Barclays report names Camden as an investment hotspot for HNWIs for the next five years, with average house prices set to rise almost 34 per cent by 2021. But can we predict the result of next week let alone five years into the future?


1st June 2017


Ham & High Property

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Camden named amongst top five property investment hotspots, but London prime property market remains hard to predict

By Frankie Crossley

Camden is fourth in a list of property investment hotspots across the UK, with prices predicted to rise 33.9 per cent over the next five years.

The borough placed behind Richmond upon Thames, St Albans and Three Rivers.

The Barclays UK Property Predictor indicated prices would increase at a rate of 6.02 per cent a year..

London as a whole is predicted to see an average annual increase of 2.27 per cent, or 11.88 per cent by 2021.

As for the UK as a whole in the next five years, Barclays expects the average annual price increase to be 1.31 per cent a year, or 6.1 per cent by 2021.

The report estimated a nationwide price rise of 6.1 per cent by 2021, bringing the average property value to just shy of £300,000.

Average house prices are expected to rise to £290,714, up £16,714 from today’s average.

38 per cent of high net worth investors (HNWIs) anticipate a price hike in the north of the country, spurred on by high employment, increasing average earnings and promising business start-up rates outside the capital drawing entrepreneurs looking to make better profits than overhead heavy London.

Not often the focus of housing optimism, millennials are purportedly behind the predicted buoyancy of the investment market according to Barclays, that’s provided they have refrained from splurging on avocado toast and have a cash to splash.

Property made up 41 per cent of the portfolios of those surveyed, 18 per cent more than over 55s.

Younger HNWIs were also more optimistic, with 75 per cent aiming to increase the proportion of property in their portfolio by 2021. Just one in 10 over 55s said the same.

The bank of mum and dad is clearly paying dividends to well off property pundits who benefit from a plumper purse. Indeed, young HNWIs were more likely to own more than one property than their older counterparts.

The rental market is prime property for millennial investors, with 65 per cent of those looking to buy doing so in anticipation of rental rises.

23 per cent said they would use a buy-to-let mortgage to fund procurement, in contrast to just 7 per cent amongst older investors. Just under half (48 per cent) of their annual income was generated from rent.

Dena Brumpton, CEO, Wealth & Investments at Barclays, said: “It’s encouraging to see that property is still viewed as an important part of the investment portfolio with high net worth investors typically owning three properties and over a quarter planning to buy property because they believe that it offers long-term investment security.”

Camilla Dell, managing partner and founder of Black Brick Property Solutions is less encouraged. “I would say [this] is quite a simplistic way of looking at the market because the London property market is not homogenous; different parts of the market will behave and do very different things in the next five years,” she said.

“Savills are actually predicting Prime Central London growth of 21 per cent over the next five years cumulative, so quite a bit more than what Barclays’ price predictor is showing. Knight Frank are suggesting that east London will increase far more than more traditional west London and Prime Central London postcodes. So there’s quite a big discrepancy in their data.”

Unfortunately, the buying agent is also less convinced that Camden will perform better than elsewhere. “I’ve seen lots of research around HS2, Crossrail 2, east London because of all the technology companies investing there but I can’t say I’ve come across anything that says Camden is a hotspot,” says Dell.

Instead, Dell offers that the most growth will be seen in the market below £1 million outside Prime Central London. “That’s where we see the most growth happening over the next five years where we still continue to see supply and demand in balance and first time buyers competing with investors.”

Predicting the future in today’s turbulent market is quite the challenge given the number of known unknowns: Brexit and next week’s General Election to name but a few, and agents will no doubt be reluctant to put figures on future sales in a market which is already suffering the consequences of confusion and uncertainty.

“Most forecasts actually are predicting that London will flat line over the next two years because of uncertainty over Brexit,” said Dell.

“Actually, the market could fall in certain areas and certain price brackets if we suddenly see large numbers of people leaving the city. Potentially we might see price falls in certain parts of the market; that market between £2,000,000 to £5,000,000 is particularly vulnerable.”

Barclays’ report is the latest in a line of optimistic property reports which agents claim have no stake in the reality of a market encumbered by sluggish sales and slashed asking prices as a result.

“Sellers in the current market are having to cut their asking prices in order to get people in through the door,” explained Dell. “We see that more and more, particularly on properties priced from £2,000,000 upwards in central London. That’s been the part of the market that’s been the most susceptible to things like Stamp Duty increases.”

The very top end of the market is a “micro market” that operates independently and is less susceptible to political and economic fluctuations due to the availability of capital to buyers in the £20,000,000 plus market.

As for the future, Dell was cautious rather than pessimistic. “I think in the next two years there’s a lot of uncertainty because of Brexit which is likely to affect London more than any other market,” she said.

There is a silver lining to the great Brexit stormclouds brewing in Brussels, however. “Potentially that uncertainty brings opportunities for buyers because they can take advantage of that and that’s certainly what we’re doing at the moment for our clients.”

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