enesfrit

Quarterly Newsletter

House Prices Reports

 

January - March 2014

 

Evaluating the trend in house prices is complex as there are markets within markets, for instance, Kensington and Chelsea functions differently from many other parts of the UK. The central London prime property attracts buyers from all around the world who are less sensitive to fluctuations in exchange rates, variations in inflation and sensitivities in the global economic climate.

Therefore movement in house prices in London and South East England can vary substantially from other regions of the UK. Kensington and Chelsea can vary from neighbouring Wandsworth. Properties valued at £3-5m can move higher in price quicker than flats valued at £350-600k due to demand and supply. You can gather trends but there are different nuances in price movements based on the kind of property and the area those properties are located.

There are a number of indices which evaluate the movement in house prices. Here are a list of the top ones:

 

NB: Halifax and Nationwide exclude in their monthly movement calculations: buy to let mortgages, remortgages, but cash purchases accounting for approx 25% of the overall market.

 

Some indices are rated for their ability to predict future movements especially over the next 6 months to 3 years ie

IG Index - http://www.igindex.co.uk/spread-betting/highlight-house-prices.html

 

To check for a valuation on any property try:

  1. http://www.ourproperty.co.uk/
  2. http://www.zoopla.co.uk/home-values/?utm_source=google&utm_medium=cpc&utm_term=zoopla&utm_campaign=Brand%20(Test)
  3. http://www.hometrack.co.uk/
  4. http://www.mouseprice.com/

 

Market Summary – January 2014

 

After a 15-20% drop from 2007-mid 2009 we have seen in central London a 50-60%+ rise from July 2009 to December 2014 and prices continue to rise. The market has been short of stock which has helped keep prices afloat but has also made it hard to find attractive properties. It certainly seems difficult to find really good deals for quick turn around profits but for the medium to long term investor [3-10 years] who has a genuine need for a property then the market still looks a reasonable risk.

The outlook for Bank of England base rates is they will probably rise to 1 to 2% by late 2015, historically still very low. Banks and building societies are offering better rates to first time buyers at the moment the banks are quoting 3-5% to people looking for 85-95% mortgages. However, mortgages are much more affordable than they were in 2007 to borrowers. The Government’s scheme to help first time buyers has certainly boosted the bottom end of the market and also brought in a number of new buyers since mid 2013. The recovery in the economy in the UK is more robust than expected with a solid forecast of nearly 2% growth for 2014.

Outlook: there are more reasons to see property prices rise in 2014 [projection of 5-7%] due to Government assistance to first time buyers continuing, lenders being more open to lend, London still being a highly sought after location, unresolved structural problems with the Euro still bringing in foreign buyers, a continuing lack of housing and London still being seen as a good place to educate children and a safe and stable country. Demand for properties is still good especially in central and south west London (Kensington and Chelsea, Fulham, Belgravia, Westminster).

 

BUT

 

 

In short, always have a good fundamental reason to buy, for instance:

  1. Improve your quality of life for you and your family. Owning a property ought to be a real pleasure allowing you to create a genuine home. In countries like Germany, Italy and France people tend to buy for life and make a home they own and nurture.
  2. Your family is growing, or, shrinking so good time to upgrade, or, downshift.
  3. As part of a mixed portfolio, owning a rental investment property, especially by earning a return through a holiday let allowing you higher returns and the possibility to use the property for periods of time during the year, makes a lot of sense if you have only occasional use for a property. Or even having a decent rental over a 5 year period is still a good way of hedging an investment portfolio.
  4. Instead of paying rent, why not jump onto the property ladder, not only as a way not to pay someone else's mortgage but as a way of enjoying one's own property.
  5. In general, if you have a genuine need, it is always worth looking for any property where you have the potential to add value through structural improvements, for instance, adding space by doing a loft extension or lateral or rear extension.

Otherwise currency exchange rates can play a part in manipulating UK property prices. A substantial part of the rise in the central London market is still being stimulated by Europeans, Chinese, Indian buyers and not just Russians and Arabs, as in the past.

There's always a complex and simple side to the simple question ‘is it worth buying a property now?’. Over the past 50 years apart from the stock exchange property has been the second best area for return on investment. As the single major investment for most people it always pays to be careful and like anything else in life, to ask for the right advice from the right people who know and understand the markets as each property purchase is different and we can guide you as much as possible in the right direction, as always.


"Next to the writer of real estate advertisements, the autobiographer is the most suspect of prose artists."
Donal Henahan