Home prices in east London surge in 2015
The central borough of Westminster, which includes the neighbourhoods of Marylebone and Mayfair, had zero price growth; Kensington and Chelsea saw a 4.3% gain
Madrid
HAYLEY Johnson, a 37-year-old retailer, had planned to sell her rental property in Plaistow in east London. Soaring values have made her think twice.
"The area is starting to have that up-and-coming hipster feel," she said in a telephone interview from her home in the London district. "Given the jump in value since buying and prospective price growth, I'm now in two minds."
Home values in the borough of Newham, where Ms Johnson's rental property is located, jumped 22.1 per cent last year, the most in London.
The central borough of Westminster had zero price growth and Kensington and Chelsea registered a 4.3 per cent gain. The median house price in London climbed about 13 per cent in December from a year earlier to £431,053 (S$874,000), according to an analysis of Land Registry data by Bloomberg.
Government measures to aid first-time buyers and a planned increase in the transaction tax on second homes and rental properties have fuelled buying by both homeowners and professional landlords, particularly before the higher tax goes into effect in April. High prices in the centre have pushed both types of buyers to seek better deals further afield.
Prices in Waltham Forest surged 21.9 per cent in December from a year earlier and values in Hackney, near the heart of the city's budding technology industry, jumped 19 per cent, according to the data.
Westminster, which includes the neighbourhoods of Marylebone and Mayfair, was the only borough that had no price growth. The only decline was a 3.3 per cent drop in the City of London financial district.
Plans to increase the stamp duty charges announced in November led to a surge in inquiries from investors looking to buy in the UK, according to a survey published by the Royal Institution of Chartered Surveyors on Jan 21.
The increase will cost landlords who purchase after April an average of 11 months rental income, according to an estimate by Countrywide plc, the United Kingdom's largest real estate agency.
Average rents in the capital rose 11 per cent over the last 12 months to £1,596 a month, double the rest of the UK, according to a report by Homelet, the UK's largest reference- checking and rentals insurance company. It found that 64 per cent of landlords in Greater London expect to raise rents in the near future.
"There's likely to be a few lumps and bumps along the way as landlords get to grips with and adapt to the changing environment," Johnny Morris, head of research at Countrywide, said in an interview.
Most landlords view property as a long-term investment and capital growth in the up-and-coming areas will be enough to absorb the increase over time, he said.
"The new tax has definitely urged buyers to rush in before April," said Ms Johnson, who has an offer that is 50 per cent more than what she paid for the two-bedroom apartment in 2007. "That in turn will be good for price growth which will be good for me." BLOOMBERG
