London Capital Growth by Property Type

London Property Capital Growth By Property Type

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Analysis: Which property type has the greatest price growth in London?

Here we reveal which property type in London has offered the most growth over the years. We use the UK land registry dataset, which provides information on every property sale since 1995. In this analysis we exclude commercial property and postcodes which have too few transactions for a given property type to deliver high quality statistics. All averages reported here are the median to protect against outliers which would skew the results.

London as a whole

Figure 1 shows by how much the average property price in London has grown by relative to 5, 10, and 20 years ago.

Figure 1 Figure 1

Over the long run flats have experienced the greatest growth, 492% over the last 20 years! Terraced homes come in at a little less with 481% growth over the same time period. Looking at shorter timeframes, it appears that terraced homes have been outperforming flats ever so slightly. This is because terraced homes have experienced accelerated growth recently. We can see this by looking at how the median price has grown relative to median prices back in 1995, and just before the financial crash in 2006 (Figure 2).

Figure 2 Figure 2

What is interesting is that terraced homes and flats have outperformed semi-detached and detached homes. This may be counter-intuitive as we might expect larger homes to experience greater house price growth. We speculate that this could be driven by the large cost of a semi-detached and detached house; the large cost freezes out many people which results in greater demand for terraced homes and flats. Another factor may be that London attracts professionals who would prefer a flat closer to the centre rather than houses further out. Whilst these factors are speculative, the data in contrast is clear: in London the demand for flats and terraced homes have outpaced that of semi-detached and detached homes over the past 20 years.

Which London outcodes have experienced the most growth by property type? So far we have looked at how the average price has grown by property type for London overall. Let us now look at which London outcodes have experienced the greatest growth by property type over the past 20 years.


Figure 3 Figure 3

We can see that some outcodes performed more than twice as well as London overall, for example outcodes in East London like E10 (Hackney) and E5 (Clapton) had approximately 1000 % growth in flats and terraced homes respectively. The areas with lowest growth were outer London areas such as KT2 (Kingston), TW (Twickenham), and TN (Tonbridge). For a summary of the top performing outcodes over more recent timeframes please consider purchasing a report.


Conclusions

By examining the data we can conclude with some perhaps counter intuitive results:

  • Detached homes are not a better investment, go for flats and terraced properties
  • Flats and terraced homes have grown at a fairly similar rate over the past two decades, with a slight boost for terraced homes
  • Areas in the E and SE outcodes like Hackney, Clapton, and Herne Hill were the best place to have bought twenty years ago with a growth of approximately 1000%. Could you have predicted that these were the place to be twenty years ago?

We believe that buying a house is one of the biggest financial decisions you can make in your lifetime, so it should be informed by the most recent and relevant information. Vast amounts of property data are stored in unwieldy CSV files or available only in fragments in websites like Zoopla. This makes it hard to get a comprehensive view of what is happening in the property market where you are interested in buying. We work hard to gather, process, analyse, and present property data so that you can make the most informed choice when purchasing your next property.


Want to know more about a particular area? To get a full data sheet, including potential alternative investment areas, check out our Property Scouting reports