Many of these homeowners in prime Central London have benefited from considerable capital growth and in many cases owners have been pleasantly surprised to find out the current value of their second homes. Sales of such properties are in many cases helping provide a financial cushion to those who have lost their jobs or seen a considerable reduction in income. Owners wishing to upgrade their main residence realise that the sum they can now achieve for their pied á terre could make a real impact on their budget.
In addition, investment savvy owners with buy to let properties in prime locations are selling up and reinvesting the cash in areas which they feel have greater growth potential, for example, selling in Shad Thames and buying a new investment in Wapping, or selling in Maida Vale and buying in Kensal Rise. Studios and one bedroom properties are in some cases generating low yields in light of new high values, and are unlikely to rise beyond the £500,000 price bracket. Consequently, owners are opting to sell while prices are strong and buy into an area where they will receive a stronger rental yield and which has considerably greater capital growth potential.
The shortage of smaller, less expensive properties has been a major issue in the overall lack of supply in recent months, holding back first time buyers and blocking movement further up the ladder. An increase in second home sales is helping to satisfy this high level of housing demand at the lower end of the spectrum, below the £1 million mark, which is boosting Central London’s first time buyer market.
James Hyman, partner for residential sales at Cluttons, said:
“There are a number of factors driving an increase in supply at the lower end of the market, which will help unlock stagnation further up the ladder. The exceptional demand for smaller, more affordable properties in recent months, as buyers are increasingly priced out of the market for larger homes, has resulted in remarkable price growth. This is tempting owners to raid their piggy bank homes and monetise their assets, using the cash to secure their personal finances, help upgrade their main residence or reinvest in a higher yielding buy to let property.”
Have your say on this story using the comment section below