Now it’s true the London property market has undergone some quite acute property price falls in recent years. In the upmarket areas of Mayfair and Kensington, the Land Registry have reported values are 11% lower than a year ago, yet in the UK as a whole they are 1.3% higher. Yet look around the different areas and regions of the UK and Northern Ireland, and you’ll see that property values are up nearly 6% year on year, whilst over the same time frame, the East Midlands is 4% up and Yorkshire is 3.7% up. So, what exactly is happening locally in Tarporley and what should Tarporley landlords and homeowners really be concerned about?

Well, to start with, as I have been saying for a while now, property is a long game, and making decisions on the short-term fluctuations is something that could cause a nervous breakdown.

I wanted to look at how Tarporley had performed over the long term, when compared to London and the UK as a whole.  Yet it is hard to compare differing locations when the average value of a property in Tarporley differs greatly to one in the capital.  I decided if I wanted to compare like for like, I needed to see what would happen if I had spent £100 on property in London in 1979 and what would that £100 be worth today, and then do the same exercise for the UK. So, looking over the last 40 years …

See how the growth of that £100 was broadly similar between 1979 and 2007 on all three strands of the graph and then we had the credit crunch drop between late 2007 and 2009? However, after 2009 London went on a different trajectory to the rest of the UK. Whilst Tarporley (and the UK) were generally subdued between 2009 and 2012, London kicked on. All areas of the country had a temporary blip in 2012, yet whilst Tarporley and the UK went up a gear again 2013, London went into overdrive and up like a rocket!

Now you can see London has dipped slightly in the last year, so the hot question for everyone has to be – are price falls likely to spread (as they did in the previous property recessions of 1989 and 2007) to Tarporley and other places in the UK? The Bank of England’s opinion is that a London house price drop is unlikely to be the beginning of a countrywide trend. Looking at the graph again, it can be seen London has been in decline for 2 years, whilst the rest of the country has been moving forward.

So, what does all this mean for Tarporley homeowners and landlords?

Well what happens in London does have an impact, but there are other issues that will have a bigger impact on the local property market. The simple fact is over the last 40 years, we have had 392.9% inflation, yet looking at a typical Tarporley terraced house…

A Tarporley terraced house has jumped in value from an average of £27,184 to £292,500 since 1979 – a rise of 795.1%.

Property has in the long term been a good bet. Yes, we might have some short-term blips and as long as you play the long game – you will always win. In the short term, my concern isn’t over monthly up or down property values, Brexit or another General Election. With property values still rising faster than salaries in many parts of the country, what really matters is how much of householder’s take home pay goes into housing costs as opposed to other spending items. If housing gets too expensive – other things will suffer, like holidays and the nice things in life to spend your money on. Only time will tell!

P.S. Wonder what that Tarporley terraced would be worth if it had gone by London house prices? Here’s your answer – £425,702.

Ian
07501723253 / ian@storeysofcheshire.co.uk

Copyright 2021 Storeys

Well, looking at the numbers in greater detail, in Wilmslow there has been a 45% proportional drop in the number of 25 to 34-year olds owning their own home between 1999 and 2019 .. and a corresponding, yet smaller drop of 21% of 35 to 44-year olds owning their own home over the same time frame.

So, if you were born in the late 1980’s or early 1990’s, the dream of owning a home in Wilmslow has reduced dramatically over the past 20 years as young adults’ wages and salaries are now much lower in relation to Wilmslow house prices. Nationally, average property values have grown by 186.9%, whilst average incomes have only risen by nearly 45%, yet that doesn’t allow for inflation. However, whilst not over the same 20 years (it’s close enough though), the Institute of Fiscal Studies said recently the average British home was just over 2.5 times higher in 2015/6 than in 1995/6 after allowing for inflation; yet the average household income (after tax) of 25 to 34-year olds grew by only 22% in ‘real-terms’ over those 20 years.

Yet, even though property prices are at record highs, on the other side of the coin, the monthly cost of mortgage payments has actually fallen because interest rates have remained low. In 1999, the average mortgage rate paid by UK homeowners was 6.5% whilst today it’s more than halved to 2.6% – a drop of 59%. Many of you reading this will remember the 15% mortgage rates of 1992!

The fact is, mortgage repayments take up a considerably smaller proportion of take home pay, on average, than they did before the Credit Crunch or in the late 1980’s. Although the risk that mortgage rates will increase if the Bank of England put up interest rates might leave some homeowners in a difficult position – hence I might suggest (if you haven’t already) you seriously consider fixing your mortgage rate (remember to take advice from a professional before you do).

