The London property market has enjoyed one of its busiest periods in the first half of 2021 for both sales and lettings. The number of properties sold and properties let hit record levels.
Chestertons data and research published in the latest London Residential Property Market Report shows that the past three months in particular have been even busier than recent averages.
Recently, homebuyers and property investors have been motivated by a number of factors, including the stamp duty holiday extension, success of the vaccination programme, the roadmap out of lockdown and imminent return to the office. Between April and June, the number of property sales was 24% higher than in the three-month period before, according to data from LonRes.
House prices also increased in almost all of the locations where Chestertons operates. Our sales index tracks prices in 27 higher value locations across London. The index revealed an average 1.5% rise in prices between the end of March and end of June.
House prices in Central London grew by 1.2% in the second quarter of the year and was 0.3% higher than prices in June 2020. In Greater London, prices increased by 5.7% during this three-month period. And prices there were even 7.3% higher than in the same period in 2020.
In the second quarter of 2021, demand for rental properties was high. With the prospect of returning to the office, there was a particularly strong increase in demand for one and two-bedroom apartments in more central locations of the capital. There was also a rise in demand from international students who have been largely absent in Central London since last year.
With this growth in demand and drop in the number of available properties, rents started to increase in more locations across London. At the same time, investors saw rental yields increase slightly as well.
Property investment hotspots in London
When looking at our data on residential capital and rental values across London, a number of property investment hotspots have been revealed. Here are a few of the best locations to invest in.
As an expanding investment location in East London, Canary Wharf has an ever-increasing number of job opportunities, which is causing strong demand for rental properties.
For the second quarter in a row, the neighbourhood tied for the fourth best rental yield in the capital with a gross yield of 3.5%. As a centre of prolific regeneration, Canary Wharf is slated for strong capital growth as well.
Most famous for being the home of the England football team, Wembley is located in Zone 4 in West London and is another location with strong property investment prospects. As part of an important area of Greater London, Wembley has been transformed with billions of pounds of investment.
Across Greater London, rental growth increased to 2.7% in the second quarter of 2021. Chestertons also forecasts that rents will rise by 2% in that region over the entire year and will accelerate to 3% growth in 2022.
As part of Westminster, Maida Vale is close to the heart of London but feels tucked away. As many people have reassessed their property preferences and altered their work-life balances due to the COVID-19 pandemic, this will likely remain a popular area to live and invest in.
At the end of June, investors in Westminster and Pimlico as a whole saw an average 3.5% gross rental yield. This is well above the Prime Central London average of 2.5%, showing the area can provide above-average yields when compared to its central counterparts.
Read more about the London property market here, including the best locations to invest in and advice for buy-to-let investors.