The amount of homes worth £250,000 or less in London has decreased by 14% in a year, according to research by Experian.
Most of these properties are in Newham, Enfield, Croydon, and Barking and Dagenham.
Director of Residential Research at Savills estate agents, Lucian Cook, says just 75 of 627 council wards in the capital have an average house price of £250,000 or less. He says this is a reflection of how increasing prices affect the whole of London.
He adds: “The shrinking market under £250,000 reflects the extent to which prices in London have risen over the past five years and been dislocated from the rest of the UK.”1
Chief Executive of Haart estate agents, Paul Smith, comments: “Not only are homes under £250,000 gold dust to first time buyers in the capital, but investors are also on the hunt for them.
“The strongest yields can be achieved on properties of this value and London is still viewed as the global hotspot for property investment.”
He says that this shortage is forcing first time buyers out of London in search of a family home, as the average age of this type of buyer is 32-years-old.
He continues: “We are now starting to see more first time buyer activity outside the capital than inside. You can get a three-bedroom semi-detached house in Chelmsford for £250,000, but in London, even somewhere outside the centre like Wembley, you’d be lucky to get a two-bedroom flat.
“Young professionals are increasingly doing a balancing act, weighing up their commute against the quality and size of their home – and home is increasingly coming out the winner.”1
Research analyst at Countrywide, David Fell, thinks that the Government’s Stamp Duty reform last year could be behind the shortage of homes under £250,000: “We are now seeing homes that would have come onto the market at £250,000 before the change, marketed at £260,000 or £270,000.”
Similarly to Smith, he is witnessing first time buyers moving further away from central London: “A decade ago, the focus of first time buyers was in places on the Zone 2/3 border, such as Hackney, Deptford and Crystal Palace.
“Today, stretched affordability means new buyers have to look further and further afield to get on the housing ladder. Places like Walthamstow, West Ealing and Croydon are now the starting point of many first time buyers’ home searches.”1
However, the other side of the market, properties priced at £500,000 or more, rose by over 22%.
Associate Director of John D Wood in Weybridge, Vincent Dennington, says: “We have been taking on a lot of property about £500,000 and it has been selling quickly to both owner-occupiers and investors.
“As mortgage rates are low, people are seizing the chance to move up the property ladder while they still can. Many people are concerned they might not be able to afford to upsize their home in the future if prices continue to go up, so they are making the move now.”1
In the South East, research reveals a similar story. The number of homes for sale at less than £250,000 has dropped by 10% and homes at over £500,000 has risen 25%.
1 http://www.homesandproperty.co.uk/property-news/news/hunt-londons-rare-property-gems-under-ps250000