Southampton
property values rose by 1% last month, meaning they are 6.1% higher than 12
months ago. Overall, I expect future property price growth to remain firm,
built on the foundations of an improving labour market, strengthening economy
and very low mortgage rates. In fact, talking to a number of other agents in
the city, mortgage arrangers and solicitors (all of whom have their direct
finger on the pulse of the Southampton property market), the steady long term
growth in Southampton property prices helped by strong demand so far this
summer, alongside an underlying lack of supply and the continued low mortgage
rate environment, means the slow but steady upward momentum of the Southampton
property market is likely to continue in the second half of 2015.
However, there
are a couple points I wish to highlight as all my blog readers will know, I
like to give a balanced and honest opinion of what is happening in the Southampton
property market. The two main points
being low interest rates and a lack of supply of property.
Interest rates first - Mark Carney (Chief of the Bank of
England) said in a speech a few weeks ago at Lincoln Cathedral, the Bank will
be seriously considering raising interest rates around Christmas time. An
upward movement in interest rates will temper demand and result in a marked
slowdown in house price growth. Mr Carney said that only six out of ten people
that had a mortgage (57% to exact) had a variable rate mortgage, compared with
more than five in seven (73% to be exact) in the Summer of 2012. Now I am not a
mortgage arranger and cannot give advice, but rates are only going on one
direction, so whether you are a landlord or homeowner, this might be a time to
consider fixing your mortgage rate? Don’t
say I didn’t warn you!
Tie this in
with the stricter mortgage lending rules which were introduced in 2014, which
affected people’s ability to have larger mortgages, this means homeowners will
need to be realistic in their pricing if they want to sell. Reading other
recent reports though, property owners have continued to pay off mortgages at a
faster rate while mortgage rates have been low. Therefore, when mortgage rates
rise, the effect on home movers sentiment which, given the shortage of supply,
would result in a marked slowdown in the rate of house price growth.
Shortage of Supply – As I have mentioned in previous articles, the number of houses on the market in Southampton is at an all-time low. One reason is the large number of buy to let landlords who have bought Southampton property over the past fifteen years. Unlike first time buyers who tend to move on after a few years, landlords tend to keep their properties long term, meaning there are less properties coming onto the market ... thus restricting supply and sales. In fact over the last two months, only 546 properties in the Southampton City Council area have changed hands and sold, compared to 576 in the same period in 2014, a not so insignificant drop of 5.21%.
Shortage of Supply – As I have mentioned in previous articles, the number of houses on the market in Southampton is at an all-time low. One reason is the large number of buy to let landlords who have bought Southampton property over the past fifteen years. Unlike first time buyers who tend to move on after a few years, landlords tend to keep their properties long term, meaning there are less properties coming onto the market ... thus restricting supply and sales. In fact over the last two months, only 546 properties in the Southampton City Council area have changed hands and sold, compared to 576 in the same period in 2014, a not so insignificant drop of 5.21%.
If you are
planning on investing in the Southampton property market, or just want to know
more about our local market please do give me a call.
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