London’s top ‘recession-proof’ areas to buy a home

A dramatic slump in prices could leave homeowners in negative equity, where the property becomes worth less than the mortgage taken out on it, while declining house prices could make mortgages more difficult and expensive to secure.

Most experts still think a house price crash is an outside chance, but the current economic uncertainty shows no sign of dissapearing anytime soon.

A recent survey by Deloitte found almost two thirds of finance leaders are expecting a recession next year.

With further interest rate rises expected, research by fintech company Proportunity has conducted research into the UK’s ‘recession proof’ areas to help buyers protect themselves from volatility in the property market.

How to spot a ‘recession-proof’ neighborhood

By analyzing 331 local authorities and looking at areas that performed well in previous recessions, the company has identified a set of characteristics to look for when buying a property.

These include affluent areas with low housing supply, a higher proportion of Millenials (a marker of higher economic activity), greater numbers of older properties and larger than average properties.

The UK’s top three ‘recession busting’ areas are all in London, while outside of the capital South Gloucestershire is another area where prices are unlikely to fall. Other strong areas include Luton, Bracknell Forest in Berkshire and Broxbourne in Hertfordshire.

Where to buy in London

The riverside in Kingston upon Thames

/ Daniel Lynch

Top of the ranking is Kingston upon Thames in south west London, where the average terraced property sells for £765,686 according to Rightmove.

The former market town’s green areas and good schools mean it is likely to always be a popular choice for families.

According to Peter Knowles, head of Hamptons’ Kingston Office, data shows the area is usually insulated from market slowdowns.

Knowles said a common reason families have to move is if there is not a good secondary school once a child finished primary school, but Kingston has excellent options for both age groups meaning there is less “churn” and therefore less stock available.

He added: “In terms of other recession-proof areas, Surbiton is also a great area for the same reasons and with more people now requested to be back in the office maybe 3 or 4 days a week the train times of 17 mins to London Waterloo are a massive bonus.”

Crouch End in Haringey, another ‘recession-busting neighborhood

/ Adrian Lourie

Haringey in north London is one of London’s most sought-after locations, where the average terraced property sells for average of £825,136, and the average flat for £462,224 according to Rightmove.

Its resilient market is due to its plentiful parks and green spaces, proximity to central London and up-market areas such as Muswell Hill, Crouch End and Highgate.

According to Proportunity, the third top London location for ‘recession busting’ homes is Harrow in west London. Like Kingston, the area has good schools and is well connected to the city.

Harrow

/ Daniel Lynch

In addition to these areas, London’s prime market is its own microclimate and remains insulated from economic fluctuation according to Alex Woodleigh Smith, Managing Director of AWS Prime.

”The prime market is likely to be more resilient than other areas due to the fact that many buyers are cash buyers and therefore not as affected by interest rates and fluctuations on the stock markets.

“In addition, many prime London buyers are international buyers, so again, they are not as susceptible to domestic inflationary factors and have diversified interests across the globe.”

Woodleigh Smith said London’s iconic garden square properties were a good example of “bullet proof” investments due to their historic and special architectural interest.

Vadim Toader, Proportunity CEO and co-founder comments: “Buying a home is an exciting and nerve-wracking time. Add rising prices and economic uncertainty and the decision on whether to buy or not to buy becomes more complicated than ever before.

“Knowing the characteristics that make homes more likely to retain their value and the top areas of resilience is a simple way to protect your purchase. Whether it’s a recession, a pandemic or just uncertainty, ticking the boxes of what is likely to weather the economic storm adds an extra layer of security to your new home.”

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