Islington has long been the bellwether for housing markets across Inner London. Its clientele, many of whom work in financial services in the City, are attracted to some of London’s most sought after listed squares that sit alongside luxurious, glass penthouses. Further South, the arrival of Crossrail marks Farringdon as one of the best-connected stations in the country. But all this comes with a price tag. A quarter of homes sold in the area cost over £1 million, making Islington the 8th most expensive borough to live in the capital.
Sales
Islington and its inhabitants arefast. Quick to react to marketpressures and wise to economicmovements. Perhaps this is whyprice growth since the pandemichas been strong, at 13% whencompared to 2019.
For this same reason, it could besaid that there has been ratherslow growth this year. Currently,average prices stand around 1%higher than in 2021.
Given the demand for space, andits short supply so close to the citycentre;houses are faringparticularly well in Islington. Costingon average £1,759,100 they’renearly three times as expensive as the average flat at £645,900.
Due to its affluence, properties tendto take slightly longer to be matchedwith buyers here, averaging a timetaken to sell of 63 days. Nine morethan the average across InnerLondon.
A buyer match is usually perfecthowever, this year sellers areachieving an average of 100.5% oftheir asking price, up from 98.9% lastyear and the highest proportion onrecord since 2014.
Once people move to Islington theyrarely stray, 40% of purchases thisyear were from someone alreadywithin the borough. And of those who came from elsewhere, theywere not from far. Almost a quarter(23%) came from the neighbouringdistricts, Hackney and Camden.
Despite the strength of the currentmarket, there are risks on thehorizon.
Interest rate rises in the face ofdouble-digit inflation may start toput limits on how much buyers canafford to pay.
However, the savy demographic ofIslington will know how to confidentlynavigate and deal through anyoncoming challenges. This andcentral London’s historical prowessmeans the market is likely to bebetter insulated than many othercorners of the country.
In fact, we expect affluent areas likeIslington to outperform not onlyLondon but the whole of GreatBritain too.
Lettings
In many ways, the ideal location in Inner London, Islington paints a perfectpicture of its lettings market. Rents in the city centre had been hovering above 30% year-on-year growth over Summer, with august being the first to dipbelow at 29%. Of course, Islington homes have been trailblazing this.
Since Covid, tenant’s priorities havechanged. Requirements for gardenspace and extra rooms remain atthe forefront of people’s minds.
With studios falling out of favour,larger homes have more than madeup for this. However, strong rentalgrowth has meant that tenants areeffectively losing a bedroom in orderto pay the same rent. A twobedroomhome today costing£2,880 pcm is now £150 moreexpensive than a three-bedroomhome last year.
Existing supply issues have beencompounded by tenants signinglonger tenancies as well as moresitting tenants renewing, rather than moving. This has put pressure on Thebusiness-minded landlords andinvestors of Islington have remainedahead of their zone 1 and 2 peerssince 2021. The average gross yieldin Islington has climbed to 4.9%,offering better returns than Zone 1where yields average 3.4%.
The good news for investors is thatwe expect this figure to grow overthe coming years too. While the costof living crisis and rising interest rateswill keep a lid on house price growthnext year, landlords will seek to passon rising costs to tenants throughhigher rents. This is why we forecastrents in London to rise 6% in 2023and 5% in 2024, outpacing houseprice growth.
