The pandemic’s race for space — and specifically al fresco space — has had a major impact on the value of flats in the capital.
Surprising new figures released today by online portal Zoopla show that London flats, many of which don’t have any outdoor space, have seen no change in their average prices since 2016. This equates to a decline in real terms of 24 per cent.
Their underperformance means this section of the market, while still expensive, offers significantly better value than inner London houses and properties outside London.
“The price of houses has outpaced flats over the last seven years in London, as buyers have prioritised space and the London economy saw weak employment growth after the Brexit vote,” says Richard Donnell, Executive Director at Zoopla.
“The value of houses in the commuter areas around London has powered ahead and has made flats in London appear better value for money — especially for renters looking to buy and faced with steep increases in housing costs.
“Inner London flats don’t come cheap, but they are better value for money,” adds Donnell.
Overall, in terms of the annual price change of all properties across London boroughs, outer London fared much better, with Barking and Dagenham having the highest average annual increase at 3.8 per cent, which works out as a £12,320 price change.
This was closely followed by Havering’s 3.5 per cent increase, up £14,210 annually, and Bexley with a 2.7 per cent increase, up £10,410.
At the bottom end of the scale were boroughs in and around Zone 1, with the City of Westminster seeing the biggest fall, a 1.2 per cent drop and a £12,170 reduction, Kensington & Chelsea second from bottom with a 0.5 per cent average drop and average reduction of £6,220, and Hammersmith and Fulham third underperforming with a 0.1 per cent drop in average prices, or a £550 reduction.
That said, Kensington & Chelsea still retains its crown as priciest London borough, with the average property costing £1,189,400, compared to the lowest priced borough, Barking and Dagenham, where the average home is priced at £337,500.
While nationally, annual house growth has slowed to 4.1 per cent, with prices one per cent lower since October 2022, Zoopla says that the market conditions in March were better than many had expected.
Modest price reductions (averaging four per cent) were taking place as buyers and sellers strike deals but, in general, sales activity has been boosted by the increase in supply.
According to Zoopla’s data, 65 per cent more homes are currently for sale across the country compared to March last year, with the average estate agent having 25 homes available, in contrast to the low of 14 this time last year.
The bottom 40 per cent of the market is particularly buoyant and has seen an increase in sales of five per cent, as first-time buyers get on the property ladder to avoid paying the capital’s rising rents.
With the housing market looking wholly unpredictable over the next 12 months, it will be interesting to see if Londoners fall back in love with the inner city flats that offer them more square footage for their savings.
