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Home , Bermondsey tube station, Central London

RESIDENTIAL RESEARCH

FOCUS ON: 2018

PRICE PERFORMANCE COMPARED CONNECTIVITY DEVELOPMENT PIPELINE FOCUS ON: BERMONDSEY 2018 RESIDENTIAL RESEARCH

At , on the eastern fringe, Amenity the craft drinks industry, a number of FIGURE 1 FOCUS ON: BERMONDSEY British Land has lodged a planning micro breweries and gin distilleries House prices in application for a £4bn development Bermondsey’s cultural offering is diverse. occupy the railway arches from compared Bermondsey is a culinary and cultural focal point surrounded to be delivered over the next decade The White Cube Gallery, one of Europe’s Bermondsey station up to Bridge Indexed 100 = 2009 by some of the capital’s largest regeneration projects. that will include a new town centre and largest commercial galleries, the Fashion station. These factors have steadily 3,000 homes. and Textile Museum, the only UK museum 220 brought more visitors to the area, and Bermondsey Prime Central London [rebase 2009=100] showcasing contemporary fashion, data from shows 210 Stretching between and by Bermondsey’s position at the heart The project will include 2 million square London and 42-seat independent cinema Kino UK to the west and Canada of a handful of large-scale regeneration feet of offices and 1 million square feet of a 62% increase in entries and exits at 200 Prime Central London Bermondsey, are all a short walk apart. WaterUK [rebaseto the 2009=100] east, and covering both projects, which will be accompanied leisure and retail space interspersed with Bermondsey tube station between 2007 190 SE1 and SE16 postcodes, Bermondsey by improvements to the public realm water and green public spaces. A short In addition, Maltby Street Market is known and 2017. 180 walk away, Sellar Developments and is justLondon a 20-25 [rebase minute 2009=100] walk to the City and amenity. throughout the capital and is regarded This trend is expected to continue as 170 Genesis are delivering more of London. as an alternative attraction to nearby the area’s cultural offering and range of 160 than 1,000 homes. It’s popularityBermondsey [rebase has been 2009=100, driven c.m.a. by 1 year]its Development Borough Market. Now synonymous with amenity continues to improve. 150 central location, its thriving culinary and To the north of the district, in the vicinity of One mile to the east of Bermondsey, the 140 cultural scene and its selection of high Bermondsey Station, five large schemes Elephant Park mixed-use development FIGURE 3 Average resale prices in Bermondsey, year to May 2018 130 quality schools. In Bermondsey there are (60+ units) totaling almost 1,500 units have is underway, including almost 2,500 new homes and the largest new park in central 120 nine primary schools and four secondary been granted permission or are in progress London for 70 years. 110 schools rated ‘outstanding’ by OFSTED, (figure 2). These are set to be delivered over 100 the schools watchdog. the next three to five years. On the southern fringe, the mayor and local authorities plan to transform the Old Kent 90 These factors have underpinned house To the south, the New Bermondsey Road. The Opportunity Area 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 prices, which have climbed 114% since regeneration scheme surrounding Millwall Football Club will include a creative will include 20,000 new homes, supported Source: Knight Frank Research/Land Registry 2006 (figure 1). media quarter, a new overground station, by a proposed extension of the Bakerloo House price growth over the coming a health complex, and more than 2,000 Line from to decades is likely to be further supported private homes. (figure 2). The council is also seeking to bring a university to the area, alongside a new cultural institution. FIGURE 2 Bermondsey Pipeline Projects of 60+ private units within 1.5km of Bermondsey station These projects form part of a push by the Authority to address a long-term shortage of homes in the capital. The GLA estimates a minimum of 65,000 new homes are needed per year in order to keep up with demand, yet fewer than 40,000 dwellings were added in 2016/17. In the borough of , official estimates 407 Chambers Wharf suggest 3,089 new dwellings are needed every year until 2026 in order to meet demand, while just 2,412 were delivered during 2016/17. Source: Knight Frank Research/Land Registry 69 151-157 Road BERMONDSEY ROTHERHITHE BERMONDSEY CANADA WATER FIGURE 4 Travel times from Bermondsey underground station 799 63 Alwen Court Porter's Edge 111 Corio

