MANAGING PARTNER OF BLACK BRICK
Q.Dear Camilla, how do you think the austerity measures put in place recently by the new government will affect UK house prices?
A.We believe that house prices outside of central London are likely to be affected the most by the wave of spending cuts that are due to happen over the next few years. The property market outside of central London is much more of a domestic market and it's likely therefore that prices will go down, particularly in rural areas.
This does however present an interesting opportunity for anyone looking to purchase a country home, where demand has dropped significantly and supply is outstripping demand. We have seen evidence of several distressed sales happening, even in quite prestigious country estates in Surrey.
We believe house prices in central London will be much more resilient to the spending cuts. This is mainly due to the presence of international buyers, who account for well over 50 per cent of London property purchases.
There is also still a lack of supply, particularly in the prime, sought-after areas. London property won't be immune but we think prices will remain relatively flat over the next 12 to 18 months, rather than fall significantly.
Q.Dear Camilla, I am thinking of purchasing a buy to let property. How is the rental market currently performing and are there any hot spots?
A.Now is an excellent time to be purchasing a buy-to-let property – the rental market is currently enjoying a boom period and rents have risen up to 35 per cent in the last year.
Prime areas of central London such as Mayfair, Marylebone, Hyde Park, South Kensington and Kensington are areas that rent well and houses in these locations stand the best chance for capital appreciation. Prime north London areas including St John's Wood, Hampstead and Islington have seen the strongest rental growth at more than 4 per cent in the three months to September.
For all investors in the London property market I would recommend a two-bedroom, two-bathroom flat in any of these areas. Two-bedroom flats appeal to the widest tenant market – professional sharers and also individuals. They also have more scope for capital appreciation than a one-bedroom flat.
In the most established areas of prime central London you can expect your two-bedroom investment flat to rent for between £800 per week and £3,000 per week depending on its size, location and condition.
In the more peripheral areas, such as St John’s Wood and Notting Hill, a two-bedroom property will achieve anything from £500 upwards.
Camilla Dell is the managing partner at search and acquisition consultancy Black Brick. www.black-brick.com.