I am genuinely concerned about the Hampstead property
market, but in a way that might surprise you.
Rightmove announced that average ‘asking prices’ rose last month by 0.2%
in London ,
leaving them 7.8% higher than a year ago. Whilst it could be said that monthly
change is very modest, in the same period a year ago, we saw a monthly fall of
0.4% in London, which is more the norm given the onset of schools breaking up and everyone going on
holiday.
Looking at all the data on the Hampstead property market;
putting aside the need for more houses to be built in the next decade to
balance out the increase in population (helped in part by inward European
migration) but not matched by a similar increase in housing being built; my
research shows there is a widening gap between what property buyers want and
what is available to buy. In a nutshell,
many more buyers are looking for the smaller one and two bed properties (the
typical apartments, whilst there are a larger typical semi detached /detached
properties available.
Demand for smaller properties comes from both first time
buyers and the growing number of buy to let landlords, where it is more cost
effective and efficient to buy smaller properties to let out compared to larger
properties which tend to offer poorer returns. Also, landlords with larger
loans (on those larger more expensive properties) will also be hit harder with
the changes in the way tax is paid on buy to let investments,
which start in 2017.
If you recall, a few weeks ago I did some research on how
different types of properties had performed in Hampstead since the year 2000. I
revisited those calculations and it hit me how different types of properties
had performed over the last 15 years. In a nutshell, this mismatch of demand
and supply isn’t a new phenomenon, it’s been happening under our noses for
years!
In the last 15 years, the average value of terraced house in Hampstead has risen in value from £394,723
to £1,711,499 whilst the detached house has risen in value from £1,576,667 to £3,650,000. Nothing seems amiss until you look at the percentage
growth. The terraced house has grown in value by 334% whilst the detached by
only 132% meaning the gap between the affordable terrace and expensive detached
properties has in percentage terms narrowed enormously (this isn’t just a
Hampstead thing, it has happened all across the Country).
I am concerned because more houses need to be built, not
only in Hampstead, but in London and the UK as a whole. In particular, there is
specific need for more affordable starter homes for the growing demand from
both tenants (and the landlords that will buy them) and first time buyers. The Tories need to face up to the fact that
unless they can get the builders, the planners (to release more building land),
the banks (to finance it) and themselves together, to ensure long term plans
can be made, and implemented, this issue will continue to worsen.
Therefore, investment in the local Hampstead property market
as a buy to let investment could be the best move to make as the stock market
investments are possibly on the wane. Everyone is different and trust me; there
are many pitfalls in buy to let. You
must take lots of advice and seek out the best opinion. One source of opinion,
specific to the Hampstead property market is the Hampstead Property Blog www.NW3propertyblog.com or if you would like to have a chat,
feel free to 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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