Hampstead’s
continuing housing shortage is
putting the suburb’s (and the Country’s) repute as a nation of homeowners
‘under threat’, as the number of houses being built continues to be woefully
inadequate in meeting the ever demanding needs of the growing population in the
area. In fact, I was talking to some
friends the other day at an evening dinner together; the
subject of the Hampstead Property market came up in the conversation (as I am
sure it does at many parties in Hampstead) after the weather and politics. My friends said it used to be
that if you went out to work and did the right thing, you would expect that
relatively quickly over the course of your career you would be buying a house,
you would go on holiday every year and you would save for a pension. However, over recent years, things
seem to have changed.
Back in the Autumn, Philip
Hammond, used the Autumn Statement to double the housing budget to £2bn a year from April 2018 in an
attempt to increase supply and deliver 200,000 new homes each year until
2020. The Chancellor also highlighted the series of initiatives
introduced by his predecessor (George Osborne) to help get first time buyers on
the housing ladder; including the contentious Help to Buy Scheme and extending Right
to Buy from not just Council tenants, but to Housing Association tenants as
well.
Now that does
all sound rather good, but the Country is only building 140,660 properties a
year that were actually completed (split down 114,650 built by private
builders, 23,930 built by Housing Associations and and a paltry 2,080 council
houses). If you look at the graph (courtesy of ONS), you will see nationally,
the last time the country was building 230,000 houses a year was in the 1960’s.
How Philip
Hammond is going to almost double house building overnight, I don’t know,
because using the analogy of a greengrocers; if people want to buy more apples
(i.e. houses) giving them more money (i.e. with the Help to Buy scheme) when there's not enough apples in
the first place doesn't really help.
Looking at
the Hampstead house building figures, in the local authority area as a whole,
only 400 properties were built in the last 12 months, split down into 380
privately built properties, 10 Housing Association and 10 local authority being
built. This is simply not enough and the shortage of supply has
meant Hampstead property values have continued to rise, meaning they are still 1.5% higher than 12 months ago (seasonally
adjusted)
At school
(all those years ago!), I was taught that this economics game is all about
supply and demand. The demand for Hampstead property was particularly strong
for properties in the good areas of the town, though the number of overall
sales over the last two quarters has fallen. This ,coupled with the fact that
there are also fewer properties being introduced to the market has resulted in
a slight fall in values over the first quarter of 2017 to the tune of 2.77%. (Source Land Registry)
Moreover,
of supply, well we have spoken about the lack of new building in the town
holding things back, but there is another issue relating to supply. Of the
existing properties already built, the concern is the number of properties on
the market and for sale. The number of properties for sale last month
in Hampstead was 780, whilst two and a half years ago, that figure was 900, and
just over four years ago it stood at 990… quite a drop!
(Source - Land Registry)
The overall
state of the Hampstead property market remains a mixed bag - minimal new homes
being built and less properties coming onto the market and fewer properties
sold has resulted in a slight fall in average prices. This is against the
outlook for the economy , Stamp Duty revisions, first time buyer affordability
and stricter lending criteria for larger mortgages. The cautious behavior of vendors and
purchasers has caused a bit of wobble, though values are holding their own,
albeit by a small margin.
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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