After twenty plus years property experience and owning my own independent estate & letting agents reviewing the property market and house prices in Bournemouth is part and parcel of the job.
There are several property house price index stats, Nationwide, Halifax (based on mortgage applications) and more recently the property portals, Rightmove (based on asking Prices), RICS and Movewithus based on its members polled but the most accurate is the Land Registry. Although, the property data from the Land Registry is always three months old, it is by far the most accurate in what actually is happening in the property market.
You can see in the attached graph, the height of the market was December 2007, with the average house prices in Bournemouth £206,227. The credit crunch hit the economy and property market in 2008 and property prices fell, at their lowest on March 2009 at £163,937. A fall in property prices of 20%. In fact, in the past, I have reviewed house price data since 1972 until today. Reviewing the property cycles and the recession in 1990, property prices only normally crash by a maximum of circ. 20% before stabilizing and either going straight back up, like in 2010 or remaining stagnant for a few years like in 1990.
Just tell me if this is boring you … zzzzzzzzzzzzzz. Actually, on a serious note, its a great article to read in bed, you’ll soon be asleep.
Right, back to stats. The market has gradually increased from 2009 through to 2016 and up until May 2016 the average house price in Bournemouth in May 2016 is £226,167. An increase of 9.6% from the height of the property market in 2007 or an increase of 38% if you were lucky enough to buy at the bottom of the market in 2009, an average increase of £62,230 but who can judge the top and bottom of the property market? … no one, its just luck.
The interesting part, (well I say ‘interesting’ loosely) is Total Sales Volumes graph – this is transaction levels. Its a myth, estate agents like property prices going up or property prices coming down obviously. The most important part is property transaction levels and these have been falling over the last decade, mainly due to the high cost of moving with Stamp duty tax, estate agents fees (cheap in my opinion), solicitors fees etc. The tax element is very counterproductive because when someone moves home, they employ builders, plumbers electricians, removal companies, home furnishings, garden furniture, the economy is centered around an active housing market. Good housing liquidity = an active economy.
Looking at the graph ‘total sales volumes’, its easy to see the very large spike in transaction levels in March 2016 with buy to let landlords buying property before the Stamp Duty increase on the 1st April 2016 for second homes and buy to let buyers. Its inevitable, we will see a housing slump after this, although the media will no doubt blame Brexit, as the hot topic of the day, although I can tell you with confidence, these tax changes are the most damaging to the property market.
Which brings me on to Brexit, where are we today? Whats going to happen in the future property market with Brexit?
The fact the pound has fallen has meant this is a fantastic time for overseas property buyers to enter into the property market, its like receiving an immediate 15% discount on buying property. As we become closer with global partners across the world and inward investment from overseas, this sector of buyers is likely to grow.
The next interesting part is interest rates. If rates drop any lower, banks may charge customers for keeping their money with them or certainly current accounts will be zero interest. Then why would anyone keep large sums of money in banks and certainly property is an excellent choice for receiving an income on capital, although, there are certain considerations that need to be carefully thought about.
Next, when Britain crashed dramatically out of the European Exchange Mechanism in 1992, it was the best thing that happened, the economy boomed and property prices increased. I can only see positives with Brexit, as long as Britain gets to keep the free trade access, even free movement of people would be fine with me, if that’s what it takes to keep free trade access with our European partners.
The only part that is holding the property market back now or a small fall in property prices this year is the negative, pessimistic media and I’m sure any fall will be big ‘negative’ headlines but the reality is, this is a fantastic time to buy property. Mortgage rates surely can not be any lower and paying such low interest for the past (since March 2009 = 0.5%) 7 years has meant its been considerably cheaper than renting and excellent property investments.
Thank you for reading and if you want any further property advice or thinking of selling, buying, renting or letting in Bournemouth, please call me at Clifftons – 01202 789699.
written by James Scollard – CLIFFTONS
Posted: 28th July 2016