Anyone would think that national news, especially when it comes to
talking about the property market, is just focused on London centric. In fact,
over the last 5 years, the London property market has really manipulated the UK
on averages to such an extent that many lenders like the Halifax and Nationwide
publish two indices, a national one without London and one with.
Now it’s true the London property market has undergone some quite
acute property price falls. In the upmarket areas of Mayfair and Kensington,
the Land Registry have reported values are 11.3% 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, property values are up 5.8% year on
year, whilst over the same time frame, the East Midlands is 3.9% up and Yorkshire
is 3.7% up. So, what exactly is happening locally in Huddersfield and what
should Huddersfield 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 Huddersfield 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 Huddersfield 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 Huddersfield
(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 Huddersfield
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 Huddersfield 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 Huddersfield
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 Huddersfield terraced
house,
A Huddersfield terraced house has jumped in
value from an average of £11,664 to £125,500
since 1979 - a rise of 654.2%
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 Huddersfield
terraced would be worth if it had gone by London house prices? Here’s your
answer - £182,651.
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