Rapid population growth
London is by far the biggest city in the UK and one of the most populous in the world. It is at the heart of the UK and its economy is so large that people from everywhere around the globe are drawn to it. Consequently, the approximately 9 million people who live in London at the moment are just the start, and many more are expected to move to the city in the years to come.
The latest data from the Greater London Authority (GLA) anticipates that London’s population will grow by at least 50-70,000 people a year going forward.
This is very good news for investors as it means that demand for rental property will continue increasing, and the foundations for the whole sector will be shored up annually by all the new arrivals. Areas like Clapham with outstanding transport links, world-class culture and an unbeatable living environment will become increasingly desirable to the thousands of young professionals moving to the city.
A reliable and mature property market
This is an established and proven market which should inspire confidence in investors. Whereas some regional centres can put up flashier numbers in the short term, the capital instead grows in a reliable way which offers large profits for investors without the ups and downs that can characterise some newer markets. London is a mature prospect which you can rely on.
Savills expects Prime London prices to rise more significantly in the second half of 2021 and end the year with 3% gains, followed by an 8% bounce in 2022. The agency puts this down in large part to the fact that international capital is freed up and easier to move as the pandemic begins to ease, with the expectation that London will be a major beneficiary of this. Overall, they project house price growth of 21.5% by the end of 2025 – a serious level of capital appreciation.
London’s rental market is also in exceptionally good health. According to Rightmove’s Quarterly Rental Tracker for Q3 2021, tenants are returning to city centres in huge numbers following the easing of Covid-19, and London is a major beneficiary of this.
The additional demand is pushing an already strained housing stock to the limit, and rents in Inner London (Zones 1 and 2) have seen an increase of 5.6% in a single quarter. Furthermore, Rightmove reports that competition for flats is up 95%, with three and four bed apartments seeing the most competition - yet more good news for those investing in apartments in London.
The picture improves even more as we look to the future. Savills forecasts that rental growth in London will be the highest in the country and above the national average. Whereas the rest of the country is looking at average rental growth of 17% by 2025, the capital is scheduled to see growth of 19.3% overall, following growth of 5.5% next year alone.
An education powerhouse
London is an academic powerhouse, with the most universities of any city in the UK. Many of these institutions rank highly in the QS World University Rankings 2022, including Imperial College London (7th), University College London (8th) and King’s College London (35th). Nowhere else in the UK or Europe can match the strength and impact of London’s higher education sector.
As well as the quality of its education, students from around the world are also attracted to London due to the city’s diversity, entertainment, culture and history. All of these combined make London the UK’s number one university destination.
The sector generates more than £17bn for London every year and supports over 172,000 jobs in the city. It’s almost 400,000 students includes more than 115,000 overseas students from 200 countries who contribute a net impact of £4.6bn every year. What’s more, almost 70% of students stay in London after graduation, providing a further boost to the housing market.