British Land 3,000 TUBE TIMES home masterplan 271 London Square Bermondsey 581 The Biscuit Factory*

SURREY QUAYS 4 7 12 17 41 Old Kent Road MINS MINS MINS MINS MINS (VIA DLR) (VIA TUBE,HEATHROW opportunity area EXPRESS) Elephant Park, 20,000 homes 2,500 new homes

CANARY WHARF BANK LONDON CITY AIRPORT *Solely PRS Source: Molior Source: Knight Frank Research, TFL

2 Please refer to the important notice at the end of this report 3 Transport Outlook The extension in 1999 provided As Britain begins the process of leaving “BERMONDSEY’S POPULARITY a significant uplift to Bermondsey’s the EU, the London property market is HAS BEEN DRIVEN BY ITS transport connectivity. On this line, Canary expected to experience some headwinds PROXIMITY TO THE CITY Wharf is only a four minute journey away, as the negotiations progress. However, while Westminster and Bank are just seven OF LONDON, ITS THRIVING our latest five-year forecast predicts that and 12 minutes away (figure 4). The Jubilee average house prices in London will rise CULTURAL AND CULINARY Line is one of five lines now operating a 24 by a cumulative 13.1% by 2022. hour service during the weekend. SCENE, AND ITS SELECTION OF HIGH QUALITY SCHOOLS.” The extension is still at For the prime London market, higher consultancy stage, but has been supported rates of stamp duty remain the biggest by the . If the new line is impediment to activity levels, though the approved, construction is scheduled to higher rates are starting to be reflected Patrick Gower, Associate start in 2023. in more realistic pricing. [email protected] If you would like further insight into prime residential markets please feel free to get in touch. FIGURE 5 Connectivity: walk-times from Bermondsey underground station

London Bridge

Rotherhithe

Canada Water Bermondsey

Surrey Quays Knight Frank Research provides strategic advice, consultancy services and forecasting to a wide range of clients worldwide including developers, investors, funding organisations, South Bermondsey corporate institutions and the public sector. All our clients recognise the need for expert alk Time independent advice customised to their 5 specific needs. 10 15 20

Source: Knight Frank Research Important Notice © Knight Frank LLP 2018 – This report is published for general information only and not to be relied upon in any way. Although high standards have been used in RECENT MARKET-LEADING RESEARCH PUBLICATIONS the preparation of the information, analysis, views and projections presented in this report, no responsibility or liability whatsoever can be accepted by Knight Frank LLP for any loss or damage resultant from any use of, reliance on or reference to the contents of this document. As a general report, this material does not necessarily represent the view of Knight Frank LLP in relation to particular properties or projects. Reproduction of this report in whole or in part is not allowed without prior written approval of Knight Frank LLP to the form and content within which it appears. Knight Frank LLP is a limited liability partnership registered in with registered number OC305934. Our registered office is 55 Baker Street, London, W1U 8AN, where you may look at a list of members’ names. Focus on , Nine UK Housebuilding The London Review Super Prime London Elms, - 2018 Report - 2018 - Summer 2018 Report - Spring 2018

