Hampstead property values fell by 0.1% last month, meaning
they are 3.2% higher than 12 months ago. Even though values dropped slightly, overall,
I expect future property price growth to remain firm, built on the foundations
of an improving labour market, strengthening economy and very low mortgage
rates. In fact, talking to a number of other agents in the city, mortgage
arrangers and solicitors (all of whom have their direct finger on the pulse of
the Hampstead property market), the steady long term
growth in Hampstead property prices tied in by strong demand conditions so far
this summer, alongside an underlying lack of supply and the continued low
mortgage rate environment, means the slow but steady upward momentum of the Hampstead
property market is likely to continue in the second half of 2015.
However, there are a couple points I wish to highlight as
all my blog readers will know. I like to give a balanced and honest opinion of
what is happening in the Hampstead property market. The two main points being
low interest rates and a lack of supply of property.
Interest rates
first - Mark Carney (Chief of the Bank of England) said in a speech a few
weeks ago at Lincoln Cathedral, the Bank will be seriously considering raising
interest rates around Christmas time. An upward movement in interest rates will
temper demand and result in a marked slowdown in house price growth. Mr Carney
said that only six out of ten people that had a mortgage (57% to be exact) had
a variable rate mortgage, compared with more than seven out of ten people (73%
to be exact) in the Summer of 2012. Now, I am not a mortgage arranger and cannot
give advice, but rates are only going in one direction, so whether you are a
landlord or homeowner, this might be a time to consider fixing your mortgage
rate? Don’t say I didn’t warn you!
Tie this in with the stricter mortgage lending rules which were
introduced in 2014, which affected people’s ability to have larger mortgages,
this means homeowners will need to be realistic in their pricing if they want
to sell. Reading other recent reports though, property owners have continued to
pay off mortgages at a faster rate while mortgage rates have been low.
Therefore, when mortgage rates rise, the affect on home movers sentiment which,
given the shortage of supply, would result in a marked slowdown in the rate of
house price growth.
Shortage of Supply – As I have mentioned in previous articles, the number of houses on the market in Hampstead is at an all time low. One reason is the large number of buy to let landlords who have bought Hampstead property over the past fifteen years. Unlike first time buyers who tend to move on after a few years, landlords tend to keep their properties long term, meaning there are fewer properties coming onto the market ... thus restricting supply and sales. In fact, over the last four months, only 660 properties in the Camden London Borough Council area have changed hands and sold, compared to 944 in the same time frame in 2014, a not so insignificant drop of 30.08%.
Shortage of Supply – As I have mentioned in previous articles, the number of houses on the market in Hampstead is at an all time low. One reason is the large number of buy to let landlords who have bought Hampstead property over the past fifteen years. Unlike first time buyers who tend to move on after a few years, landlords tend to keep their properties long term, meaning there are fewer properties coming onto the market ... thus restricting supply and sales. In fact, over the last four months, only 660 properties in the Camden London Borough Council area have changed hands and sold, compared to 944 in the same time frame in 2014, a not so insignificant drop of 30.08%.
If you are planning on investing in the Hampstead property
market, or just want to know more about things to consider for a successful buy
to let investment, one source of information is the Hampstead Property Blog www.NW3propertyblog.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.
Don't forget to visit the links below to view back dated deals and Hampstead Property News.
