After many years of soaring house price growth in London, the past few months have seen values in the city begin to level out and even slump in some areas, while other parts of the country are booming. But some areas are still generating returns for existing landlords.
The prime central London housing market has seen some of the worst house price growth results in recent months according to a number of indices, with sellers reducing their asking prices by an average of 10% in some of the top-end districts such as Kensington and Chelsea, Hampstead and Canary Wharf. Meanwhile, the latest house price index from Nationwide registered a 1% decline in house prices in the capital in March compared to the previous year.
Investors who had previously focused their attentions on London have already begun to branch out into other more profitable parts of the country, such as Manchester, Birmingham and Leeds, but according to research by estate agent Portico, those with existing rental properties can expect to see the best yields in these seven areas.
1. Barking: 6.2%
The town of Barking in East London was once part of Essex, and being in Zone 4 means it is affordable while still being easily commutable to the city centre. Average property prices here according to Portico are now £254,943, close to the UK national average.
2. East Ham: 5.8%
Neighbouring Barking is East Ham in the Borough of Newham, another popular area for commuters but slightly pricier, with properties fetching an average of £383,469 – which is a 4% rise compared to last year.
3. St James’s Park: 5.6%
Right in the centre of London between Buckingham Palace and Pall Mall, this prime location has been generating strong rental yields recently, bucking the trend for the majority of prime spots in the city. For those that can afford it, a flat here will set you back more than £1.5m.
4. Newbury Park: 5.3%
Back in the east London area, Newbury Park has a tube and a train station as well as close proximity to the North Circular, and is an area on the up with property prices rising 11% over the past year to an average £438,909.
5. Plaistow: 5.2%
There’s a distinct theme to this list of top performers, as Plaistow is another part of east London that has remained resilient for property investors and landlords. Located just south of the increasingly popular Stratford, homes here fetch around £342,000.
6. Redbridge: 5.2%
Another area that was previously within the Essex remit in the east, Redbridge is a slightly pricier option in terms of purchase price, with average homes costing £523,645, but the area has seen a lot of improvement in recent years and is a popular choice for renters.
7. Heathrow: 5.2%
Famed for its huge international airport, there is a constant demand for homes in the Heathrow area for those working at the terminals, as well as frequent flyers and international commuters. Properties here are cheap by London standards – £263,167 – but have risen by 29% over the past year, according to Portico.
To learn more about some of the investment opportunities available outside the capital, click here.
