The rightmove house price index has now been released and you’ll see the report contains my quote which goes out to the national and regional media (in the overview tab) on the property market here in Bournemouth.
UK house price to earnings ratio. Wage growth and house prices are directly interlinked. The long term average is 4.25 times. In the first recession I remember, in 1990 – 1994, the wage linked multiple was 5 times at the peak and nearing the end of the recession in 1994, this dropped to around 3 times. As house prices increased throughout the 1990’s and 2000’s, this grows to a peak of 6.25 times, dropping sharply throughout 2008 to sit at 5 times and currently today February 2019, sits at 5.5 times.
Fundamentally, the UK housing market is solid, its mature but its not overly leveraged in regards affordability and certainly with the stricter mortgage lending over the past 24 months, this has helped keep growth under control. I think its important to note Miles Shipside comments, “wage growth is on the rise at the fastest rate in nearly eight years.” it will be interesting to see how this continues.
The property market has only seen an annual rise of 0.2%, prices are not going up or down, in my humble opinion, this is the best market to work in. Why? because people are being sensible with asking prices and people are buying property. The property market is steady. Many people thinks estate agents like rising property prices but actually we prefer a fluid, solid property market.
Currently, I cannot see property prices falling, although we are in a mature part of the property market cycle. The biggest impact in the property market (excluding London) was not Brexit, it was increasing stamp duty for property investors. There are many changes in legislation and this in an area that could impact the market the most.
My advice, I would happily buy in this market, I think its a great time to buy.
James Scollard, owner of Clifftons Independent Estate & Letting Agents in Bournemouth
Posted: 18th February 2019