The Prices of Houses and Flats for Sale in Fitzrovia Soar

The residential property market in prime central London remains strong, with prices having appreciated significantly across many parts of the region so far this year, with rental values also rising, due to high demand and low housing supply.

As sales prices continue to increase, it is getting harder for would-be homebuyers to secure finance to buy property in central London, forcing many people into rental accommodation instead, pushing rental values higher in the process.

Robert Bartlett, Chesterton Humberts' CEO, says: "The prime London residential lettings market is facing a variety of challenges this year and in spite of the ongoing economic gloom, overall rents are continuing to increase. Good quality rental properties are being let at record prices and in record time."

One area where the housing market is going from strength to strength is Fitzrovia, near London's West End, which is home to an array of upmarket properties and various celebrities.

 

 

A limited supply of houses and flats for sale in Fitzrovia, in stark contrast to a high level of demand, has pushed property prices higher in the area, driven primarily by a growing influx of overseas buyers.

"The London property market continues to be seen as a safe haven in turbulent economic times, with record numbers of properties being sold to international buyers," said Ed Mead, sales director, Douglas & Gordon.

Demand is also being fuelled by more property investors looking to add to their property portfolios, thanks to the fact that many people are looking at property to rent in Fitzrovia, thanks to its close proximity to London's West End, along with a wide selection of local attractions and amenities.

 

Andrew Ellinas, director of Sandfords, says that the "the Fitzrovia lifestyle" appeals to many people attracted to "art galleries enthused with vibrant bars, outstanding restaurants, famous landmarks like the BT Tower, the open spaces of Regents Park and the fashionable boutiques of Marylebone High Street".

Whether flats or houses to rent in Fitzrovia, good quality properties rarely stay on the market very long, as tenants snap them up amid fierce competition for sought-after homes in the area. This is creating a severe supply-demand imbalance that is unlikely to change until more new homes are developed, in light of London's rising population.

 

 

The Institute for Public Policy Research (IPPR) reports that England is facing a "growing housing crisis", with an estimated shortfall of 750,000 homes by 2025.

Nationally, the think tank says that up to 280,000 new homes are required each year over the next 16 years, with the biggest requirement in London, particularly popular areas like Fitzrovia.

Unless property supply increases in the near future property prices and rents are likely to rise further, regardless of the state of the economy, as housing remains a necessity that we all require.

"Whether the economy performs well or poorly, a serious gap looms between housing supply and demand," said IPPR director Nick Pearce. "Our ageing population and rising expectations for living standards are going to drive up demand, but if there is no change in housing policy it will seriously hold back supply."

Homebuyers looking to areas beyond Central London

Central London estate agents have reaped the rewards from a surge in property values in recent years, propped up by low interest rates and international buyers.

"Since the depth of the property bust in 2009, prices in England and Wales have floated up by a gentle 11.2 per cent but flats in Central London have rocketed ahead," said Andrew Ellinas, director of leading estate agents Sandfords.

The average price of a residential property in prime central London has increased by 35 per cent since 2009, with greater growth anticipated in the short to medium term, according to CBRE.

Mark Collins, head of residential, CBRE, said: "Superprime residential markets have emerged as one of the only secure investment options for the world's super wealthy. The very top-end of the market remains exclusive, involving only a handful of cities, and within this elite group London is still one of the most compelling choices."

But while many homebuyers continue to snap up properties in central London, others are now looking beyond the heart of the capital to second-tier markets – searching properties for sale in Little Venice, Maida Vale, Swiss Cottage and Camden, among other popular areas. 

Although some home purchasers are buying property to live in, demand is being significantly boosted by a rise in activity among property investors seeking to capitalise on good prospects for capital growth and high rental returns.

"London is seen as a sound investment, with prices continuing to rise in good locations," said Ingrid Skinner of developer Taylor Wimpey. "This has seen investors … spreading beyond the super-prime market to areas that offer good rental returns in solid residential areas."

It is unsurprising that more property investors are targeting homes in London, given that rents, currently at an all-time high in the capital, continue to rise.
 

The average rent in London increased by 0.6 per cent to £1,038 per month in May, surpassing the previous high of £1,033 in November, according to latest buy-to-let index from LSL Property Services. This compares with an average of £712 per month in England and Wales.

David Newnes, director of LSL Property Services, said: "The end of spring has brought with it renewed activity in the rental market, and rents have returned to the level seen before the impact of the stamp duty deadline [in March 2012] rush by first time buyers … strong tenant competition is pushing up rents as a result.

High rents and rock-bottom savings rates are preventing many people from being able to save for the larger deposits banks now require to buy property. Consequently, fewer tenants are able to leave the rented sector.

But it is not just involuntary renters that are adding to demand, particularly in sought-after areas. Many would-be homebuyers are opting to rent as they adopt a wait-and-see approach to the property market in-light of the recession and wider eurozone crisis. 

This means that the high number of people looking for a house or flat to rent in Little Venice, Maida Vale, Swiss Cottage and other desirable areas, is unlikely to wane anytime soon.

High Demand for Property for Sale in Fitzrovia

Despite the economic crisis and eurozone woes, the booming property market in London shows very few signs of slowing, particularly in prime central London were property prices are at a record high.

The latest data produced by CBRE shows that the average price of a home in prime central London has appreciated by 35 per cent over the last three years and is now 16 per cent above the 2007 peak.

Furthermore, the property group estimates that the average price of a home in the heart of the capital will appreciate by six per cent this year in stark contrast to the rest of the UK.

The property market in London is ultimately being supported by rising demand from national and international homebuyers, while housing supply is being restricted by a lack of new build homes. This has created a shortage of property for sale in Fitzrovia, Chelsea, Kensington and Marylebone, among other desirable places in London. 

 

"An acute stock shortage and unprecedented buyer demand in prime areas is helping to underpin prices by as much as 10% in the last 12 months as many buyers compete to take advantage of excellent yields and prospect for strong capital growth," said Andrew Ellinas, Director of Sandfords.

Family homes are generally the most desirable properties in London, which will explain why there are very few houses for sale in Fitzrovia or Chelsea, or any other sought after area with easy access to top schools, established infrastructure and excellent transport links. 

 

"London's time-zone, infrastructure, education system and the language help make it the top choice location for a trophy asset," said Mark Collins, head of residential, CBRE.

He added: "London's limited source of developable land means that supply will almost never satisfy demand."

Nevertheless, flats for sale in Fitzrovia and other desirable areas are also in great demand, from both owner occupiers and property investors seeking to cash-in on high tenant demand and rental values. 

 

 

 
According to Homelet, tenants in London are now paying an average of £1,187 a month to rent a home, which is much higher than those living in rented homes in other parts of the UK who are paying an average of £653 per month in rent.

HomeLet's Managing Director, Ian Fraser, explained: "There's been a steep increase in the number of young people and families renting a home due to being unable to secure a mortgage."

Unsurprisingly, with rents rising, more landlords are adding to their residential property portfolios, research by Paragon Mortgages shows.

According to the specialist buy-to-let mortgage lender, during the second quarter of 2012, landlords' property portfolios increased to an average of 14.1, down from 12.9 in the first quarter of this year. This is also an increase on the second quarter of 2011 when the average portfolio size was 12.5 properties.

A fifth (21 per cent) of landlords who took part in the quarterly Private Rented Sector (PRS) Trends Survey, said that they were planning to add to their portfolios during the third quarter.

John Heron, Managing Director of Paragon Mortgages, said: "The fact that landlords are planning to make further investments in their property portfolios is positive news. It shows their appetite to grow their business to meet the on-going demands from tenants and demonstrates the viability of the UK's PRS."