Welcome to the very first article of The East London Property Blog. I’ve toyed with a few different ideas for the first article and none seemed right for the launch, and then came the Idea to write about how the East London property market has been coping over the last few years, the dreaded covid years. So here I am writing this article on the night of new years eve which requires several hours of research, hoping to post on the first day of the year. Well done Abul, could’ve thought of that earlier.
The sales market
Anyway, now that I’ve stopped babbling, let’s take a look at the sales market in East London. I need to throw out a few disclaimers first; for my examples I’ve chosen to use E postcodes only even though LBBD, Havering and Redbridge (IG and RM) are considered East London, However I didn’t have the time to extract all the data for it but I will be making reference to it from my personal experiences. The house price data has come from the Land registry website. Second Disclaimer is that I downloaded the data on the 31st of December 2021, therefore the data for 2021 will likely not be fully accurate as it usually takes a few months to update, however the averages will be a good indicator for this article. In this article I will be discussing the sales and rental market and will be analysing the overall prices, averages and number of transactions.
So let’s now take a look at some stats:
As you can see, From 2019 (which was pre covid), to 2021, the total value of property sold has almost halved. However if you look at the Average Prices tabel, you will see that the average price of property has actually increased slightly every year while the number of transactions have gone down steadily.
So let’s explore some of the reasons for our findings. Firstly regarding the total values, in March 2020 we saw almost all industries come to a halt, briefly. This did affect the property market massively, which is one of the reasons we saw the stamp duty holidays brought in by the chancellor Rishi Sunak. This got the market moving but of course it would have been very hard to match 2019, imagine what would have happened without this great incentive to buy property, I bet you’d rather not.
Secondly, although the average prices have risen the number of transactions have fallen. Traditionally this happens when prices rise. After lockdown, many people wanted to move, for a change of scenery, and for many it was a move from a flat to a house. This meant many people were moving out of the E1, E2, E3, E14, postcodes. Not having to work from the office meant many people did not have to be that close to work, which led to people moving further away from central London. This of course meant most areas with houses went up in value and inner city London areas like Tower Hamlets and Hackney have actually seen a dip in prices. As you can see from the individual postcode table you will see that most of the postcodes show that the average price actually went up with the exception of a few. Some went up in 2020 and then went down in 2021. This can happen when there is an influx of new builds in an area, like E16, where there is massive amounts of new construction happening on the coast of the Thames like the Royal Wharf development. These properties are priced much higher than the average property in the postcode before which may have pushed the average high in 2020, but then in 2021 the average went further down than 2019 even though the number of transactions were almost double. I anticipate this going up again soon as there is still a lot of new construction taking place in the area.
Now if we spend a little time looking at the table with the total number of transactions with individual postcodes you will see that overall most went down progressively after covid hit. With some postcodes like E20 having as little as only 15 sales after having 867 the previous year. Mind you, E20 is a brand new postcode only existing since 2011 just before the olympics, residing in stratford where there are only new build properties, therefore it is likely that we will see another spike soon, as there are still new buildings popping up in E20.
However, the majority of the other postcodes saw a big drop, apart from E7 which saw a slight increase and E16. The interesting thing about E16 is that the number of transactions almost doubled in 2021 as I mentioned earlier, while we saw the average price go more than half. Like I said, when prices increase you will see transactions slow down and when prices go down the transactions go up.
This is why I believe people will and should be investing in E1, we’ve seen a massive drop in average price but also a massive drop in transactions. When in fact people should be actually investing in E1 right now. The prices are low and I don’t expect them to go much lower. It’s one of the cheapest inner city areas to buy in right now. Although the average price is 844k, in fact you can buy 1 beds for as low as 285k, 2 beds for as low as 320k and 3 beds for around £380-400k. The rents of which are around £1300, £1800 and £2400 pcm respectively. All these properties would have been around £50k higher in recent years like 2016, and I believe soon they will hit those numbers again.
It was harder to find stone cold stats for rental but my personal experience working in an East London Sales and Lettings agency was that in 2020, soon after the lockdown we saw a massive drop in rents. The media says up to 20% drop, in some parts we saw up to 30% and that is partly due to Central London flatlining briefly and also where some properties were actually overlet. Also due to the initial shock factor of the covid, we saw many international tenants from different parts of Europe fleeing the country, leaving their deposits and wanting to be near their loved ones. This of course created a massive vacuum in the rental market. Since then we have seen a bit of a rollercoaster ride where the market has been going up and down and after the summer of 2021 I believe we have almost come back to normal.
We’ve seen many renters move to more rural areas like Barking, Seven Kings, Gants Hill and so on, and in areas like this, the change in rent was almost unaffected over the last few years, in fact some places it went up.
Whats coming in 2022
So, what’s to come in the next few years? As you may know the Bank of England base rate has gone up from 0.1% to 0.25% after a very long time. This is reflective of inflation, which is probably up much more than 0.25%. With inflation we will definitely see the prices of property go up again, some experts say up to 10% market wide. If you are looking to buy property in a London area, I would advise buying in E1. In later articles and blogs, I will share individual property adverts that I think are great investments in East London.
Well that’s where I’ll wrap up my first blog/article. If there’s any topics you would like me to write about please do reach out to me and I hope you enjoyed this one.