Talking to an elderly relative recently, he reminded me that
in his day, you could have bought a property for the same price of what a
decent second hand car would sell for today and that his father was buying property
for the same price as a decent 50 inch LCD TV!
Now of course, these are only headline prices and we have had wage
growth and inflation. Interestingly,
since the Second World War, property values in Hampstead doubled in 1961, 1971,
1975, 1980, 1988, 2000 and 2006.
Looking at more recent times, since the start of the
Millennium, these increases in property values have generated large increases
in equity for many homeowners but on the other side of the coin also making
housing unaffordable for other people. It might interest readers to note that
most of Europe experienced sharp increases in property values in the early
years of 2000’s, with only Spain beating
us (although we know what has happened to the Spanish property market
over the last few years!). In the
2000’s, the British situation was different in two regards. First the property value boom started earlier
and saw more sustained increases; second, the regional pattern was fairly
uniform.
However, since 2010, the regional pattern has been
completely different in the UK . Compared with 2007 (the last property boom),
average property values today in England and Wales are 1.2% higher, whilst in
Greater London, they are 35.7% higher, whereas in Hampstead they are 69.52%
higher. The London
property market has been like a different country. Looking specifically at Hampstead though, it
has been increasingly difficult for first time buyers to get on the housing ladder.
The best measure of the affordability of housing is the ratio of Hampstead
Property Prices to Hampstead Average Wages, (the higher the ratio, the less
affordable properties are).
·
1997 6.64
to 1 (i.e. the average value of a
Hampstead property was 6.64 times higher than the average annual wage in
Hampstead)
·
2000 9.43
to 1
·
2002 9.56
to 1
·
2003 9.50
to 1
·
2007 12.58
to 1
·
2009 11.78
to 1
·
2012 13.69
to 1
·
Today 16.72
to 1
You can see quite
clearly, even though we had an improvement just after the 2007 property crash
(i.e. the ratio dropped), in following subsequent years with Hampstead house
price’s rising but wages not keeping up with them, the ratio started rise. This has meant there has been deterioration
in affordability of property in Hampstead over the last couple of years. This is one of the (many) reasons why the
younger generation is deciding more and more to rent instead of buy their own
house. The local Council sold off much
of its housing stock in the Thatcher years and didn’t replenish it and for many
on low incomes or with little capital, owning a home has simply never been an
option.
With fewer people able to save up the deposit
required by mortgage lenders, more and more people are looking to rent, this
has also resulted in a change in attitudes towards renting over the last
decade. This delay in moving up the property ladder has driven rents up
in Hampstead over the last few years, as more people are seeking properties to
rent. All these things have combined to make the demand for rental
property in Hampstead rise. If you are an existing landlord or someone
thinking of become a first time landlord looking for advice and opinion and
what (or not to buy in Hampstead),
one source of information is the Hampstead Property Blog www.NW3propertyblog.com or
call the office on 020 7435 0420.
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.
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