Hampstead property values are 20.5% higher today than
they were February 2014 but 1% lower than they were 3 months ago. It should be
no great surprise to hear that Hampstead property values are starting to slow
up as we enter the New Year.
Property values in the suburb were growing at extraordinary rates earlier in 2014, when they were impressively rising by 2% to 3% per month in the late Spring /early Summer. In fact in the month of July 2014, they rose by 3.6% in that month alone. However, as the leaves turned brown, property prices slowed down considerably and as already mentioned, in fact, dropped slightly in the last few months of 2014.
Property values in the suburb were growing at extraordinary rates earlier in 2014, when they were impressively rising by 2% to 3% per month in the late Spring /early Summer. In fact in the month of July 2014, they rose by 3.6% in that month alone. However, as the leaves turned brown, property prices slowed down considerably and as already mentioned, in fact, dropped slightly in the last few months of 2014.
The reality is we have had 43 months (since the summer of
2011) of outstanding market conditions in Hampstead, but now all that pent up
demand is starting to fade. The big question moving forward is whether the Hampstead
market will now be held back by affordability and restricted mortgage lending and
what long term impact this will have on the Hampstead property market. It is
obvious to me and my fellow agents in Hampstead that I talk to in the suburbs
that we are all beginning to be wary about the direction of the market as a result
of the not as strong demand and fewer house sales.
(Photo from Wikipedia)
This is all good news for landlords looking to buy rental
property in Hampstead, and especially Belsize Park because you could bag a
bargain during this lull.With the changes in stamp duty and later
in 2015, the new rules regarding pensions, where you will be able to take money
out of your pension pot to invest in property. However, at the same time, I
would say don’t just buy any old property in Hampstead. First time landlords need
to be cautious. The doubling of house prices every seven to ten years which has
taken place since WW2 doesn’t seem to have been seen since the mid 2000’s. The property
market is shifting with more properties being built and restrictions put on
mortgage lending, the likelihood of the property market increasing at the same
levels as the past are questionable. But investing in property is also about
receiving the rent.
So to answer the question,
what will happen in 2015? Supply and demand become increasingly better
balanced, so house price gains in Hampstead will continue to drift down towards
zero over the next few months until the General Election, but I do not expect
sustained house price falls in the suburb like we did in 2008 (as mentioned
above) thanks to record low mortgage rates, rising wages and early signs that
lenders are starting to increase the availability of mortgages. If I had to stick my head out on this, depending
on the election result, property values will either drop by a few percentage
points by the end of the year if we have a hung Parliament (because of the uncertainty that brings) or a
modest rise of 5% to 8% if Tories get back into power.
In terms of what one should buy? Well, buy-to-let is the
balance between capital growth (how much a property increases in value over
time) verses yield. On the one hand, going for high yielding property to rent
out seems an obvious choice, but high yielding property often doesn’t go up in
value that well and in some circumstances doesn’t keep up with inflation
(although not in our part of London), meaning in real terms you have a
depreciating asset. So, surely you should pick a property that has great capital
growth then, because of the obvious potential to generate long term capital
profit, especially with inflation eating away at our savings. However, rental
yields on high capital growth properties tend to be low meaning if you are
taking a high percentage mortgage, the rent doesn’t pay the mortgage payments.
Or you could look for a property with a bit of both? (yield and capital
growth).
.jpg)
(Photo http://flickrhivemind.net/Tags/camden,nw3/Interesting )
Before I finish and before everyone gets gloomy at the
recent minor property price drops, it
must be said this is all relative. The average value of a property in Hampstead
today is £1,443,300, three months ago it was £1,471,400, yet a year ago it was
£1,218,500 and when we had the Olympics it was £1,063,500.
If you are unsure what to do, be you a first time
landlord or a seasoned pro, feel free to pop your head round our door or email
me on chris@ashmoreresidential.com . I know what sort of properties match whatever
you want from your property investment and I can give you my honest unbiased
opinion
If you are looking for an agent with experience that can help you find the right tenant for your property, then contact us to find out how we can get the best out of your investment property. Email me on chris@ashmoreresidential.com or give me a call on 020 7435 0420. Pop in for a chat – we are based on Ashmore Residential, Suite 7, 25-27 Heath Street, London, NW3 6TR. The kettle is always on.
Don't forget to visit the links below to view back dated deals and Hampstead Property News.
No comments:
Post a Comment