Despite the UK economy heading in the right direction with
record low mortgage rates and unemployment figures dropping, the fallout from
the Brexit Vote and the subsequent cut in interest rates announced last week to
the historic low 0.25% has changed the outlook. This slow but sure downward
trend in the rate of growth has been in evidence since mid-2014. Property value increases continue to outpace
the growth in salaries; however the gap is closing, helped by a lift in salaries
over the last 12 months. Property values in the London region as a whole are
8.9 % higher than a year ago. Compare
this to the neighbouring regions of the South East also at 5.49% higher and the
East at 5.5 %, the majority of the
country continue to see annual house price gains - the exception being Wales
which recorded a slight decline of
-0.6%.
Even with the correction in house price inflation and the current mood
somewhat subdued, it does not necessarily change my outlook that property
prices are likely to be firmer over the final quarter of 2016 with an average
increase of around 2-3% for 2017 . As stated in a previous article, there is a
current shortage of properties on the market, restricting supply, which has
been falling consistently since the recession of 2008/2009 which in turn will
provide stability and support to Hampstead property prices. The cut in interest
rates may also encourage some sellers back to the market with funding costs
reduced with the savings lenders shall pass on. This to some extent is welcome news for the
buy to let sector with landlords ready to re finance taking advantage of the competitive
mortgage deals on offer. With the downgraded economic forecasts further to the EU
referendum result and the about turn from the Bank of England interest rate cut
have presented an opportunity to manage funding costs with fixed term 3 to 5
year deals in order to consolidate their finances.
Property investment is a long term business. Buying the right sort of property is vital. I have recently been speaking with a number of Hampstead
landlords about the importance of a balanced portfolio, when buying and renting
out property. The balance between buying properties that offer good monthly
returns (high yields) but quite often offer poor capital growth (i.e. they
don't increase in value that much over the years compared with the average)
verses properties that do go up in value quicker but often offer a lower yield.
So, what type of properties has
performed best over the last few years in Hampstead, especially in terms of
their capital growth?
When comparing what the
average price of detached, semi detached, terraced and flats were selling for
back at the start of the Millennium to the present. The results are remarkably different,
almost like a bag of Liquorice Allsorts, as the different types of property
have performed poles apart over the last 16 years:
- · Detached Houses in 2000 were selling on average for £2,200,000 and so far in 2016, they have been selling on average in Hampstead for £5,350,000 a rise of 143%
- · Semi -Detached Houses in 2000 were selling on average for £1,220,000 and so far in 2016, they have been selling on average in Hampstead for £3,955,000 a rise of 227%
- · Terraced Houses in 2000 were selling on average for £800,200 and so far in 2016, they have been selling on average in Hampstead for £2,065,000 a rise of 158%
- · Flats and Apartments in 2000 were selling on average for £332,203 and so far in 2016, they have been selling on average in Hampstead for £1,015,079 a rise of 205%
Moving forward, what should new and existing buy to let
landlords do with this information? Well,
the questions I seem to be asked on an almost daily basis by landlords are:
·
“Should I sell my
property in Hampstead?”
·
“Is the time
right to buy another buy to let property in Hampstead and if not Hampstead,
where?”
·
“Are there any
property bargains out there in Hampstead to be had?”
Many other Hampstead landlords,
who are with both us and other Hampstead
letting agents, like to pop in for a coffee, pick up the phone or email us to discuss the
Hampstead property market, how Hampstead compares with its closest rivals (St
John’s Wood, Notting Hill, Chelsea or Kensington), and hopefully answer the
three questions above. I don’t bite, I don’t do hard sell, I will just give you
my honest and straight talking opinion and look forward to hearing from you.
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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