I had an interesting conversation with a local Hampstead
accountant the other day. He is quite an observant chap (I know this because I
have known him for a few years ... but I
suppose you have to be if you’re an accountant!). He knew property values had
increased in the area, but wasn’t sure by how much. He also thought the number
of properties for sale in Hampstead (and more importantly ones with sold slips
on them) had slightly decreased over the last couple of years.
The rate of house price inflation in Hampstead continues to
slow with growth of 14.4% in the 12 months to February 2015 compared to annual
growth of 22.2% just over six months ago, according to the latest Land Registry
data. However, there is considerable local variation in our part of London,
with annual house price growth (up to Feb 15) ranging from 7.8% in Ken and Chelsea
to 15.8% in Hammersmith and Fulham over the last 12 months.
Hampstead has seen property values rise by 29.5% in the last
two years, on the other side of the coin though, Hampstead has seen a slight
reduction in the number of properties sold throughout 2014 as base line demand
for housing tempers. The 9.4% drop in property transactions in Hampstead in 2014,
compared to 2013, indicates a tempering of house market in Hampstead as
affordability and tightening yields start to kick in.
When you compare London with the rest of the UK, you could
be looking at two different countries. In London, its mid/late teens house
price to earnings ratios are impacting demand (i.e. the average property value
is often 15 or 17 times the average wage in London .. in fact in Hampstead, the
ratio is in the early 30’s to 1). However, prices have remained strong because the
number of people wanting to sell has dropped considerably, meaning that falling
sales volumes combined with a general slowdown in activity in the run up to the
General Election are resulting in lower mortgage approvals for home purchase.
Transactions are a great indicator for house prices. The
acceleration in house price growth in London in the last two years was preceded
by three years of rising transactions. A similar pattern is being registered in
the rest of UK, as pent up demand returns to the market supported by low
mortgage rates and an improving economic outlook. This is good news as other
areas catch up with London, the UK property market will be more in balance as a
whole across the Country.
It might be interesting to note though, the number of Hampstead
property sales in 2014 are still 22.4% lower than the level seen in 2007 (when
property values were rising at an impressive 20.4% per annum), so now that
there has been a positive outcome on the General Election, the ongoing housing
recovery is far from stalled. In fact I believe the market will become focused
on the middle to higher value areas (such as Hampstead) where households have
equity and find it easier to access mortgage finance. If you want to know more
about the Hampstead Property Market, please visit the Hampstead Property Blog www.NW3propertyblog.com or send me an email to chris@ashmoreresidential.com
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.
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