Property company Grainger put out a trading update on Thursday and it provides yet another snapshot of just how insane London’s housing market is right now.
Grainger says it has seen “exceptional market response” to Abbeville Apartments, a purpose built rental develop in the London borough of Barking & Dagenham.
Here’s Grainger (emphasis ours):
Less than eight weeks since the scheme launched on 18 June, we are very pleased to announce that the 100 apartment building is now fully let. The level of demand for the homes has been exceptionally high with over 1000 registered interested parties, leading to rental levels being ahead of plan. Furthermore, 40% of the customers have opted for a three-year tenancy agreement, which is appealing for Grainger as it reduces costs and the potential for voids. The scheme will generate gross rent of c.£1.47m, compared to an earlier estimation of £1.34m.
1000 people applied for just 100 apartments — the odds of being allowed to rent a flat there were 100 to 1.
This is hardly a prime area either. Barking & Dagenham, which is in East London, was last week named the worst place to live in the UK by Right Move following a nationwide happiness survey. (Councillor Darren Rodwell has disputed Right Move’s claim.)
Dagenham was also highlighted as a burglary hotspot earlier this year and Barking & Dagenham ranks among the 4 worst boroughs in London for poverty. While the area is improving, with new developments like arts venue the Boat House, it has a way to go.
It’s also on the outskirts of London, right on the Essex border. It’s got good transport links but you’re still likely looking at a long commute to get to the center.
Still, there’s clearly huge demand to live in Barking — 100 to 1!
What’s more, a big chunk of those who did get a place — 40% — are locking it down for three years. The motivation for many may well be the difficulty of finding somewhere to live in London.
Upmarket London estate agents Foxtons’ highlighted the fact that there just aren’t enough houses being built in its recent half-year report. Between 2005 and 2013, 900,000 extra people moved to London, but only around 175,000 new homes were built.
While Foxtons was talking about what that means for the housing market, clearly the same dynamics hold true for renting. If there aren’t enough flats to go around, demand will be high and prices will rise.
That’s why the government last year launched a scheme encouraging developers to build rental properties, a scheme Grainger took advantage of with Abbeville. Clearly there’s demand for a lot more like it.