RESIDENTIAL RESEARCH RESIDENTIAL RESEARCH RESIDENTIAL RESEARCH RESIDENTIAL RESEARCH PRIME LONDON PRIME LONDON UK RESIDENTIAL SALES INDEX LETTINGS INDEX UK RESIDENTIAL MARKET FORECAST MARKET UPDATE Get in touch Headlines May 2018 UK HOUSE PRICE FORECAST TO RAISE OR NOT TO RAISE UK house price growth has slowed Attention is focused on Bank of England rate-setters as they prepare from a peak reached three years ago, There are five main factors at play in the sales seeing stronger growth and activity levels than to deliberate whether to raise rates the highest level in more than nine although the annual rate of change market at present. the traditional property powerhouses of years, though they will still be ultra-low by historical standards. remains in positive territory First, the balance between buyer demand London and the South East, though large and the supply of homes being put up for discrepancies in capital values remain. Economic and housing update for more than nine years. Even if the rate rise Key facts July 2018 doesn’t come this summer, expectations sale, which differs across the country. The market’s political and economic mood Price growth across the UK is expected Every piece of economic data released in are high that there will be one, if not two rate music is a duet of Brexit and future interest Average UK house price growth was to be 1% in 2018, and 14.2% Certainly, the disconnect in some UK towns and the last few weeks has been pored over for rises this year. rate rises. 2% in June, down from 2.4% in May cumulatively between 2018 and 2022 cities between rising demand – on the back of clues as to what it might mean for the Bank What will this mean for mortgage holders? If you’re thinking of buying or selling, stronger economic growth – and muted stock Brexit will continue to create uncertainty in the This report analyses the performance of single-unit rental properties in the second-hand prime central and prime of England’s rate decision on August 2nd. levels, is contributing to price growth. short-term. And while interest rate rises will The prime London sales indices are based on repeat valuations of second-hand stock and do not markets between £250 and £5,000+/ week. For an analysis of the build-to-rent market and the institutional private rented sector Prime central London prices slipped Economists are split on whether the central Many borrowers who have taken out a loan JULY 2018 include new-build property, although units from completed developments are included over time. JULY 2018 In London, price growth over the next in London and the rest of the UK, please see our Private Rented Sector Update http://www.knightfrank.co.uk/research bank will move rates. The table below shows in the last year or 18 months will see no Secondly, stamp duty remains a curb on push up mortgage rates, the rates payable on 0.4% in June, taking the annual five years is expected to be around home loans will remain near historic lows in decline to -1.8% how the data is being interpreted. immediate change to their monthly mortgage transactions. However, in prime central PRIME CENTRAL LONDON PRIME CENTRAL LONDON 13%, although prices are forecast to the short to medium-term. payments, as around nine in ten of all new London, some parts of the market are moving dip this year mortgages and re-mortgages taken out over into positive price growth for the first time in Finally, and perhaps one of the biggest factors | | | Will interest rates move in August? Prime central London index | 5,884.2 Annual change | -1.9% Quarterly change | -0.8% Monthly change | -0.2% Prime central London index 165.7 Annual rental value change 1.1% Quarterly rental value change 1.5% Average UK rents rose by 1% in the the last four years have