London landlords looking to make a killing in real estate should avoid the city center and head for the suburbs—that is, if they’re not already too late.
Such is the picture to emerge from London’s latest property figures, which suggest that the city’s notoriously expensive inner west may have peaked, while prices in humdrum suburbs are going through the roof. The new figures, shown in a set of visualizations by data scientist Jay Patani, refine the picture of a city being turned inside out, with the poorer residents that once dominated the inner city being scattered to the outer districts.
A recent report from Centre for London showed that poverty was growing fastest in suburban areas that, while not exactly wealthy, had not historically been known as centers of deprivation. These new maps also confirm another trend: as less wealthy Londoners scatter from the city core, they’re pushing up prices.
In the above map of price rises, a very different picture emerges. Prices in the innermost boroughs have actually slumped; in Westminster, for one, they’ve fallen by a hefty 8.2 percent. These figures could be harbingers of a possible future trend that is both feared and desired—a potential property crash, at least in the luxury market.
Meanwhile, London’s cheaper properties are getting ever more unaffordable. The highest average price rise—a galloping 16.5 percent—is in the historically low-income borough of Newham, home to London’s Olympic Park. The western fringes of Newham, in particular, have been on the up for a while; they’re an overflow zone for people who can no longer afford parts of now-fashionable Hackney and Tower Hamlets.
What’s arguably more striking is evidence of sharp rises in boroughs further out. This is not just about middle- and upper-income residents returning to the inner city. It may also be about essentially suburban, farther-flung areas becoming the only option for many buyers—already themselves a relatively elite group in unaffordable London.
This shift has altered wealth and house price patterns, but also population density. The northwestern borough of Hillingdon, for example, where housing price rises have been among the most rapid, saw its population grow by 3.7 percent between 2012 and 2014, against a London-wide average growth of 2.7 percent. Another map created by Patani nonetheless demonstrates the limits that are placed on outer London density increases, unless major construction work reshapes these areas.
Take the map above showing house sales by property type. While pale blue dots signifying flats or maisonettes (apartments or duplexes in British English) predominate in Central London, further out these are replaced by terraces (row houses) and semi-detached (twin) homes. This mixture puts a cap of sorts on numbers. You can, as many Londoners now do, install bunk beds, turn a living room into a bedroom and watch TV in the kitchen instead, convert loft space, and maybe even construct illegal “beds-in-sheds” in your garden, but there’s still a limit to the number of people you can squeeze into low-rise housing. Homebuyers seeking better values may be heading outwards, but fast price rises there may well be exacerbated by the limits in outer London on available residential space.