Where will Hampstead Property Prices Be By 2022?

I was having lunch the other day at The George, on Haverstock Hill, Belsize Park, with a local Hampstead solicitor friend of mine, when the subject of property came up. He asked me my thoughts on the Hampstead property market for the next five years. Property prices are both a British national obsession and a key driver of the British consumer economy. So what will happen next in the property market? So here is what I told him, and now wish, my blog reading friends, to share with you.

Before I can predict what will happen over the next five years to Hampstead house prices, firstly I need to look at what has happened over the last five years.  One of the key drivers of the housing market and property values is unemployment (or lack of it), as that drives confidence and wage growth – key factors to whether people buy their first house, existing homeowners move up the property ladder and even buy to let landlords have an appetite to continue purchasing buy to let property.

When the Tory’s came to power in May 2010, the total number of people who were unemployed in suburb stood at 3,325 (or 4.7% of the working age population in Hampstead parliamentary constituency). Last month, this had dropped to 1,884 people (or 2.5% of the working age population).

As the Hampstead job market has improved with better job prospects, salaries are rising too, growing at their highest level since 2009, at 2.9 % last year in the private sector (as recently reported by the ONS) Average property values in the Hampstead area continue to rise and are 34% higher today than they were five years ago.

Many home occupiers have held back moving house over the past decade following the Credit Crunch but with the outlook more optimistic, I expect, at least some, to seize the opportunity to move home, releasing pent up demand as well as putting more stock onto the market. With a more stable economy in the suburb, this will, I believe, drive a slow but clearly defined five year wave of activity in home sales and continued house price growth in Hampstead.

I forecast that the value of the average home

In Hampstead will increase by 21.2% by 2022

The increase of 21.2% might sound optimistic to some, but according to Land Registry, values are currently rising in Hampstead at 3.2% year on year, I believe my forecast to be fair, reasonable and a reflection of both positive (and negative) aspects of the local property market and wider UK economy as whole.

However, it wouldn’t be correct not to mention those potential negative issues as I do have some slight concerns about the future of Hampstead housing market.  The number of properties for sale in Hampstead is lower than it was five years ago, restricting choice for buyers (yet the other side of the coin is that that keeps prices higher). Interest rates were being predicted to rise around Easter 2016, though shortly after the EU Referendum result, they were cut to a record low 0.25% .Finally, the new buy to let taxation rules which are being introduced between April of this year and 2021 (although choosing the right sort of property / portfolio mix in Hampstead will, I believe, mitigate those issues with the next taxation rules).

I am telling the landlords I speak to, that with interest rates at their current level 0.25%, the cash in your Building Society Book is going to grow so slowly that it might as well be kept under their bed. Property prices, by contrast, have rocketed over the years, even after the property crashes and other events that have made the political headwinds, far outstripping bank accounts and inflation.

So my final thought ...  property is a long term investment, it has its’ up and downs, but it has always outperformed, in the long term, most investments. Those in their 40’s and 50’s in Hampstead would be mad not to include property in their long term financial calculations. Just make sure you buy the right property, at the price in the right location. 

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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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