been fixed-rate deals. nearly two years. The trend is becoming in the market at present are the growing year to June, the same rate of growth affordability pressures in some parts of the STAY SAME RISE UK rental growth is expected to be particularly apparent in areas where lower as in May 14% between 2018 and 2022 prices more fully reflect higher stamp duty country – these will weigh on pricing. Proportion of fixed vs variable rate or would just like some property MAY VOTE 7 2 FIGURE 1 FIGURE 2 mortgages UK, new purchases and re-mortgages charges. Figure 1 The number of new prospective FIGURE 1 FIGURE 2 Figure 1 The number of lettings listings In the lettings market, rental growth has been Decline in lettings listings reverses Positive annual rental value growth returns New prospective buyers rise in June High-value deals hit three-and-a-half year high above £2,000 per week rose 0.5% in the Rents in prime central London rose INFLATION On a more regional basis, the North/South slowing for a year. However, as with the sales buyers in prime central London was 31% Annualised % change in listings by price bracket Annual % rental value change CPI 2.4% for Year-on-year % change Monthly value of £10 million-plus deals in London 1,600,000 8% divide in price growth has narrowed, with market, rental performance is dependent on higher in June than the same month year to June compared to the previous by 0.8% in the year to June, the first June (expected Average mortgage rate (RHS) 12 months, Rightmove data shows. This £1,000 pw + £2,000 pw + £3,000 pw + annual rise since January 2016 2.6%) Variable rate mortgages (LHS) the Midlands, East of England and North West the type of property, as well as its location. last year. Despite a period of political 35% £500m 2% 1,400,000 Fixed-rate mortgages (LHS) 7% uncertainty, the upwards trend highlights 30% reversed a pattern of declines that occurred 15% 1% EMPLOYMENT 25% £400m as more landlords listed their property for 1,200,000 6% the strength of underlying demand as asking 10% Low 2018-2022 Forecasts, May 2018 20% 0% prices rebase. sale after tax changes. The reversal may 5% unemployment 1,000,000 5% 15% £300m -1% 2018 2019 2020 2021 2022 2018 - 2022 10% indicate pricing expectations for some were 0% -2% 800,000 4% advice, please do get in touch. 5% -5% Mainstream residential sales markets Figure 2 The total value of £10 million- £200m not met in the sales market. -3% ECONOMY 0% -10% UK 1.0% 2.0% 3.0% 3.5% 4.0% 14.2% plus sales in June 2018 was £407 million, GDP up 600,000 3% -5% -4% £100m -15% 0.3% in May London -0.5% 2.5% 3.0% 3.5% 4.0% 13.1% the highest monthly total since December -10% Figure 2 Annual rental value growth was -20% -5% 2014. It highlights the strength of underlying -15% 1.1% in June. It was the second successive 400,000 2% North East 2.0% 2.0% 4.0% 3.0% 3.0% 14.8% -20% £0 -25% -6% demand for prime central London property month of growth following a 28-month run HIGH ST SPENDING Retail sales Spending up 2.1% North West 1.0% 2.0% 4.0% 4.0% 4.5% 16.4% 200,000 1% despite a period marked by political of declines. Rental values have strengthened down 0.5% in in Q2, strongest Jul-17 Jul-17 Jul-18 Apr-18 Apr-17 Apr-16 Jul-18 Jul-16 Jul-17 Oct-17 Oct-16 Jun-18 Jun-17 Jun-16 Apr-18 Feb-18 Feb-17 Feb-16 Apr-17 Apr-18 Aug-17 Dec-17 Aug-16 Dec-16 June (expected quarterly rise Oct-17 Jan-18 Jun-17 Jun-18 Jan-17 Oct-17 Jan-18 Jun-17 Jun-18 Mar-18 Feb-18 Mar-17 Mar-18 Jan-16 Jan-17 Jan-18 Feb-17 Feb-18 Aug-17 Sep-17 Dec-17 Nov-17 Mar-16 Mar-17 Mar-18 Dec-17 Aug-17 Sep-17 Nov-17 Sep-16 Sep-17 May-18 Nov-16 Nov-17 Yorks & Humber 1.0% 2.0% 3.0% 3.0% 3.0% 12.6% May-17 May-18 May-16 May-17 May-18 0 0% uncertainty. as supply has declined as more landlords +0.2%) since 2004

