I want to look further from the station to find more space, but how will this affect the value of my property if the market changes?
This was precisely the question I was asked whilst having a catching up with an old friend earlier this week, and an excellent question which is well worth addressing. So let’s first state the obvious. Being close to transport is good. Typically, buyers like properties that are close to transport and properties that are located within a 7-8 minute walk from a station also tend to hold their value. Hence investors and developers tend to be a lot more cautious when it comes to putting their money into properties further out than this.
However, I told my friend that a big factor which has contributed to the rapidly increasing prices of the last few years here in London is the shortage of supply. And what do people do when there is not much on the market? Look further out. When in the position of buying and faced with the option of a cramped property relatively close to a transport hub, or a much larger place that is further away from a station, buyers compromise. Suddenly, that 15 minute trek seems much more do-able – especially in a market like London where buyers are typically stretching themselves to get on the property ladder in the first place – and have to compromise on something unless their budget is unlimited!
And what happens to prices as a result? We know that centrally located properties tend to increase in price steadily. However, what we have seen in the last few years is that when supply is restricted the prices of properties further out actually increase more rapidly in percentage terms, as they play catch up with with the more central ones. Properties further out have gone up at phenomenal rates over the last three years. Naturally, should the market be flooded with properties the price increases could be liable to plateau as buyers can afford to be more picky in terms of location.
Ultimately, investing in property in a market as buoyant as London is generally a wise long term decision wherever you buy. As always there is no right answer or wrong answer, it depends on circumstance – but the big factor when considering whether to purchase a property closer or further from transport – when looking from a price perspective – really comes down to how long you are planning to keep the property for. I advised my friend that were he only planning to keep the property for just a couple of years before upsizing or moving elsewhere, it would probably be better to purchase close to the tube station in the location he was looking at, as this would leave him less vulnerable to any short term volatility in the market. If he was looking to keep the property for longer, say 5-10 years as a long term investment, if he looks further afield not only is he likely to get considerably more for his money, it is highly likely to be a shrewd decision financially.
As always if you are eyeing up an investment and would like a second opinion do get in touch on 020 3397 2099 or drop me a line.Richard Thompson