This chart takes a look at how sales levels have evolved over the last eight months in the local area. It should be noted that we’re looking at a relatively tight area over short periods of time, which is why there is a lot of volatility in the figures. The patterns however, are very revealing and show how seasonality affects the dynamics of the market.
There have probably never been more factors at play in the UK property market than there are right now. The national market is pausing for breath as it reaches the end of the cycle which started with the credit crunch. 2016 saw stamp duty changes as well as the Brexit vote, and the impact is very much still being felt. The result of the election has added to the uncertainty surrounding the economy.
By having a look at the average number of people per property, we can actually tell quite a lot about the area. Most areas of the country have between two and four people living in the average home. This is obviously a function of whether the area is popular with families or singletons. But it also shows population density with inner city areas having higher numbers of people per property.
This column chart shows the relative average sold prices of flats and houses selling in the last eight years in our area. It doesn’t account for different sizes of houses or flats but because we’re looking at annual figures any fluctuations should smooth themselves out.
By looking at quarterly sales charts we can see the volume of properties sold for semi-detached, detached, terraced and flats over the last two years. Whilst people are quite understandably most concerned about house prices, particularly the price of their house, property geeks like us actually look more at sales volumes to take the pulse of the market.
In December 2016, The ONS (Office for National Statistics) reported that house prices across the UK saw a year-on-year rise of 7.2 per cent. These figures are promising for the property market, and if the trend continues, the average home in the UK will increase in value by £22,000 in the next year. But what’s in store for The Heatons?
Since 2013, the UK has been experiencing ’strong growth’, and a typical house price is now higher than it was four years ago. Surprisingly, it’s the areas outside of London that have seen the highest growth, with the East of England experiencing price increases of 11.3 per cent in the last year. With the majority of the UK seeing such positive growth signs, the future of the residential property market looks good.
Over the last decade, local prices have seen a rise of 31.3 per cent, equivalent to £6,260 per year. Terraces tell a different story, having seen a rise of £4,820 per year or 29.6 per cent over the period. As the chart shows, all owners have benefitted from price rises, but some more than others.
The hike in house prices indicates good news for current homeowners, but those hoping to take their first steps on the property ladder will need to familiarise themselves with pros and cons of current schemes. There are several government schemes for first-time buyers: Help to Buy, Shared Ownership, ISA’s and Starter Homes.
With the continuing increase in house prices, it will make more sense for some people to rent. This is excellent news for buy-to-let landlords and potential investors thinking about purchasing a rental property. Rental prices have also increased over the last 12 months, with the average rents nationwide up 6.5% with a mean average of £839 per month.
Local area residents thinking of selling their home will be buoyed by the price increases, especially if they have owned their property for a significant amount of time. If you would like to know how much your home is worth don’t hesitate to give us a call. Alternatively, pop into our office for a friendly chat through your options.
In The Heatons, of the 15,206 households, 5,148 homes are owned without a mortgage and 5,733 homes are owned by a mortgage. Many homeowners have made contact me with asking what the General Election will do the The Heatons property market? The best way to tell the future is to look at the past.
I have looked over the last five General Elections and analysed in detail what happened to the property market on the lead up to and after the General Election. Some very interesting information has come to light.
Of the last five general elections (1997, 2001, 2005, 2010 and 2015), the two elections that weren’t certain were the last two (2010 with the collation and 2015 with unexpected Tory majority). Therefore, I wanted to compare what happened in 1997, 2001 and 2005 when Tony Blair was guaranteed to be elected /re-elected verses the last knife edge uncertain votes of 2010 and 2015.. in terms of the number of houses sold and the prices achieved.
Look at the first graph below comparing the number of properties sold and the dates of the General Elections
It is clear, looking at the number of monthly transactions (the blue line), there is a certain rhythm or seasonality to the housing market. That rhythm / seasonality has never changed since 1995 (Seasonality meaning the periodic fluctuations that occur regularly based on a season – i.e. you can see how the number of properties sold dips around Christmas, rises in Spring and Summer and drops again at the end of the year).
To remove that seasonality, I have introduced the red line. The red line is a 12 month ‘moving average’ trend line which enables us to look at the ‘de-seasonalised’ housing transaction numbers, whilst the yellow arrows denote the times of the General Elections. It is clear to see that after the 1997, 2001 and 2005 elections, there was significant uplift in number of households sold, whilst in 2010 and 2015, there was slight drop in house transactions (ie number of properties sold).
Next, I wanted to consider what happened to property prices. In the graph below, I have used that same 12 month average, housing transactions numbers (in red) and yellow arrows for the dates of the General Elections but this time compared that to what happened to property values (pink line).
It is quite clear none of the General Elections had any effect on the property values. Also, the timescales between the calling of the election and the date itself also means that any property buyer’s indecisiveness and indecision before the election will have less of an impact on the market.
So finally, what does this mean for the landlords of the 2,442 private rented properties in The Heatons? Well, as I have discussed in previous articles (and just as relevant for homeowners as well) property value growth in The Heatons will be more subdued in the coming few years for reasons other than the General Election. The growth of rents has taken a slight hit in the last few months as there has been a slight over supply of rental property in The Heatons, making it imperative that The Heatons landlords are realistic with their market rents.. but in the long term as the younger generation still choose to rent rather than buy .. the prospects, even with the changes in taxation, mean investing in buy to let still looks a good bet.
How far people travel to work says a lot about the nature of an area. For example if people live and work in market towns there is likely to be a lot more community spirit to experience in daily life. When people are travelling further afield to work, they effectively spend their days on two different communities. It will be interesting to see if community spirit increases as people work more from home.
This chart shows how house prices in the local area have moved over the last seven quarters. We’ve indexed flats, terraces, semi-detached and detached homes so they start at the same point so you can easily see how they’ve moved in relation to one another.
A look at the annual sales charts for the last ten years offers a good indication of market activity within the local area. Patterns are in line with expectations given the nature of our area. While there is nothing too surprising about which type of properties have seen the most transactions, it’s useful to see how the market has performed since just before the credit crunch.