Last year’s housing market was shaped by optimism – house prices rose by 5.6 per cent nationally (10.6 in London), and above the 2007 peak for the first time, to reach new record levels (£186,350 nationally, and £503,431 in London), encouraging developers to build more homes and councils to approve record levels of new developments.
But it was also one of despair for many, as record numbers of potential buyers and middle-class families gave up on their dream of owning a home. New research from the Bank of England revealed that half of families who don’t own a home never think that they will – that’s some 4.5million households. The rate of home ownership has fallen from 73 per cent in 2007 to 65 per cent today.
And next year? Recognising the crisis, the government used its Autumn Statement to announce a raft of new measures to try and increase the amount of new homes being built, and to help first-time buyers even more. But the pressure on supply is still likely to keep pushing up prices – at least until interest rates start to rise and push up mortgage costs, which is predicted to happen by the end of the year. So if you have a home, sort out your five-year fixed-rate deal now, and if you’re thinking of buying, get in before those rates rise.
New hot spots to watch out for
Agents are tipping Victoria as a new ‘prime’ location thanks to its proximity to landmarks like Buckingham Palace.
Likewise, The Lancasters in Bayswater redefined W2, doubling values achieved north of Hyde Park for the first time in 2015.
“At the moment, a similar sort of thing is happening in Marylebone with The Chilterns development – upcoming luxury schemes in Nine Elms and Liverpool Street look set to have the same effect in other parts of the capital,” says Charlie Willis, Head of London Residential at Strutt & Parker
Other areas of growth will be in Fitzrovia and Kings Cross ,which are rapidly changing out of all recognition, tips Andrew Ellinas, Director at Sandfords.
“In terms of potential hotspots for 2016, we predict that outer London areas will continue to rise more rapidly than prime markets as buyers continue to look for value and investors for better yields. Areas such as East London, Canary Wharf, Camden, Islington, and new markets like Croydon will all outperform prime. Additionally, overlooked parts of the capital, such as Tooting and Streatham in south London, are expected to become more popular,” suggests Camilla Dell, Managing Partner at property buying agency, Black Brick.
Last year Walthan Forest and Lewisham were London’s best performing boroughs for rising prices, because they were comparatively so affordable to start with – we expect first-time buyers to continue to look further out in zones three and four for better value, as well as areas on the edge of zone one that offer better value, such as Elephant and Castle, Vauxhall, and Pimlico.
The Crossrail effect will also start to kick in – places you’ve never heard of, like Shenfield and Abbey Wood, will suddenly be worth considering once the high-speed rail connection becomes a reality.
Developments to watch for 2016
The Stage – A new Shakespeare museum, his original theatre dug our from the mud, and new homes and the first designer shops in Shoreditch, this development will mark Shoreditch’s coming of age.
Television Centre – Stanhope’s development of the iconic BBC Television Centre in White City will launch in April 2016, reviving a huge area of west London.
Chelsea Barracks – the first phase of this long-awaited £3billion super-prime development on Chelsea Bridge Road launches this year, with apartments and a café designed by Squire and Partners.
Old Oak Park – if you’ve ever been to Car Giant in London, you’ll know it’s vast. Now try to picture it without all of the cars… The canalside site will be transformed into hundreds of new homes, restaurants, shops and even a new tube station, with Crossrail nearby.
Chelsea Waterfont – this vast new development centred around a Victorian power station will link up the hinterland between the Kings Road and Chelsea Wharf and includes residential, retail, restaurants and new parks.
Greenwich Peninsula – There’s been plenty of hype about Nine Elms, but not much chatter about Greenwich Peninsula, which will offer almost as many homes (15,000), waterfront bars, restaurants and shops, and a mini Southbank for south-east London, all just one tube stop from Canary Wharf.
Mortgage rates – the Fed has put up the interest rate in the US for the first time since the crisis, will the Bank of England follow suit? We think so.
House prices – in 2015 average house prices in London broke through the £500,000 barrier for the first time. We can’t see demand fading, although prices are reaching unsustainable levels, which will reduce the amount of potential buyers, causing the rate of growth to slow – especially if interest rates rise.
The study – thanks to the internet more of us are working from home, so a dedicated work space is now a must, developers are only just waking up to the fact that everyone has a computer, printer and scanner, and we need a space for them.
First-time buyers – The government has introduced even more new measures to try and help new buyers into the ladder – a 20 per cent discount for first-timers buying below £450,000 in London; doubling the value of Help to Buy to a 40 per cent equity loan in the capital; increasing shared ownership, and a new Help to Buy ISA, plus and increase in the amount of 95 per cent mortgages will all help to get more new buyers into their own homes this year.
Garden and outdoor rooms – Any outdoor space is a precious commodity and more of us are turning our gardens into “outdoor rooms” with elaborate kitchens and furniture, and installing posh sheds and studios to extend our homes outwards without the cost of moving or building an extension.
Rented, reinvented – The PRS – or private rental sector – is one of the fastest growing new-build areas as developers realize that young people who cannot buy will pay for quality, new-build, long-term rental properties. The developer not only gets the capital gain of the property, but a steady rental income, while tenants can expect a higher standard and quality of contract, including integrated broadband and Sky TV, longer tenancies, and concierges to manage buildings, maintenance and collect those ASOS packages while you’re out.
Broken plan – think nooks for teenagers to sit with their iPads in, while the rest of the family watch TV, and break-out spaces for toys or work.
Swimming pools – going up in every sense! Swimming at altitude looks set to become a new London trend with rooftop pools, panoramic 24th floor pools, and even a suspended swimming pool bridge all being built into new schemes.
The dining room – admit it, in real life you eat your supper on your lap watching Masterchef.
Open plan – so you really want to eat curry in the same room as you dry your washing or to try and focus on work at the table while your other half watches the footy?
Buy to let – new rules on stamp duty and tax relief from George Osborne have been designed to make it less appealing, which could be good news for first-time buyers, who are often beaten to affordable homes buy investors.
Grey – There’s a certain developer look to new build homes – gloss kitchens, grey walls, white bathrooms and metro tiles – that’s getting a bit tired. Buyer are bored of bland and searching for something more personal and localised, expect a rise of British interiors, craftsmanship, and homes and interiors inspired by their surroundings and the history of the site or area.
Technology – super whizzy, remote-controlled properties that are all bling and completely confusing are seeing a backlash from buyers, who’d rather install their own tech systems or enjoy a more simplified home. Too many switches and controls add up to high maintenance and ‘messy’ walls cluttered with control panels.
Luxury buyers – almost all agents agree that the top of the housing market could falter in 2016 as new changes to stamp duty will make people think twice about buying in the £2-5million bracket.
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