After yields continue to decline in the capital, London is unlikely to experience any growth in the property market until the end of 2016.
- Investors in London property are choosing to renovate their existing properties or look in other regions to avoid high costs
- London yields continue to offer limited value and are not expected to improve until Q3 of 2016
- With some prime locations in the capital offering yields under 3%, investors are looking to other regions where returns are twice as high
Potential investors in the London property market are choosing to use their money on renovations or to purchase property elsewhere.
The annual rate of increase in the capital is the lowest since November 2009. Official statistics show that price growth in the capital has slowed, with additional expenses and narrowing yields blamed.
Andrew Ellina, Director of London-based Estate Agent Sandfords, said: “I predict that price increases in the prime central London market in 2016 will be modest with some areas experiencing growth and others seeing prices remaining fairly static. I do not anticipate sustainable growth returning until the third quarter of 2016.”
Experts believe that unless something significant happens within the market there will be no crash, but the slowing of growth prospects and the current high prices will lessen demand in London.
With prime locations in London offering yields as low as 2.68%, investors are looking towards other regions that are experiencing the beginnings of a growth curve. HSBC’s report published earlier in the year showed that investors in the Manchester property market were commanding the biggest yields, with the average just short of 8%.