How much can you afford and where?

  • Written by 
  • 10/01/2014
Extra costs to factor into your thinking 3 of 4 Buying a London property: the things you need to k ... 1 of 4

Residents of the United States, please read this important information before proceeding

Please read this important information before proceeding.

Some of the world’s most expensive residential property is to be found in London, in central districts such as Knightsbridge, Mayfair and Piccadilly. However, there are many places within Greater London that are much cheaper and that still benefit from strong transport links to the centre.

Consider, for example, the borough with the lowest average house prices: Barking and Dagenham, in the north-east of the city. It is 10 times cheaper than the borough with the highest average house prices: Kensington & Chelsea, in the south-west. Yet you can catch a London Underground train in Barking that will take you to Bank station, at the centre of the financial district, in just 23 minutes.

It should be noted that, in Barking and Dagenham, average house prices have only risen by around 12 per cent since May 2009, while in Kensington and Chelsea they have risen by 67 per cent3. Nevertheless, there are numerous infrastructure and regeneration projects under way across London that promise to improve the quality of life and accessibility of districts that were previously regarded as poor and unfashionable.

The most significant of these projects is, arguably, Crossrail, a new railway that, by 2019, will run for 118km from east to west – right through the middle of the city. One of the places that will get a Crossrail station is Woolwich in the east of London, close to Canary Wharf and London City Airport. Another is Whitechapel, close to the financial district, the creative quarter of Shoreditch and the government-backed technology quarter known as Tech City.

These places are still relatively cheap but look set to undergo a transformation and, as a consequence, their property prices are already rising (although this trend will not necessarily continue).

Choosing where to look for a property of your own will obviously depend on your particular needs and those of your family. If, for example, you are thinking of buying a home for your child to live in while they attend university then you may wish to consider looking at places close to their campus, or at cheaper places that are some distance away but still well-connected by rail or bus routes.

If, however, you want a London property that could act as an investment while your family uses it as a second home, you should consider how its location will look in the future – and, crucially, how well-connected it will be to the centre of the city.

The first part of the Crossrail line will not open until 2015, yet house prices within a 10-minute walk of the central stations are already outperforming their local markets, according to Knight Frank’s Crossrail Index4.