Hampstead property values fell by 4.6% back in June as soon as
the results of the EU Referendum were announced meaning they are 2.1% higher
than 12 months ago. Even though values dropped slightly, overall, I expect
future property price growth to remain firm though 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 brokers 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 is tied in by strong demand conditions. So far this summer
there have been some significant events with a fair amount of ambiguity
surrounding what may happen in the short to medium term. Brexit aside, we have
seen a revision in Stamp Duty as a mechanism to slow market activity , the
devaluation of Sterling and most recently the cut in interest rates to 0.25%.
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 the Bank had cut the base rate to 0.25%. Mr Carney said that only six out of ten people
that had a mortgage (57% to be exact) were on 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, so whether you are a
landlord or homeowner, this might be a time to consider fixing your mortgage
rate? The other important point is that these rate cuts often mean that lending
criteria are stricter with banks taking a frugal approach and not all lenders
will necessarily pass this rate cut on to their customers – perhaps not good
news for some purchasers.
The stricter mortgage lending rules which were introduced in
2014, affected people’s ability to have larger mortgages, this means homeowners
in the Hampstead area 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 since the early 2000’s. 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 540 properties in the Camden Council area have changed hands and sold, compared to 660 in the same time frame in 2015, a not so insignificant drop of 22.2%.
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 since the early 2000’s. 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 540 properties in the Camden Council area have changed hands and sold, compared to 660 in the same time frame in 2015, a not so insignificant drop of 22.2%.
The Stamp Duty changes have also gone some way in slowing
market activity, especially with the 3% rise in Duty on second homes coupled
with the new Tax Rules that will have effect from 2017. The next significant event is the much
awaited Autumn Statement from the Chancellor, Philip Hammond. This will give us
key indicators of the outlook for the UK economy with detail on
Construction/house building and other infrastructure investment projects.
Having said that it won’t be until late October, until then I expect that the
mood music will be much the same.
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.
No comments:
Post a Comment