Has the long-held mantra ‘location, location, location’ lost its mojo in the capital?
London estate agency James Pendleton believes it has, with its research suggesting that the property itself – and not location – is the key attraction – but this has received a mixed response from other London agents.
The agency, which covers prime London hotspots, such as Chelsea and Fulham, has found that 72% of buyers don’t purchase in the area where they first started house-hunting.
It believes that the type and size of property influences buyers more than its location in ‘post-gentrification’ inner London where it says every area is in demand.
Lucy Pendleton, director of James Pendleton, explains: “In inner London, ‘location, location, location’ has become ‘property, property, property’. In the post-gentrification era, the right home is far more important than where it happens to be.
“Demand in inner London has reached such a critical mass that gentrification is no longer relevant. Everywhere is gentrified, everywhere has ‘come up’. This is giving buyers the confidence to branch out into virtually all residential areas in inner London.
“What we are also seeing is that the premium being charged in traditionally sought-after areas, where prices are typically higher, can no longer be justified based on the local environment alone. Widespread gentrification over the past decade has created a much more level playing field.”
Affordability ‘is a major driver’
But Lucian Cook, Savills head of research, is not sure he wholeheartedly agrees that location is no longer so important. He says: “Much of what’s happened is attributable to supply and demand, and affordability constraints. People have moved into new locations by a range of factors, but affordability would be a major driver.
“We know that the average first-time buyer deposit in London is now approaching £100,000 (£97,513, according to latest Council for Mortgages Lenders data) compared to just £26,224 as a UK average. The average first-time buyer household income in London now stands at over £64,000 compared with around £40,000 across the UK as a whole.
“Clearly, this is a very high barrier to entry in London and constrained mortgage lending means that it’s also very challenging to make a move up the ladder. For new entrants to the market, or for those looking for more space, a move to a cheaper location is often the only option.”
‘People will pay more for a better location’
Harry Buchanan, director of Jackson-Stops & Staff’s Pimlico branch, is a firm advocate that location still is the key driver for buyers.
“There are buyers who will come to us in Pimlico and they won’t want to look further afield even though they might get more bang for their buck,” he says.
He agrees with Mr Cook that affordability does lead to the choice of location. “You marry up location and affordability – I think the two go hand in hand in that you buy the best location that you can afford, but that means location is key,” he says.
If you have a budget of half a million. You will choose the best place you can buy that suits your lifestyle for that price. You could go to Yorkshire and buy something lovely for half a million pounds, but it’s not going to help if you work in London.
“There are people who will buy a one-bed flat in a prime location over a two-bedroom flat in a lesser location if the second bedroom isn’t that important to them. People will always want the best flat they can buy in the best location they can afford.
“Looking at prices in Pimlico since January, the average property is about £1 million, compared with £500,000 in nearby Brixton. The reason we’re worth more is that we’re a better location and people will pay more to be here. I don’t buy into the fact that all of London is gentrified and we’re all on some plateau.”
He adds: “You have three areas within location: your area of London, your neighbourhood within the area and then your level within a street or building. Where you are within a street, whether you’re on a first floor with a balcony or a basement flat that is affected by the Tube will all influence a property’s price. With location, you start large and go macro.”
‘Some buyers are not location driven’
In contrast, Philip Eastwood, partner and head of the London office of The Buying Solution, believes that the property itself is more important than its location.
“People start looking at the property rather than the location – they are more driven by what it looks like. If you want a double-fronted property, for example, you have to look at a number of areas to find it, so some buyers are not location driven.
“London is a selection of villages, each with its own attractive qualities and vibe, and a lot of people will be very open to looking at other areas. I was out with a client and we were looking in numerous areas, but we were looking for the right house. We settled on something which was a larger plot and better value than, say, central London.”
While he dislikes the word ‘gentrification’, he believes that a lot of areas have improved dramatically over the past 20 years, particularly south of the river – Clapham and Brixton, for example.
“There are now more locations in London where people want to live. The cost of London property has gone up inextricably and people are looking in areas where their parents certainly didn’t go and wouldn’t consider,” he says.
“But it is important to look at the surrounding area too. Londoners are addicted to drinking coffee, so if you were looking to buy a property, an area where there is a nice high street, good shops, restaurants, bars and coffee shops - and as soon as a Waitrose is on the map – it will be sought after.”