The Southampton Property market in 2016 and beyond!

A question I often get asked is how the Southampton property market will perform, particularly when you look at how stocks and shares have performed recently! As we all know property values are both a national obsession and a key driver of the British consumer economy.  So what will happen next in the property market?

Before we look to the future you need to look at what has happen over the last five years.  One of the key drivers of the housing market and property values is unemployment, as it drives confidence and wage growth – key factors as to whether people buy their first house, existing homeowners move up the property ladder and even buy to let landlords have an appetite to continue investing.

When the Tory’s came to power in 2010, the total number of people unemployed in Southampton stood at 2,058 (4%) Last month, this had dropped to 813 people.

As the Southampton job market has improved with better job prospects, salaries are rising too, growing at 3.4%p.a. - their highest level since 2009.  That is why, even with the turbulence of the last few years, property values in the Southampton are now 10.06% higher than they were five years ago.

Many homeowners have held back moving house since 2007 following the Credit Crunch but with the outlook improving, I expect some to seize the opportunity to move home, releasing pent up demand as well as putting more stock onto the market. With a more stable economy in the City, this will, I believe, drive a slow but clearly defined five year wave of activity in home sales and continued house price growth in Southampton.

My expectation is that Southampton property values will increase by 21.9% by 2021. Now that might sound optimistic to some, however values are currently rising in Southampton at 5.5%p.a. This forecast reflects both the positive and negative factors of our local market and the wider UK economy as whole.

So what about those negative factors that may affect the future of the property market.  Well the number of properties for sale in Southampton is lower than it was five years ago, restricting choice for buyers (but this can keep prices higher). Interest rates were being predicted to rise around Easter, but now I think it will be nearer to Christmas and finally the new buy to let taxation rules which are being introduced between 2017 and 2021 and of course the stamp duty changes for second home owners.

Investors that I speak to, know that with interest rates at their current level, the cash in their Building Society or Bank accounts is falling in value! Property prices, by contrast, have grown over the years, even after the property crashes, far outstripping bank accounts and inflation.

Property is a long term investment, it has its’ up and downs, but it has always outperformed, in the long term, most investments. Whether you are a first time buyer in your 30’s, trading up as the kids grow or you are looking to plan for your retirement I feel the Southampton property market will produce good medium to long term returns.  Just make sure you buy the right property, at the price in the right location, whatever your investment goal.