The Land Registry has just released their latest set of
figures for the Hampstead Property market. It makes interesting reading, as
average property values in Hampstead dropped by 4.2 % in June. This leaves
average property values 1.2 % higher than 12 months ago, meaning the annual
rate of growth in the area fell to its lowest level since January 2012
according to a recent survey by Home track When we compare Hampstead against
the regional picture, London property values rose by 2.6 % overall with buyer
sentiment having had a more significant impact as a result of the EU Referendum
and political uncertainty with a much weakened Conservative government.
Obviously this is a far cry from the price rises we were
experiencing in Hampstead throughout 2014. At one point (August 2014 to be
exact) property values were rising by 22.7% a year. All the same, the
correction we are seeing will have a greater significance for distressed
sellers who have a greater urgency to release funds.
However, the thing that concerns me is that the average number
of properties changing hands (i.e. selling) has dropped substantially over the
last couple of years in the area. For example in April 2014, 90 properties sold
in Hampstead but in April 2015, that figure dropped to 41. The most significant
event that had bucked the trend in 2016 was the announced Stamp Duty hikes on both
primary residences and second homes which saw a substantial increase in supply
in the first quarter with 133 properties sold in March of last year and for
April 2017, the figure stands at 32. Traditionally,
the spring season is where the market starts to become active, though political
headwinds over the General Election, stalled activity in the local market with
a sharp fall of just under 22% of completed sales compared with the same period
in 2015.
See the graph below - (Source Hampstead Property Blog Research)
In the main, the UK economy is centred around its housing
market, the other reliable barometer are share prices in the large house
builders like Wimpy homes with jaw dropping fall of 37.5% and Barrat at a staggering 43%, all within a
fortnight of the Referendum result. In June values in Hampstead fell by over 4%
in real terms, though the market is hardly in freefall. Since then, the share
prices for house builders have recovered well and the recent price falls we
have seen in the local market will plateau in the near future. The Office for
Budget responsibility has downgraded its forecast for the next 5 years showing
average prices rises of 4.3% which is good news for the medium to long term.
The correlation
between unemployment and house prices is strong. According to the ONS as of
March the figure for the local constituency of Hampstead and Kilburn stands at
7.2% or 6,700, compared to the 10.7% of 2013, suggesting that the underpinnings
of the local market are pretty robust. Overall, Brexit has caused a temporary
wobble, though nothing significant enough for serious long term effect.
As mentioned in my previous article, the more pressing issue
is with inflation, currently at 2.9% and will likely rise into the final
quarter of 2017. The Bank of England has dropped a subtle hint that rates may
have to rise to bring it under control as the Sterling has weakened and imports
are now dearer. Even so, over 85% of mortgages agreed so far this year have been with fixed rates, very
much with this in mind, and it’s a far cry from the early 90’s with rates at
15%.
Despite theses issues having impacted on the sentiments of
purchasers and sellers, they will get fixed in time. The greatest threat to the
Hampstead (and UK) property market is the shortage of new homes being built for
a variety of tenures, especially in the big cities. When you consider that only
2.3% of all the land in the country is actually built on, the pressure on the
Government to get its act together with a coherent housing policy is greater
than ever.
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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 me 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 at Ashmore Residential, Suite 7, 25-27 Heath Street, London, NW3 6TR. There is plenty of parking and the kettle is always on.
If you are looking for an agent with experience that can help you find the right tenant for your property, then contact me 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 at Ashmore Residential, Suite 7, 25-27 Heath Street, London, NW3 6TR. There is plenty of parking and the kettle is always on.
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