Buy-to-let demand predicted to soar with each new generation
- Fewer than half of those born in 1990 will own their own home by age 40 (Savills)
- Custom House Crossrail station area prices to rise by 40.5% by 2020 (JLL)
- Riverside buy-to-let apartments available from £390k (Surrenden Invest)
Newly released data from Savills has thrown into stark relief the pace at which home ownership is falling in the UK. Issue three of the Residential Property Focus 2015 reveals both the rate at which home ownership has fallen since 1960 and the rate at which it is projected to go on falling for those born in the 1980s and 1990s.
According to the Savills figures, 53% of those born in 1960 could look forward to owning their own home by the age of 30, rising to 71% by the age of 40 and 79% by the age of 50. This compares to just 35% of those born in 1980 and 26% (projected) of those born in 1990 being able to own their own home by age 30. And it is clear with these figures that it is the 1990 cohort that is set to suffer the most. By age 40, the majority of the group will be in rented accommodation, with just 47% predicted to own their own home.
Of course, falling homeownership levels aren’t bad news for everyone. The figures paint a promising picture of a profitable future for the UK’s buy-to-let sector. Jonathan Stephens, Managing Director of Surrenden Invest, a London-based property consultancy specialising in high yielding buy-to-let investments, explains,
“Quite simply, falling rates of homeownership mean rising rates of renters, so the growing situation in the UK creates a substantial opportunity for those looking to make their money work for them by investing in residential real estate. Of course, alongside this it is important to remember that the area in which you invest is important too – a few miles difference, particularly in major cities like London, Manchester and Liverpool, can have a big impact on yields.”
This is particularly true of London properties. House prices are projected to rise by 21.5% in central London and by 18.2% in outer London over the next five years, according to Savills. Yet figures from JLL predict rises of nearly double those averages by 2020 in many areas of the capital, all good news for those able to buy.
Yet there are even more substantial profits to be found for those savvy investors who look carefully. Property around the new Custom House Crossrail station, for example, is projected to rise in value by 40.5% over the next five years, based on the JLL forecasts, with the same area expected to achieve rental price growth in excess of 28% by 2020.
Royal Victoria Residence is located just minutes from the planned Custom House Crossrail station. The superior one, two and three bedroom apartments, due for completion towards the end of 2017, will benefit from premium amenities, including a 24-hour concierge service. Curved balconies, views of the Thames and Canary Wharf and sleek interiors are bound to prove popular with the demands of modern tenants, making this one of London’s key riverside investment opportunities over the coming years. Prices range from £390,186 to £854,459.
Soaring levels of investment in London’s Royal Docks are also likely to impact positively on property prices over the coming years. Surrenden Invest’s Jonathan Stephens comments,
“The revitalisation programme for the area around London’s historic Royal Docks is massive. There are some vast mixed-use projects underway and others still under discussion. Royal Wharf at £3.5 billion, for example, and Silvertown Quays at £1.5 billion are going to have a huge impact on local employment levels and economic output growth. Altogether some £22 billion of investment potential has been identified in the area.”
The intense redevelopment makes the Royal Victoria Residence an even more exciting prospect for buy-to-let investors. Certainly with the rate of home ownership projected to continue falling over the years ahead, it will be developments like this that make up the future of London’s housing market.
For further details, visit www.surrendeninvest.com, email info@surrendeninvest.com or call 0203 3726 499.