In the first of a series of stories about the housing crisis in London, Hayden Vernon examines the increase in £1m properties in areas that were once among the most deprived in London
Sales of properties worth over £1 million have increased more than forty-fold in Hackney over the last ten years.
In 2005 four properties in Hackney sold for over £1m for a total of £4.5m. This year to date 171 sales over £1 million have taken place in the borough for more than £220m in total.
The figures, taken from the Land Registry, show the extent of the housing bubble, with the average house price in the area reaching more than £500,000.
Jay Jethwa, manager of Winkworth estate agents in Hackney, said: “We’ve seen an average increase of 13-14 per cent over the last three years, so although these kind of properties are selling for over £1m, they’re quite standard in some sense.”
The increase in £1m properties selling in Hackney is vast when compared to other inner-London boroughs.
Kensington and Chelsea, one of the most expensive places to buy property in the UK, actually saw a drop-off in purchases of houses over £1m by about a third this year. More than 1000 properties were sold for more than £1m in 2005. More than 700 have been sold this year already.
Westminster also saw a slight decrease, from 750 in 2005 down to 610 this year to date.
Jethwa said that agents are currently over-valuing the properties because they expect demand to continue to rise.
“There’s always going to be a shortage of housing. The population’s increasing, life expectancy of people is increasing, so the need of housing is therefore so much more. And in a place such as Hackney, or London in general where you find the highest paid work in the UK, more people are inclined to move to London.
“Because of the demand things are still going to rise, but at a slower rate.”
In the other East London Lines boroughs, property sales over £1m have increased dramatically in the last ten years. In Tower Hamlets more than £115m has been spent on 81 £1 million-plus properties this year, up from 23 in 2005.
Tower Hamlets is also home to the most expensive property bought this year in the Eastlondonlines boroughs, a £4.5m terrace house next to the Thames and St Katherine docks.
The map below shows the properties that sold for more than £1m this year in the Eastlondonlines boroughs.
The trend also continued south of the river. In 2005 just four properties were sold for more than £1m in Lewisham totalling £5.2m. This year to date 45 properties have sold for more than £1m for a total of £63.1m.
Mark Beaumont, director of Beaumont’s Estate Agents said that he was surprised by the figures, as increases in stamp duty mean people are becoming more reluctant to sell higher value properties.
He said: “My personal view is that the gap price-wise between small houses and big houses is narrowing. What I mean by that is that you get more bang for your buck on properties over a million and they’re not going up in value anywhere near as much as properties with lower stamp duty levels.
“I would say to you that that end of the market, properties over £1m, is going to become very, very difficult because of the amount of stamp duty people will have to pay. You might have bought a house 40 years ago for not very much and it’s worth £1.2m now, which is great until you have to sell it and there aren’t many buyers for places like that.”
In Croydon this year 21 properties sold for over £1m for a total of £27.5m up from 7 houses for a total of £9.5m in 2005.
There was also a large number of commercial property sales over £1m this year in the Eastlondonlines boroughs, including 15 buildings that sold for more than £10m.
The cluster of £10m-plus commercial properties sold in central Croydon this year, including the £75m paid by Westfield for the Whitgift Shopping Centre, highlights how regeneration is stepping up in the area.
However, as East London Lines reported last year, not everyone in the area is in favour of the project.