Recent findings have indicated that prospective homebuyers could potentially save hundreds of pounds by purchasing properties in a postcode next door to one which is more sought after.
The research from online agent HouseSimple was based on average property prices across 20 of the most highly desirable postcodes within London such as SW4, NW1 and N1. The data then also looked the prices of homes in nearby postcodes which were less sought after.
From the research, it was found that on average, property prices in the less desirable neighbouring postcodes were 37.6% lower. This points towards a ‘postcode premium’ for buyers who purchase in these highly popular locations. There were similar results for flats too, with a reduction of an average 28.9% in adjacent postcodes.
An example is Clapham, an area popular with young professionals. The postcode is SW4 and in recent years, prices have surged, with the average flat costing £873,498. In nearby areas such as Stockwell (SW9) however, the average flat will be priced at £599,302.
Another area popular with first-time buyers is N1, despite the average one bed flat costing £830,672. In neighbouring postcode E2 however, the average price of a flat is 36.7% cheaper at £526,092.
Commenting on the so-called ‘postcode premium’ was Alex Gosling. The CEO of HouseSimple stated: “There will always be buyers who are happy to pay a premium for the privilege of living in one of London’s most in demand postcodes. But for many of us, it’s not worth paying thousands of pounds more just to say we live in W4, not W3.
Instead, with a little bit of research, you could find a similar property, both in style and square footage, just over the border of a sought-after postcode, that is well within your budget. That way you can still enjoy the benefits of living close to your preferred area, but you’re paying a fraction of the price for a property
Also, you are likely to benefit from the uplift in property prices, that a less sought-after area will enjoy, as buyers who can’t afford to purchase in the most popular postcodes, look at surrounding areas for value.”
