Last week the BBC published a news story discussing two properties that are selling for extortionately different prices even though they are on the same street – and it is the property in worse condition that is selling for more. However, the difference is that one of the properties is technically based on Hazelwood Road, east London while the other is based on Hazelwood Road, Wigan – leading to the prices differing by a massive £85,000. The saying ‘location, location, location’ has therefore never been more true, and here we look at how location is determining the property and lettings markets:
Population Growth
One of the main reasons that property values have risen in the UK over the past few years is because the UK population has increased considerably. During the recession house prices dropped as less people were able to afford to buy properties, which led to more people relying on the private rental sector. This was felt particularly in big cities, however London was affected the most as a large percentage of the growing population headed to the capital during the recession in search for work. This led to the property and letting markets in London becoming different from the rest of the country, as even during the recession prices remained high. Now the UK is recovering from the recession more and more people are looking to buy properties – pushing up prices even further in London and the rest of the UK.
The Allure of London
Capital cities generally attract a large amount of people as they are home to some of the biggest companies in the world. Furthermore, they tend to have better public transport systems, such as the Underground in London, the Metro in Paris and the Subway in New York. Capital cities are also home to a large amount of attractions such as museums, art galleries, bars and restaurants, which means that they not only attract residents but also tourists. London is therefore one of the busiest cities in the world, and as such property prices are extremely high. Even property prices in other large UK cities such as Manchester and Liverpool aren’t as high as in London, even though they offer the same amenities. It looks as though London is king when it comes to the most desirable place to live in the UK.
Buying Property in London
Unfortunately, as so many people want to buy properties in London owners generally don’t put much effort into keeping them in good condition. As previously mentioned, a property that was recently listed in east London in poor condition was priced £85,000 more than one down the road in Wigan that was much larger and in much better condition. Furthermore, if you are thinking of buying a property in London you will be up against a considerable amount of competition as there have been reports of potential buyers queuing down the street on viewing days. This means that even properties that start off being affordable can quickly jump up in price due to demand, leading to that £250,000 two bedroom flat that needs a bit of work ending up costing you well over £300,000.
Choosing the Right Location
Even though properties and therefore rent prices are higher in London, it’s not always the right place for you to base your business. Letting properties in London often takes a lot of hard work as landlord insurance premiums are higher and tenancies tend to be shorter, meaning you will need to find tenants on a regular basis. Therefore, it may be wiser to look in areas slightly outside of London or in other large cities that have a high level of demand for private rented accommodations. Luckily, as the economy is improving more people are starting to move away from big cities to the suburbs, which means that there is a whole new market that you can cater to. It all depends on the types of properties you own and your budget – at the end of the day you need to make sure that your property portfolio works for you.
Location has never been more important when it comes to the property and private rental markets, so if you are thinking of expanding your property portfolio make sure you research the area before you buy.
Photo by Andrew Bossi / CC BY-SA 3.0
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