St John's Wood Property Market Remains Buoyant

Whether renting or buying a property in London, St John's Wood remains one of the most desirable places to live in the capital, reflected by the fact that it is home to some of the most expensive properties in the world.

This prosperous part of North West London, in the City of Westminster, only a 15 minute walk from Baker Street and London's West End, features a high proportion of independent retailers and offers easy access to the open green spaces of Primrose Hill and Regent's Park. It is also the location of the famous Lord's Cricket ground and Abbey Road Studios, where The Beatles recorded their Abbey Road album.

St John's Wood estate agents report that property prices in and around St John's Wood have continued to soar, despite the global economic uncertainty, eurozone woes, and the recent hike in stamp duty at the upper end of the market to seven per cent.

Liam Bailey, head of residential research at Knight Frank, commented: "Early indications of the impact of the recent changes to stamp duty are that the market is so far proving resilient."

According to a new Knight Frank survey, home values in prime areas such as the Borough of Westminster, increased by 1.1 per cent in April and are now 11.4 per cent higher compared to the corresponding month last year.

Andrew Ellinas, director at Sandfords Central London estate agents, said: "In 2011, Westminster and Camden together accounted for more £1 million plus properties than Kensington and Chelsea - most of them in Sandfords' domain of Marylebone, Regent's Park and St John's Wood."

Demand for properties in St John's Wood is being primarily fuelled by a growing influx of foreign purchasers taking advantage of a historically weak pound, which has actually reduced the cost of buying property in the UK for some foreign buyers, making central London a particularly sound property investment option.

"Many [overseas property buyers] are looking for a safe haven asset class to take their money away from the turbulence of the eurozone and the Arab Spring," said Naomi Heaton, chief executive of London Central Portfolio.

As well as high demand from property buyers, there has also been a shift towards more people looking at property to rent in St John's Wood as a preferred lifestyle choice; an attractive proposition for property investors.

The high level of rental demand is reflected by the shortage of houses and flats to rent in St John's Wood, with most properties often let within days of being placed onto the rental market.

Strong tenant demand is expected to push rents up by an average of five per cent in 2012, following an average gain of 12% in 2011, with further growth anticipated moving forward, according to property consultants Jones Lang LaSalle.

London's population has grown every year since 1988, and it is likely that it will continue its steady growth over the next few years, further fuelling demand for rental accommodation in St John's Wood and its surrounding areas, including Hampstead, according to various Hampstead estate agents.

"There are likely to be 150,000 more London households renting [by 2015] than before the financial crisis," said Jones Lang LaSalle's research director Jon Neale.

Managed Rental Homes in Central London are Highly Sought-After

With property prices and rental values continuing to rise, Central London estate agents have seen a surge in the volume of landlords actively buying properties in prime London in order to take advantage of attractive rental returns.

Fresh research by specialist buy-to-let lender Paragon Mortgages shows that property acquisition activity in the UK remained strong in the first quarter of 2012, during which period landlords increased their portfolio size by 1.8 properties, with prime central London by far the most popular place to buy property.

John Heron, Director of Paragon Mortgages, commented: "It has been a steady and progressive start to 2012. Whilst landlords are still benefitting from attractive market conditions, there is still a long way to go to meet the increasingly high level of tenant demand. More investment across the private rented sector is needed during the coming year to help to meet this demand."

The greatest supply-demand imbalance can undoubtedly be found in the heart of the English capital, partly because property prices remain out of reach for many would-be homebuyers, while mortgage finance is still hard to access for some, particularly first-time buyers, pushing more people into rental accommodation instead.

Unsurprisingly, 46 per cent of private rented sector investors are considering adding to their London portfolio in the next 12 months, according to the latest Young Group Index.

With rental demand and values soaring, Neil Young, chief executive of Young Group and Young London said that investors appear to be more committed to the London market than ever before.

"Confidence in the asset class remains strong, particularly for property in the capital where investors see future tenant demand as virtually guaranteed," he said.

But with rising rents comes greater expectations from tenants.

Despite the existing high level of demand for homes, landlords who are uncooperative and offer shabby properties will generally not be tolerated by most tenants who are now being forced to pay record high rents.

It is all very well adding to a property portfolio, but a landlord needs to take on the increased responsibility, which often proves far too time-consuming for many property investors, especially for part-time or temporary landlords.

Consequently, more property professionals with properties in and around Central London are now turning to London property management firms to provide professional organisation, according to Adam Feather of Robert Anthony estate agency.
 

"Many landlords now realise it makes more sense to hire the services of a property managing agent in order to help maintain their property and keep tenants happy, as well as reduce void periods and maximise rental returns," said Feather. 

Healthy property investment appetite in Prime Central London means that it is not just rents that are rising. High demand for homes in prime locations, including houses and flats for sale in Marylebone, Chelsea, Notting Hill, Kensington and Mayfair, among others, are generally expected to push micro property prices upwards.

According to the latest Young Index, property values in London are expected to increase by an average of 2.2 per cent between now and the first quarter of 2013, whereas investors predict that values across the rest of the UK will fall by 0.4 per cent over the same period.

Significant capital growth in recent years means that London now accounts for the vast majority of £1 million plus homes in the UK. 

"London accounts for two thirds of all UK sales above £1 million with 4,329 transactions in 2011 compared with 2,582 in the rest of the country," said Andrew Ellinas, Founder of leading Central London estate agents Sandfords.

Despite wider concerns about the economy, indications are that the property market in Central London will remain resilient and continue to go from strength to strength.