London has 11 new '£1 million neighbourhoods' and the reason why is soul-destroying
London has 11 new ‘£1 million neighbourhoods’ and the reason why is soul-destroying
The areas are: Muswell Hill, East Finchley, Highbury, Kentish Town, Queen’s Park, Clerkenwell, Maida Vale, Hammersmith, Vauxhall, Battersea, and Herne Hill
Upmarket property firm Knight Frank on Thursday put out its latest quarterly review of central London’s residential market. In sum: if you’re not rich, prepare to be pushed out.
Eleven London postcodes have now become what Knight Frank calls new “1 million neighbourhoods”:
The analysis is based on postcode districts where at least 20% of sales have been above 1 million in at least one quarter since the start of 2014. The minimum threshold was five sales and no postcode district was allowed to have more than one quarter with 20% of sales above 1 million before 2014.
The areas are: Muswell Hill, East Finchley, Highbury, Kentish Town, Queen’s Park, Clerkenwell, Maida Vale, Hammersmith, Vauxhall, Battersea, and Herne Hill.
It’s not surprising that areas like Kentish Town, Highbury, Muswell Hill, and Maida Vale are in the 1 million-club. They’re upmarket North and West London areas that have long been coveted by dreamy-eyed, would-be buyers.
But areas like Hammersmith and Vauxhall are more surprising. Until a few years ago, Hammersmith was a byword for rubbish. The truth is, the way London’s property market is going the idea of “rubbish” areas are dying out – and the poor out with them.
Here’s Knight Frank: “Hammersmith (W6) had five such quarters [of 1 million sales] since 2014, making it the area that has undergone the biggest transformation in terms of 1 million-plus sales.”
What’s interesting is that the surge in prices in these areas isn’t really the result of a trickle-down effect of rich foreign investors piling into the very top end of the market.
The top end of London’s property market is actually cooling. Knight Frank reports a 21% decline in the number of 1 million-plus properties sold in the year to April 2015 and the pace of price rises at the top is slowing.
The real reason 1 million properties are becoming the new normal is simple demographics – tonnes of people are flooding into London and there just aren’t enough houses being built to cope. And that’s depressing.
Here’s Knight Frank again:
Demand for London property at below 2 million is set to remain strong, with the city’s population forecast to grow by more than 100,000 every year for the next decade.
As house prices grow across London, it will create new markets where properties cross the 1 million threshold.
Foxtons, the posh, London-only estate agents, made the same point recently. And you can see it playing out in the prices.
While London’s high-end property market is cooling, the price of houses valued sub-1 million – a fair measure of affordability in London, crazy as that may seem – is rocketing.
Sub-1 million houses are the fastest growing price bracket across London, well outpacing the norm.
Properties below 1 million grew 17.5% in prime central London and 21.3% in prime outer London in the two years to August 2015, according to Knight Frank, compared to the respective averages of 9.5% and 15.1%.
Knight Frank only looks at what it calls “prime” London areas, most of which are central. But while the problem of rocketing prices is particularly acute in these areas, it’s not exclusive to it.
In Brixton, which isn’t covered in Knight Frank’s analysis, there have recently beenprotests from locals over the “gentrification” of the area which is pushing up rents and prices there. Brixton, in South London, has long been a hub for the capital’s Afro-Caribbean communities. These days it’s fast becoming just another yuppie hotspot.
The unfortunate truth is London is fast becoming a City only for the rich, if it isn’t already. Given the problem so clearly seems to be a demographic one, it’s tough to see a way out – suddenly building 100,000 new houses every year for the next decade seems an impossible task.
While London’s property woes are particularly extreme, housing is a huge issue across the UK. The Royal Institute of Chartered Surveyors on Thursday also doubled its forecasts for property price growth nationally this year to 6%, simply because of a huge mismatch in the supply and demand for housing.