Sadiq Khan has been handed the keys to City Hall with what is the biggest personal mandate in British political history.
Affordable housing was a key theme of Khan’s election manifesto amid a London mayoral campaign dubbed a “referendum on housing”.
According to Land Registry data, the average price of property in the capital is now a staggering £534,785, compared with £189,901 across England and Wales.
The housing market is undoubtedly one of the greatest challenges facing the capital. The new mayor has pledged that half of new housing construction in London should be affordable to people on average incomes. His predecessor, Boris Johnson, held a poor record of just 6,856 affordable homes built in 2014-2015. Some London boroughs, such as Richmond upon Thames, built just a handful. The City of London managed zero.
The definition of affordability is itself highly controversial, with some “affordable” homes having a price tag of £873,000 – more than 30 times the annual average UK wage of £27,600. So this poses the question: is it possible to buy in London on an average salary, and which boroughs should you look to buy in?
Improved transport links and lower property prices in comparison to the rest of the capital are, in my opinion, good reasons why south-east London offers an opportunity for first-time buyers. This was illustrated at Andrews & Robertson’s April auction.
Take the two-bedroom ground-floor flat with a garden in Plumstead, SE18, that sold for £270,000. Plumstead, in the Royal Borough of Greenwich, was gifted by -William the Conqueror to his half-brother Odo after the Battle of Hastings in 1066. In more recent times, notable residents have included rapper Tinie Tempah and former boyband members Marvin Humes and Lee Ryan.
More importantly, Plumstead will be within walking distance of the new Woolwich Crossrail station, with direct trains to central London. The current commute time is 30 minutes to Cannon Street. Given the recent gentrification of neighbouring areas, and the resulting price increases, I would predict Plumstead to follow suit.
Forest Hill, SE23, in the borough of Lewisham and next to popular East Dulwich, is home to the Horniman Museum, which has one of the most varied collections of taxidermy in the northern hemisphere. If that isn’t enough to tempt you, the 10-minute commute to central London should. A four-bedroom purpose-built maisonette sold for £268,000 at our April auction.
Over in South Norwood, SE25, a two-bedroom self-contained flat with loft space opposite Selhurst Park football stadium sold for £255,000. The area was once home to Sir Arthur Conan Doyle, and local settings inspired his novels. Nowadays the area has a bustling high street full of shops and cafes, with fast connections into central London, making it increasingly popular with young professionals.
Property usually enjoys a “spring bounce” as homeowners shake off the winter blues and think of moving. This year, the effect has been exaggerated by a property-buying frenzy ahead of the introduction of the additional stamp duty surcharge on second properties from 1 April.
According to HMRC, there were 165,400 transactions in March – an all-time high, and 11% higher than the peak of 149,000 in January 2007. Our first two auctions of 2016 demonstrated this surge in demand, producing 85% success rates. Our April auction raised £22.1m, improving our year-on-year total by 50%.
The market calmed and prices eased after the stamp duty deadline, but the recent pattern of strong employment growth, rising earnings, low borrowing costs and constrained supply should keep the demand/supply balance tilted in favour of sellers and maintain pressure on price growth in the quarters ahead.
It will be interesting to see if Khan stays true to his election pledge on affordable homes. And with the mayor having influence over planning rules and the ability to block developments that do not comply, the property industry could be in for a tough time in the months ahead.
However, a target of 50% will be a significant challenge given the high cost of land in the capital and there is a risk that squeezed developers will instead sit back and wait. But for those with available funds, and a willingness to roll up their sleeves, the auction room remains an ideal place to get a foot on the first rung of the housing ladder.
Robin Cripp is chairman and senior auctioneer at Andrews & Robertson
