Where to Buy in London in 2016

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In 2016, Buyers  will have to search more carefully to find an affordable property that will prove to be a solid investment.  According to the latest data, the property  market in London is active, but down in volume. Property commentators agree that some of the reasons  for the downturn are the changes to  Stamp Duty tax introduced by the Government  in December 2014 and more recently in the Autumn statement on 25  November 2015. 

A further reason is the  slowdown in the Chinese economy and the  sanctions on Russia, which have impacted on the property market, especially in the residential areas of the capital  favoured by  international investors. Changes to the Stamp Duty rates for Buy to Let properties and second homes, which come into force in  April 2016, may also deter  potential landlord investors.  Many eyes will be on interest rates.  People become used to low interest rates and cheap loans.  The current  low interest  rate will have to rise at some point. Borrowers will find it hard going when interest rates rise.   Landlord investors  should  prepare for the rise in interest rates. 

The property market is  generally  expected to be value - driven in 2016.  If  prices are reasonable, properties will sell.  And the  reasonably-priced properties are the ones to look at when investing.

Good property investment in 2016  will require in-depth  research.  Things to consider would include the location of the property, the property type, and, if you are one of  the lucky ones  with money to spare,  your  budget.  It is essential to look at the areas that are benefitting from  infrastructure improvements and large investments, including  regeneration zones  and surrounding areas.

London is booming with new regeneration projects, transport infrastructure investment,  and new shifts in employment and culture that are creating new property hotspots,  buying opportunities and increasing demand for properties.

Transport improvements 

Rail

The  transport infrastructure improvements will revitalise  many previously unpopular areas and will influence local property prices. It is  worth doing the research and locating those parts of London where these developments are taking place.  Crossrail is a  good example of a transport improvement with long-term potential as it  will make many areas more accessible, influencing property prices. Prices along the west-east Reading to Shenfield route are rising spectacularly,   ahead of the line opening in 2018.  Prices in Ealing have already jumped significantly. It is also  worth looking at  Southall, where a new Crossrail station is under construction. If you want to buy here for investment purposes, it is worth knowing that property prices look set to rise with better transport links.

Crossrail 2 -  a proposed new railway serving London and the wider South East, will  connect the National Rail networks in Surrey and Hertfordshire via new tunnels and stations between Wimbledon, Tottenham Hale and New Southgate, linking in with the  London Underground, London Overground, Crossrail 1 and the  national and international rail services. Crossrail  2 will support economic regeneration by providing the infrastructure needed to support 200,000 new homes, particularly in  East London. The Northern Line underground  extension from Kensington to Battersea will open in 2020, making it easier to commute  to Battersea and linking Battersea  to  the other property hotspots in the capital.

River crossings

In December 2015,  the Mayor of London,  Boris Johnson MP proposed  a  total of 13 new tunnels and bridges as part of his  vision for the future of the capital – this will increase  the total number of river crossings between Imperial Wharf and Dartford by more than a third, and the crossings   for pedestrian and cyclists by nearly 50%.The majority of these will be built in east London, where the cross-river connections are poor and population growth is highest. Some  river crossings are planned  from Fulham in the west to Dartford in the east. The Mayor  said: “Building a series of new bridges and tunnels across the Thames is essential for the future prosperity of our rapidly-growing city. By creating more links between the north and south of the river, we won't just improve day-to-day travelling across the сapital, we'll unlock areas for development and create thousands of jobs and homes.” 

Subject to funding, the new crossings will be progressed across London to be delivered between now and 2050, and will improve the accessibility for many new homes. 

Some property hotspots

Property  prices in many central areas of the capital have already reached their potential. While the property demand  in the capital continues to grow and the shortage of available properties is not expected to be resolved in the near future, properties in highly desirable and well-known areas of the capital will still be of interest to many buyers and  property values in these areas  will grow. 

However, Central London is not expected to bring the highest returns. For  maximum returns,  it is wise to consider other developing areas further away from the heart of the capital, where the potential for future price growth  is significantly higher. Plans for new housing developments and  new regeneration and transport  schemes open up lots of interesting opportunities for property investment.

Royal Arsenal Riverside - occupying a prime location along the River Thames with a forthcoming Crossrail Station and buzzing retail hub, is one of South East London's most exciting riverside addresses.  Riverside walks, developing infrastructure, and considerable financial investment in this area give this project  good potential for future growth. For those who want to live here, the area is buzzing with new cafes, bars and restaurants.

Berkley Homes has been selected to transform a disused Parcelforce depot at  Stephenson Street, Newham, east London into a big housing development. The development will bring 3,500 new homes, a school, a park and a further boost for the  Canning Town area. The first homes are expected to be delivered in Summer 2018.

Woodberry Park in North London just 15 minutes away from the City,  offers a  new luxury development Woodberry Down, located on the banks of the New River and West and East Reservoirs and overlooking more than 42 acres of tranquil open water. Like many new build projects, Woodberry Down offers a distinctive way of life concept rather than just the property itself: a 24 hour concierge service , a  private gym and spa facilities are available to the residents.

In South London, the Elephant and Castle area  will benefit from the Bakerloo line extension, planned from Elephant & Castle through south-east London to Beckenham in Kent. The Oval and Stockwell,  are also   good examples of  places to consider. Despite not yet being in the immediate spotlight, they are located next to the regeneration zones of Battersea,  Vauxhall and  Nine Elms ( the site of London’s hottest property developments)  and are  benefiting from  the ripple effect. 

For those classy Mayfair fans or international high-flyers, there is an impressive project completing in 2016 at one of the finest addresses in the capital - 20 Grosvenor Square. It is due to become  one of the first fully serviced buildings in the area, with a hotel service and concierge. It is reasonable to assume that the initial return on investment will not be high, however, Mayfair does not get out of date, and it is safe to say that this  address will be highly sought-after for  generations to come. The  Grosvenor project is a unique opportunity for those wishing to own a property at one of the most prestigious addresses in the country. Grosvenor Square address will make your property stand out by giving it a unique selling point.

Year ahead

So where should investors be looking for the best returns in the future?  It is  worth looking at  areas where international investments are not too intense as you will be up against fewer investors.  Consider areas  occupied by  owner-occupiers and long-term tenants . Neighbourhoods with good schools, good parks and open spaces will continue to attract  families and   tenants even in  difficult market conditions. 

The market is changing, and 2016 will see further shifts on the investment property scene  as  new legislation comes into effect  and buyers  start adopting  new strategies to keep their investments profitable. 

Property prospects for first-time buyers  are expected to become more favourable this year, with the introduction of the new “London Help to Buy” equity loan scheme  for Londoners.  However,  the shortage of affordable properties coupled with the growing demand will continue to  pose difficulties for first-time buyers. 

Reasonably  priced properties will sell. However,  it might be more difficult to sell luxury properties especially those  in the region of £1 mil+.  Property investors  need to take a flexible and  pragmatic approach – for instance,  4 properties valued at  £500,000 in a developing or desirable residential area might be more saleable and have a higher market value in future than one luxury £2 million property in a residential area  dominated by  international investors. 

As in all  changing market conditions, there are still lots of opportunities for a good investment. Buyers take heed! Those of you who are brave and take the plunge could look back on 2016  as a golden time. Buyers who  missed the market may rue their loss as some buyers did  in the aftermath of 2008. 

The article is written in general terms and reflects the personal view of its author. Each property investment case is individual, and you are strongly recommended to seek specific advice before taking any action based on the information it contains, or  making any property investment decisions. No responsibility can be taken for any loss arising from action taken or refrained from being taken based on this article.

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