London house prices are set to begin a recovery this year,
due to booming rental yields in some boroughs, according to analysis by Home.co.uk.
The property website expects the slump in the capital’s
housing market to come to an end in 2020, thanks to improving rental yields
making property more attractive to investors.
Home’s data suggests that this recovery is likely to begin
in Newham, where, in December 2018, the average rental yield was 4.9%, compared
to 3.6% in the same month of 2017. This 1.3% increase is the greatest rise in
any London borough, apart from the City of London, where a 1.5% increase was
The average rent price is Newham was £1,671 at the end of
last year, which is up by 7.6% on December 2017.
The next hotspot for investors is set to be Hammersmith
& Fulham, where the average rental yield rose by 1.2% over the year to
December, from 3.9% to 5.1%. This promising increase comes amid growth of 6.2%
in rent prices in this west London borough over the same period.
Other emerging areas for investors include Hackney and
Southwark, where yields increased by 0.7% between 2017-18.
Outside of the City of London, Southwark recorded the
greatest uplift in rents over 2018, at an average of 20.2%. A typical monthly
rent price in this borough was £2,532 in December.
A 0.6% rise in yields was recorded in the City of
Westminster and Tower Hamlets in the year to December last year.
Rents in Westminster increased by an average of 12.1% in the
12 months to December, taking the typical monthly price to £5,505, while rent
prices in Tower Hamlets grew by 10.1%, to £2,350 per month.
Housing market recovery is set to take longer in many outer
London boroughs, according to Home.
In Hounslow, Hillingdon, Harrow, Croydon, Waltham Forest,
Richmond upon Thames, and Barking and Dagenham, rental yields remained
unchanged between 2017-18.
Enfield, in north London, was the only borough to experience
a decline in rental yields over the same period, of 0.2%.
The Director of Home, Doug Shephard, says: “You just can’t
ignore the London property market’s remarkable ability to bounce back. History
has shown us time and time again how the UK’s leading property market can burst
back into growth after a period of correcting prices. The rate of rental yield
rises is surely the best analytical tool to pinpoint where the first green
shoots will emerge.
“Whilst it is encouraging that 32 out of 33 London boroughs are showing
increased yield year-on-year, it is where they are growing most quickly that is
of keen interest to investors. When they approach 6% in 16 or more boroughs,
demand in the London sales market will reignite.”
Are you more inclined to invest in the London property
market, now that it is due to recover?