London property prices may be stalling at the moment but for those who had the foresight to acquire investment properties around a decade ago the capital’s market has proven hugely profitable. Recent research compiled by Hamptons International indicates that a third of London property sales completed this year saw the seller realise a sales price of at least twice the value initially paid. The average time the property had been held for between being bought and sold was nine years. That equates to a return of over 10% per annum even without considering rental income in the case of investment properties.
However, it looks as though, at least temporarily, the boom times have come to an end. Separate research from online estate agent eMoov showed demand for London properties was down a whole 25 percent over 2017. The slide in buyers looking at London properties is being put down to affordability after so many years of continuous steep growth in prices.
Buyers who realised the most consistent profits on the sales price of their property were those in the Kensington and Chelsea borough. A massive 45 percent of sellers doubled their initial investment on its sale. That equated to an average profit of close to £1 million, at £940,494.
However, profits in the area were boosted by the fact that many owners had added value to the properties through further investment in renovation and extensions. Nonetheless, the larger part of gains were purely the result of growth in market prices. Hamptons’ head of research Johnny Morris commented that with the London property market having had a sluggish 2017, the bulk of gains come from growth realised over previous years.
On a nationwide level, sellers also realised a solid average profit of £92,466 on home sales. 92% of those who sold a property over 2017 did so at a profit on their buying price. Back to eMoov’s research and the company highlighted the significant variation currently visible in the health of the UK’s property market.
Regions such as Solihull in the West Midlands saw demand for properties increase by 65% this year with Bristol, Rugby, Edinburgh and Glasgow also performing very strongly. Aberdeen saw the steepest drop in demand as the toils of North Sea oil industry have bitten deep into the area’s economy. The oil industry was the driver of soaring prices over the past couple of decades and its sharp slump has been reflected in an equally sharp reversal of property prices and demand.