East Midlands 2.0% 2.5% 2.5% 3.0% 3.5% 14.2% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Knight Frank Research Source: Knight Frank Research / LonRes / Land Registry explore a sale following tax changes. Source: Knight Frank Research / Rightmove Source: Knight Frank Research West Midlands 2.0% 2.0% 3.0% 3.0% 4.0% 14.8% WAGES Slower than Source: UK Finance expected 2.5% Methodology Statement: East 2.0% 3.0% 3.0% 4.0% 3.0% 15.9% PRIME OUTER LONDON PRIME OUTER LONDON in 3 months £ House price forecasts are based upon time series South East 0.0% 2.0% 3.0% 4.0% 4.5% 14.2% to May In total, some 4.7 million owner-occupiers regression analysis of relevant statistically significant have variable-rate mortgage deals, according South West 1.0% 2.0% 2.5% 3.5% 4.5% 14.2% macro-economic variables adjusted in-house to Prime outer London index | 277.8 Annual change | -4.0% Quarterly change | -1.2% Monthly change | -0.5% Prime outer London index | 171.9 Annual rental value change | -1.8% Quarterly rental value change | 0.7% encompass externalities such as likely risk factors. GRÁINNE GILMORE to data from UK Finance. This accounts for The forecast uses the Nationwide House Price Index Wales 1.5% 1.5% 2.5% 3.0% 4.0% 13.1% Head of UK Residential Research If interest rates rise by a quarter point, it will 27% of all homeowners across the UK (with as a base. Our forecasts assume a Brexit deal, but Scotland 1.0% 1.0% 2.5% 3.5% 3.5% 12.0% with a two year transitional period. Rental forecasts be the first time rates have been above 0.5% or without mortgages). based on ONS IHPRP. FIGURE 3 FIGURE 4 Prime residential sales markets Figure 3 The number of properties FIGURE 3 FIGURE 4 Figure 3 The number of tenancies agreed in Downwards trend for withdrawn properties Viewings per office on the rise Number of tenancies agreed on the rise Lower price band outperforms “ Some 4.7 million Prime central London East 0.5% 1.5% 2.5% 3.0% 5.0% 13.1% withdrawn from sale declined 31% year-on- prime outer London was 17% higher in the Bank of England base rate, 3-month Libor rate, housing transactions Rebased to 100 at June 2017, rolling quarterly Rebased to 100 at January 2017 Annualised % change Annual rental value change by price bracket homeowners have Prime central London West 0.5% 1.5% 3.5% 3.0% 3.5% 12.6% year in June. Properties are often withdrawn average year to June than the previous 12-month period, Knight Frank data shows. The recent £500-£750/week High to low spread variable rate mortgage 8% 3 MONTH LIBOR % (LHS) ANNUAL HOUSING TRANSACTIONS (RHS) 1.5m Prime outer London 0.0% 1.0% 3.0% 3.5% 4.5% 12.5% because buyers will not meet the asking 20% BANK OF ENGLAND BASE RATE % (LHS) 100 150 Prime England & Wales 1.5% 2.0% 2.0% 2.0% 2.0% 9.9% price. The trend suggests asking prices pattern of increases began in October 2017. 15% 5.0% deals, according to 7% “ The political and economic now more fully reflect buyer expectations as 10% 1.2m 80 120 2.5% 6% Raul Cimesa 5% data from UK Finance. mood music of the residential Residential rental markets higher rates of stamp duty are priced in. Figure 4 Rental values between £500 and 0% 0.0% 5% 60 90 £750 per week declined by less than any This accounts for 27% 0.9m market is a duet of Brexit and UK 2.5% 2.5% 2.5% 3.0% 3.0% 14.0% -5% -2.5% 4% Index London 1.5% 2.0% 2.5% 3.0% 3.5% 13.0% Figure 4 The number of viewings per office Index other price bracket in the year to June. It -10% future montary tightening”. 40 60 of all owner-occupiers 0.6m Prime central London* 0.5% 1.5% 2.5% 3.0% 3.0% 11.0% in prime outer London was 18% higher in has been the strongest-performing price -15% -5.0% 3% -20% across the UK.” June than the same month last year. This 20 30 band since the start of the year and reflects -7.5% 2% Prime outer London* -1.0% 1.0% 2.0% 2.5% 3.0% 8.0% -25% reflects the resilience of underlying demand the relative strength of demand for lettings Follow Gráinne at @ggilmorekf 0.3m For the latest news, views and analysis -30% -10.0% 0 0 1% on the world of prime property, visit Source: Knight Frank Research and also the fact that price-sensitive buyers properties at this price point. For the latest news, views and analysis NB. Price forecasts are for existing homes. Property values in the new-build market may perform differently. 0 0.0 our blog or @kfintelligence are carrying out more viewings before 2000 2001 20032002 20052004 2006 20082007 2009 201520142013201220112010 20172016 2018 Annual (England & Wales) Housing Transactions *Based on Knight Frank indices and boundaries, existing homes only. Jul-17 Apr-15 Apr-16 Apr-17 Apr-18 Apr-18 Apr-17 on the world of prime property, visit our Oct-15 Oct-16 Oct-17 Jun-18 Jun-15 Jun-16 Jun-17 Jan-17 Oct-17 Jan-18 Jun-18 Jun-17 Feb-16 Feb-17 Feb-18 Mar-18 Mar-17 Feb-18 Feb-17 Aug-15 Dec-15 Aug-16 Dec-16 Aug-17 Dec-17 Aug-17 Sep-17 Dec-17 Nov-17 Jul-17 Jul-17 May-18 May-17 Apr-17 Apr-18 Apr-18 Oct-17 Jan-18 Jan-17 Oct-17 Jan-18 Jun-17 Jun-17 Jun-18 Mar-17 Mar-18 Mar-18 Feb-17 Feb-18 Feb-18 Aug-17 Sep-17 Dec-17 Aug-17 Sep-17 Dec-17 Nov-17 Nov-17 May-17 May-18 making an offer. May-18 blog or follow @KFIntelligence Source: Knight Frank Research/ Molior/ HMRC Source: Knight Frank Research Source: Knight Frank Research Source: Knight Frank Research Source: Knight Frank Research +44 20 7718 5227 UK Housing Market Prime London Sales Prime London Rental UK Residential Market [email protected] Forecast - May 2018 Index - July 2018 Index - July 2018 Update - July 2018

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