Prices in London have recovered from economic downturn, led by outer boroughs
House prices in London have recovered since the financial downturn with prices in some locations doubling and outer boroughs becoming key growth areas, according to new research.
The average house price in Greater London has increased by 59% from £362,641 in 2009 to £578,381 in 2016, compared to a growth of 31% for England and Wales as a whole, the research from Lloyds Bank shows.
House prices in the City of London have doubled since 2009 to £908,759, closely followed by the borough of Waltham Forest which also had a significant increase of 97% to £433,105, while the 2012 Olympic Games are credited with helping growth in some locations.
Tower Hamlets has performed the worst since the financial crisis, with average house prices increasing by 54% between 2009 and 2016. Even though this is below the overall increase for London, it is still a higher rate of growth compared to the rest of England and Wales.
London’s prime boroughs of the City of London, Westminster and Kensington and Chelsea recorded an average increase of 80% between 2009 and 2014 but in the last two years have seen little growth.
For example, prices in the City of London nearly doubled from 2009 to 2014 from £455,020 to £894,046, a rise of 97%, with prices up 86% in Westminster and 74% in Kensington and Chelsea. Since then prices have hardly moved with prices in the City of London and Westminster rising by only 2%.
In the last two years, the largest growth areas are from London’s outer boroughs with an average growth of 19%, compared to 4% for prime boroughs and 12% for inner boroughs. Nine out of the top 10 growth areas over this same period are within outer boroughs with an increase in house prices between 25% and 32%.
Newham and Barking and Dagenham, the two boroughs most impacted by the downturn, are now the areas which have seen the biggest increase in house prices in the last two years. The report says growth was helped in part by the regeneration of this area as a result of the London 2012 Olympic Games.
Newham has seen average house prices increase from £269,529 in 2014 to £356,638 in 2016, a rise of 32%, with Barking and Dagenham also recording a rise of 32% to £285,129.
‘The financial crisis saw average house prices in London generally remain stable during 2007 and 2009. Following the crisis, the growth in average prices in prime boroughs outpaced other areas in London by nearly double to create its own distinct market,’ said Andy Mason, mortgage director at Lloyds Bank.
‘More recently, our analysis is showing house price growth in outer London boroughs is increasing at a greater pace than inner London boroughs. Average house prices in the most expensive areas are starting to flatten, whereas London’s most affordable areas are showing healthy growth,’ he pointed out.
‘A possible explanation for this is the ongoing legacy from the 2012 Olympic Games and that outer borough areas like Newham will benefit from the Crossrail link to the City due for completion at the end of 2019,’ he added.