Even the Brexit vote has not hindered the
steady rise in Stamford property values, as property values went up 1.49% last month
alone, leaving Stamford values 8.12% higher than a year ago.
An increase in demand from buyers and an uninspiring level of supply (i.e. the number of properties on the market) has driven up the value of Stamford’s housing.
An increase in demand from buyers and an uninspiring level of supply (i.e. the number of properties on the market) has driven up the value of Stamford’s housing.
...And that is where the issue is. With Brexit, the coalition of the 2010-15, a
double-dip recession and post credit crunch fallout, I was perplexed that our
local property market (and values) has remained so strong, still 15.6% higher
than 20 months ago. That is until you
start to look into the real reasons why we find ourselves in such a great
place.
The housing market as a whole is built on the
foundations of basic economic rules that any GCSE Economics student should
understand. However, at a time when as a
country we seem eager to uncouple ourselves from all manner of proven facts,
anything is up for grabs.
Even the wary Royal Institute of Chartered
Surveyors (RICS) said most of its chartered surveyors anticipated UK house
prices to increase in the next 6 months, which seems contradictory given economic cautions from HM Treasury. Even though inflation will rise to around 2% to
3% in 2017 and perhaps a little more in 2018 because of the Sterling’s
devaluation, together with a high probability of a decelerating GDP and a
slight rise in unemployment, how can the RICS and most of my landlords and
sellers remain so confident about the value of our homes?
If we look at where we are starting from,
nationally we have a solid base of low unemployment, low inflation and
preposterously low interest rates, and here in Stamford the local economy is
doing quite well for itself. Confidence also plays a part. Confidence can supersede basic economic facts
for a short time at least, which is why actual property market changes tend to
be more exaggerated, as confidence can turn both positive and negative very
quickly.
The fact is, there is a long-term
relationship between property values, wages and unemployment.
For example, looking at the graph below, you
can quite clearly see the ratio of property values to earnings is nowhere near
as high as it reached in 2008 and currently is in the middle of the range for
the last 30 years. As a country, we are
in a strong position.
Property values might drop slightly in 2017,
but based on what we know of the UK economy now, values are not projected to
move that much over 2017 or 2018. Going
into the next 2 years, we are in much better financial shape as a country
compared to the last 2 crashes of 1987 and 2008.
Confidence will continue to be the key player
in the housing market for a while longer, and this may spur some much needed
second-hand market activity.
David Crooke
Owner
UPP Property Agents - Sales & Lettings
Rutland 01572 725 825 and Stamford 0 1780 484 554
If you are considering selling your own property (be that your own home or property investment), and would like your property valued, please get in touch. I keep an eye on the local property market on a daily basis as it enables me to give the best advice.
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