Marsh & Parsons’ latest London Property Monitor has found that while investors continue to account for the majority of house purchases made across ‘prime London’, this margin has narrowed significantly after a large spike in first-time buyer sales in the past three months.
29% of prime London property purchases were made by an investor in the three months to March 2015, falling from 37% at the end of 2014.
At the same time, first-time buyer sales have risen from just 21% of all purchases last quarter to 28% of activity during Q1 2015. The rise in first-time buyers has caused the number of prime transactions funded by mortgages to jump 17% in the past three months.
Over the past three months, demand for prime London homes has risen by 20%. As a result, heightened competition for available homes on the market has pushed the ratio of registered buyers per property up from 10 in December 2014 to 12 in March 2014.
Peter Rollings, CEO of Marsh & Parsons, said: “First-time buyers have been riding a wave of fortuitous circumstances recently – with almost unheard of mortgage rates, reduced up-front stamp duty costs, and support schemes like the Help to Buy ISA inflating confidence. Combined with a more accessible pace of property price growth so far in 2015, many more have been able to take the plunge into the property market. Prime London property has always been a bastion of investment, but it’s encouraging to see the drawbridge being lowered for everyday Londoners who live and work in this city.
“However, there is, and has always been, some aspirational Prime Central areas that are out of grasp for new buyers, and will remain an investment stronghold. Addresses like Kensington and Chelsea resonate around the world, and will forever entice buyers looking for unparalleled capital returns.”
As a result of this strong demand for starter homes, one-bedroom properties in prime London have seen the biggest increase in value over the past 12 months – with average values up 5%, compared to 1.7% annual growth across the market as a whole. This means the price of a typical one-bedroom property in London has risen by £75 a day over the past year.
Similarly, one-bedroom properties are highly sought after as buy-to-let investments, with rents appreciating at the fastest rate of all property types across the capital. The average weekly rent for a one-bedroom property has risen 5.8% year-on-year in more affordable outer prime areas of London, popular with young professional renters.
Rollings added: “With more and more young professionals climbing onto the property ladder, one-bedroom properties have outperformed the market across Prime London. Historically, buyers rated property on the number of bedrooms and a ‘check list’ of desirable features. But the speed at which the London property market has moved in recent years has shifted the goalposts.
“Today’s Londoners are far more likely to prioritise location, overall square footage and well-thought through living space – compromising on that second bedroom accordingly. For the same reason, savvy investors who find the right one-bedroom property have the golden ticket to rental returns.”
