Property Values drop by 0.8% in Southampton

Property values in Southampton fell by 0.8% in March. This follows several months of sluggish activity in the Southampton property market in the run up to the Election, putting the average price of a property in Southampton at £241,500, 5.7% higher than in March 2014. Despite the not so insignificant fall in March, the figures showed property values in Southampton were still pretty much the same in the first quarter of 2015 than in the last quarter of 2014. It is however important to remember that the Land Registry data lags the market by 2 or 3 months.

Interestingly, the Council of Mortgage Lenders and Estate Agent trade bodies over the last few months have reported seeing a fall in mortgage lending and enquiries from prospective homebuyers. However, in Southampton, we saw a very slight rise in housing market activity in the City. Data from the Land Registry said completed house sales in Southampton in the three months to January 2015 (the most up-to-date figures available) rose by 1% (compared to the same three month period up to January 2014). The rest of the UK has seen average drops of 15% to 23% over the same time frame.

However, I believe that the slight slowdown in property sales in Southampton is supporting Southampton property values, as there is a shortage of houses coming onto the market. Even though in the whole of the first Quarter of 2015, Southampton property value increases may seem subdued when compared to 2014, let us remember, property values are still rising well above the level of inflation. 

As I have said many times before, the population in Southampton is growing at a much higher rate than the number of properties being built. This increasing demand for a roof over people’s head, which is outpacing the supply of new houses being built in Southampton, is creating a severe imbalance in the Southampton (in fact the whole of UK’s) housing market, thus making homeownership an ever increasingly distant dream for many of Southampton’s potential first time buyers.

In fact, I still maintain the view that house prices are likely to rise by around c5% in Southampton in 2015, even after taking into account this blip at start of the year. The reason being is that the rise reflects both strong economic conditions and steady market conditions with (and this is the most important factor) very low numbers of properties on the market. 

Many Buy to Let landlords know that investing in the Southampton property market is a long-term strategy of 10, 20 even 30 years. Governments come and go, but unless Southampton City Council start to build hundreds and hundreds of new properties a year to make up for the shocking lack of supply, Southampton people will always want a roof over their heads, and irrespective of which party is in power, if there aren’t any council houses and they can’t (or are unable to buy), a demand for rental properties will always remain.