We seem to have been here before as we see that London is powering ahead with house price increases of a fifth over the last twelve months. Within the 32 London Boroughs the average home now costs £499k, creating an enormous gulf over the national UK average house price of £265k.
The knock on effect on rental yields in the capital means that both professional landlords looking for income and private investors looking for a pension have found that they are now relying on capital increases for a profit from their investment. This is of limited use when ongoing revenue is being caught, and of less use still if and when the Bank of England decide to increase the interest base rate from it’s current historic low of 0.5%
A new report for totallymoney.com indicates that average gross yields in Kensington are a mere 1.6% where the average priced property costs an extraordinary £2.25m. In contrast, the S1 postcode in Sheffield yields 11% from an average price of £70k. While capital growth will be limited the gross yield make the northern proposition an attractive one.