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Local insights

The investor's guide to Tower Bridge
Summer 2023

New 21st Century temples like The Shard offer views right out to the Thames Estuary, while the birthplace of the modern English language lies below in Shakespeare’s Globe. Consequently, Tower Bridge is home to some of the most famous landmarks in the UK. Its historic streets run along the banks of the Thames showcasing architectural contrasts between old and new which give homes in the area a global appeal.

With the rebirth of riverside living in London over the past few decades, price growth here has outpaced the London average. The two postcodes synonymous with the Towers (SE1 & SE16) have seen the average home grow in value by 169% over the past 20 years, almost 50% more than the UK average. This means homes here cost an average £647,610 so far this year, over £100k more than the Greater London average.

Due to the nature and stage of the housing cycle we’re in – price growth in central London has been running at a slower pace while the rest of the country catches up. This means price growth across Tower Bridge has been slower than the outer regions in recent years. However, it's likely that in the coming years, parts of central London will return to the top of the price growth league table once more.

Rents in Tower Bridge have mirrored the rest of Inner London by recording record breaking growth. Currently, the average flat here can be let for 9% more than last year, averaging £2,800 pcm. The average house in the area saw slightly less growth at 5%, however it still crossed the £3k mark recently to cost an average of £3,070pcm.

Homes in the capital have always achieved lower yields than those beyond the M25. However, due to recent rental increases, new and existing investors have seen a substantial uplift in their returns. Yields had been closely following wider London trends, hovering slightly below 5% since 2015. So far this year, however, the average home in Tower Bridge achieved a 5.6% yield compared to 5.5% across the city.

For an area such as Tower Bridge, the short game is unlikely to be a profitable option for most. But those willing to look ahead and place their bets on the prospect of capital growth are more likely to be rewarded. As the after-effects of Covid wear off and the exodus from the city reverses, central locations offering the delights of city living are in hot demand once again, just as they were in the run up to 2016.

In the meantime, while mortgage rates are higher than the lows of recent years, rising rents are softening the blow to landlords. Underpinned by some of the highest levels of demand seen in the rental sector in recent years, rental growth across Inner London has been running at double-digit pace for all but one of the past 18 months, elimiating the prospect of lengthy void periods.

Meanwhile the wider market slowdown has undoubtedly tipped the scales in favour of buyers. The proportion of sellers accepting offers below their asking price is returning to normal levels of roughly 50% so far this year, compared to the lows of circa 35% throughout the frenzied market of 2021-22. For investors blessed with a healthy deposit, flatlining prices coupled with rising rents mean there's a widening window of opportunity.

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Visit us 41, Shad Thames, Tower Bridge, London, Greater London,
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