At the moment, hardly a day goes by when we don’t hear about property prices in the UK. The obsession with the newspapers and newsreaders mainly comes from the fact that it helps sell print and those listening via the radio and watching TV will almost certainly stop what they are doing to hear and see the figures!
The problem is that since 2000, property prices haven’t performed uniformly across the UK. Some areas such as Nottingham have increased by around 100%, while others like Sevenoaks have increased by four times as much. However, prices tended to react in a similar way by county, so most properties in Nottingham went up by 100% up to 2007, while in Sevenoaks most went up by over 400%.
Since the credit crunch it’s clear that local supply and demand is causing property prices to move in different directions, depending on the property type and the road it sits on. So even county trends are unlikely to reflect what’s happening to your property price, it’s all about a certain property on a particular street.
Lets look at an example in one of our most successful markets: London. Within the area, there are 32 different boroughs. The average price, according to the Land Registry, for a property in London is £414,000. This average though is made up of prices across London Boroughs which range from £240,000 in Newham to £1.2 million in Kensington and Chelsea. That’s a five-fold difference. So hardly uniform and even taking a ‘London average’ is not a relevant statistic for anyone in the market for a property or keen to know what its latest value is.
Taking this analysis a stage further, I was recently presenting at a property investment seminar in London and used examples to show how different properties performed within a few roads of each other in Hackney. Why Hackney? Well this is the borough which has pretty much outperformed any other in London as far as annual property price growth since 2000. On average, London prices grow at 7% per year, whereas in Hackney they grow at 10% per year.
You would think that a successful area like this would mean any property you bought would make money.
But this is yet another average which is completely distorted when looking at what individual properties are worth on a street. One flat bought in Hackney in 2002 was purchased for just £158,000 and 10 years later sold for £178,000. Yes it had gone up, but by about 1% per year. In comparison, a three bed Victorian villa a few streets away in the same year was bought for £150,000 and, with no updating, sold for £1 million. This was a huge annual growth in value of 19% – double the borough’s average.
So, average property prices and headlines from price reports are still useful for economists, politicians and the industry, but from a homeowner, buyer or investor’s perspective, area averages are now pretty much irrelevant, which means the reports and especially the headlines used by the media, are also pretty useless.
What’s of much more use to people is sold property price data and analysis of its history. To better understand how your local market and property are performing, visit http://www.propertychecklists.co.uk/articles/How-to-Work-out-my-Property-Market-ChecklistRead more
Property prices have risen in many parts of the country, fuelled by an increase in demand coupled with a shortage of properties for sale. Housing prices rose by 0.4 percent in May compared to previous months, with many in-demand areas seeing prices increase by as much as 25 percent in the last twelve months.
The increase is the largest in a single month since 2007 – a year that was marked by relatively high property prices. Significant increases in housing prices have occurred primarily in the South East and London, with demand outstripping supply to a level that hasn’t been seen since 2009.
Real estate experts claim that the increase in buying property has stemmed from a number of government initiatives aimed at lowering mortgage rates and increasing access to financing. Others claim that it’s a simple supply and demand issue, with an inadequate amount of properties going on the market despite their higher value.
Many houses are currently being sold using a ‘mass open home’ format, where large groups visit a home that’s often sold later the same day. London has seen the largest increase in demand for home ownership, with a 15 percent increase accompanied by a simultaneous 0.6 percent reduction in the amount of homes available.
Despite the increase in property prices in London and the South East, many areas of the country haven’t fared so well. Prices increased by just 0.1 in Britain overall, and remained stable in the North East and North West. Speculators have focused on the volatile London market, largely avoiding short-term plays in the rest of the country.
While high property prices are advantageous for sellers and landlords, the increase in prices is hitting buyers hard. With little selling activity, many in major cities face stiff competition for houses that, just several years ago, were struggling to attract buyer interest.
Image: FlickrRead more
Property October 10, 2011
With the 2012 Olympics to be held in the city of London, property prices in certain areas of the city are beginning to rise as opportunistic real estate agents and developers increase their presence.Read more