Fulham and Chelsea are two of London’s most desirable and affluent neighbourhoods. But when it comes to house prices, Chelsea is the area where you can expect to pay more. You’re more likely to get a house in Fulham for a similar price to a luxury flat in Chelsea. With that in mind, we’re looking at which option offers the better deal and if you should buy a house in Fulham or a flat in Chelsea.
The answer to which property type you should buy comes down to the buyer’s persona. Clearly, a family will look to buy a house in Fulham, while the allure of Chelsea may draw a single person or couple.
But what if you’re an investor looking to get the best deal, both in terms of yields and capital appreciation? Suddenly, the choice between a house in Fulham and a flat in Chelsea isn’t so clear cut. In this scenario, it’s worth looking at more than just house prices alone.
Houses in Fulham vary in price, but looking at terrace homes – one of the most popular types in the SW6 postcode – buyers can expect to pay an average of £1.7 million, according to Zoopla. A quick look at the listings on Rightmove and a three-bedroom terrace costs anywhere from £850k to £3.5m.
When it comes to rental averages, landlords can expect to achieve between £2,800 and, realistically, about £7,000 per month. Overall rental averages in Fulham are £5,500 per month for a three-bedroom property.
So, let’s say you bought a property on the lower end of the scale for £1m and rented it out for £4,000 per month; you can expect a yield of 4.8%, which is impressive for prime central London. As far as capital appreciation goes, it’s a little harder to predict (especially considering the current inflation seen in the UK). But property prices in Fulham have increased by around £135k in the last five years.
Chelsea is one of the most sought-after neighbourhoods in the UK and archives higher than average house price values. Indeed, the average price of a flat in Chelsea is £1.1m, similar to the price of a three-bed terrace home in Fulham.
Rents in Chelsea average £3,000 per month for a one-bedroom apartment and £4,500 per month for a two-bedroom flat. Renters can pay as little as £1,500 per month for a small one-bedroom flat or as much as £4,000 for a sizable one bed.
Again, if you bought a flat for £1m in Chelsea and let it for £3,000 per month, the expected yield is 3.6%, around a percent less than similar-priced properties in Fulham. As far as capital appreciation is concerned, properties in Chelsea have increased by an average of £150,000 over the last five years, about £20k more than in Fulham.
On the face of it, Fulham looks like a better market for rental returns, while Chelsea has a slight edge for house price growth. Other factors should be considered, however. The rental market in London heavily favours apartments, and you can expect higher demand for one and two-bedroom flats over family homes.
If you’re looking for a three-bedroom house in Fulham to invest in, the market might not be as buoyant compared to apartments in Chelsea unless you consider renting it to sharers. Yet, an apartment also comes with added costs, such as services charges and ground rent as part of the leasehold. It’s unlikely these extras will be associated with a house because it should come as a freehold.
Ultimately, it comes down to your preference and how you expect to use the property in the long term. For example, you might plan to live in the Fulham house later in life or keep the Chelsea flat for your children to move into when they’re older.
Fulham and Chelsea are strong neighbourhoods offering significant rental returns and capital appreciation. Both markets are high in demand, and there’s no wrong approach to investing in SW3 or SW6.
If you’re looking for a property in Fulham or Chelsea, get in touch today. One of our personal property experts can help find your next home or property investment in London’s prime neighbourhoods.
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