
| Battersea | 3.2% |
| Vauxhall and Oval | 3.1% |
| Willesden Green | 2.8% |
| Woolwich | 2.7% |
| Stratford | 2.5% |
| Pimlico & Westminster | 2.5% |
Shoreditch takes the top spot, with the most buyers moving there instead of where they initially set out to buy a house.
What’s more, Foxton’s data shows 6% of homebuyers set out their house hunting in Shoreditch and stuck to it and managed to buy a property there – the highest percentage compared to other London neighbourhoods.
ONS data shows it costs £611,000 to buy a house in the London borough of Hackney - where Shoreditch is located - as of April 2024. This is 3.5% higher than a year ago.
Canary Wharf comes in second, with 5.3% of homebuyers preferring the area over their original house-hunting location.
Tower Hamlets, which contains Canary Wharf, saw average house prices dip 5.7% in April 2024 compared to a year ago, from £467,000 to £441,000.
Islington takes third place and has also seen house prices fall slightly since last April. The average price of a home dropped 1.3% from £678,000 to £669,000.
While those were the locations homebuyers shifted to, these are the London areas buyers stuck to from the start of their search.
| Location in London | Percentage of buyers that stuck to their initial London area |
|---|---|
| Shoreditch | 6% |
| Canary Wharf | 4.4% |
| Battersea | 3.5% |
| Islington | 3.4% |
| Stratford | 3.2% |
| Brixton | 2.7% |
| Guildford | 2.7% |
| Willesden Green | 2.4% |
| Croydon | 2.3% |
| Putney | 2.3% |
Even though London is proving popular for homebuyers, is it worth investing in property in the city?
Is now a good time to buy a house in London?
It’s no surprise that London has the highest house prices compared to the rest of the UK, and buying a house in the city comes with a huge price tag.
According to the latest Halifax House Price Index, London has the most expensive properties for sale in the country, averaging at £536,821. This is 0.2% up compared to a year ago.
The latest Savills forecast says London house prices are set to rise 14.2% over the next five years – though this growth is slow compared to other regions in the UK. For example, the property firm expects the South West of England to see house prices grow 18.7% over the next five years, 18.2% for the South East and a whopping 22% rise in the Midlands.
Despite the growth in prices, there’s also the outlook on interest rates to take into account, which affects mortgage affordability. The Bank of England (BoE) has kept the base rate frozen at 5.25% for 10 months, meaning high borrowing costs for buyers.
Experts believe a base rate cut could come later this summer.
Alice Haine, personal finance analyst at Bestinvest said: “Millions of mortgage holders are yet to feel the pain of higher interest rates because they remain protected by cheaper rates arranged before the BoE’s rapid series of rate rises started in late 2021.
“It means more than three million homeowners are still paying interest rates of less than 3%, significantly below the current average for two and five-year fixes that sit comfortably above the 5% mark. More than 400,000 households are looking at an even more dramatic jump in mortgage costs of 50% or more.”
The general election has also created some uncertainty in the housing market. Rightmove revealed that high-end sellers have been hesitant to list their property on the market and this could continue until the next government comes in.
-
Rachel Reeves: what could be in her Budget?The UK’s first female Chancellor, Rachel Reeves, will deliver the Labour government’s first Budget this autumn. We look at what could be announced
-
Number of low-deposit mortgages hits two-year high - what are your options?The availability of mortgage deals for those with a 5% deposit has risen in recent years. We look at the options for first-time buyers.