Ian
07501723253 / ian@storeysofcheshire.co.uk

Copyright 2021 Storeys

In fact, the British property market is split into lots of fragmented pieces and the same goes for the Knutsford property market. In fact it can even come down to two streets adjacent to each other, one street selling extremely well for big bucks whilst properties on the next street can stick and at comparatively lower prices (i.e. if there is a school catchment boundary or differing postcode).

According to Coutts, property values in ‘Prime London’ have dropped by nearly 15% in the last 5 years … yet look closely at those stats and Prime London is considered anything within a 1,500m radius of Kensington High Street above £4.6m – a totally different world to the average property in Knutsford, which is worth just under £490,000 and has risen in value over those same 5 years by 28.0%.

I have noticed that the top end of the market above £750,000 in Knutsford and the surrounding areas is proving a little tougher to shift than a few years ago, yet this can’t all be blamed on that dreaded B word, as buyers have long been flinching at overestimated asking prices and excessive stamp duty rates.

In Knutsford nearly 28% of properties for sale have reduced their asking price in the last 3 months by an average of 7%.

A lot less than the reductions that are being seen in central London. In fact, the property market in Knutsford is looking reasonably good with nearly 43% of properties on the market in Knutsford being shown as under offer and Sold subject to contract.

…Interesting when compared with the aforementioned London Prime market where only nearly 6% of the properties available for sale are sold .. some bargains to be had there!

So, where are the bargains in Knutsford?

It’s all about comparing and contrasting property, so to start with, check out the property web-portals such as Zoopla and Rightmove to see what’s for sale. Click on the ‘include Sold stc’ in the filters, then arrange them in price order.

You will then start to get a feel for what properties are roughly selling for. Also look at recent sales, so in Rightmove click on ‘House Prices’ on the main menu, on the proceeding drop down menu click on ‘Find Sold House prices’ and now you can type in a street, or even a street plus 0.25miles/0.5miles .. click on ‘List View’ and they are in date order.

There is a similar function in Zoopla (feel free to contact me if you need a hand with that).

Once you have found what you think is a bargain .. view it. Ask the agent why the sellers are moving.

By doing your research on the seller, seeing how long it has been on the market, whether they have reduced the asking price — you could cut a better deal if they are compelled to sell.

Push home your advantage i.e. if you are a first-time buyer, don’t have a property to sell, chain free or cash purchaser as it can all make a difference.

Looking at the numbers above, some savvy Knutsford landlords and home buyers are taking advantage of the doom and gloom newspaper headlines as property owners’ expectations are probably at the lowest they have ever been since the Credit Crunch, especially if they are in the ‘got to sell’ category instead of the ‘would like to sell’ category.

Like anything in life .. buying a property bargain comes down to putting the hard-work in, doing your homework and jumping at opportunities.

Ian
07501723253 / ian@storeysofcheshire.co.uk

Copyright 2021 Storeys

The basis of this point of view can clearly be seen in the number of property transactions (i.e. the number of property sold) that have taken place locally since 2008. The most recent property recession was the Credit Crunch years of 2008/2009/2010.

In property recessions, the headline most people look at is the average value of property.

Yet, as most people that sell also go on to buy, for most home movers, if your property has gone down in value, the one you want to buy has also gone down in value so you are no better or worse off.

If you are moving up market – which most people do when they move home – in a repressed market, the gap between what yours is worth and what you will buy gets lower … meaning you will be better off.

Yet, most property commentators, including myself, suggest a better measure of the health of the property market is the transaction numbers (i.e. the number of people selling and buying).

So, I decided to look at the 2018 statistics, and compare them with the Credit Crunch years (2008 to 2010) and the boom years (2014 to 2017). The results can be seen in the table below.

To end on, there is little to be lost in postponing a house purchase until there is better clarity on the situation. If it isn’t Brexit it will something else – so just get on with your lives and start living!

The fundamental problems of the Wilmslow property market are that there haven’t been enough new homes being built since the 1980’s (and I don’t say that lightly with all the new homes sites dotted around the locality).

Also, the cost of buying your first home remaining relatively high compared to wages and to add insult to injury, all those issues are reinforced by the tougher mortgage rules which were introduced in 2014 and the current mortgage market conditions.

Assuming something can be sorted with Brexit, in the long term property values in Wilmslow will be constrained by earnings increases with long term house price rises of no more than 2.5% to 4% a year.

Ian
07501723253 / ian@storeysofcheshire.co.uk

Copyright 2021 Storeys