Southampton property values are currently 1.7% higher than
at the end of 2017, notwithstanding the uncertainty and threats over the
potential impact of Brexit in 2019. This has exceeded all the predictions (aka
guesses) of all the City of London economists, in an astonishing sign of
strength for the local Southampton and wider national economy.
Nevertheless, the statistics from the Land Registry come
after a lethargic year for the number of properties in Southampton
compared to the actual prices achieved for those properties. All this against a framework of amplified
political ambiguity and ensuing years of rising Southampton property
values that have reduced the affordability of homes in the locality.
The average value of a Southampton property today,
currently stands at £293,200
Looking in finer detail, it isn’t a surprise that 5,103
property sales in Southampton over the last 12 months is somewhat lower than
the long-term average over the last 20 years of 7,517 property sales per year
in Southampton as the long-term trend of people moving less has meant a decline
in the number of property transactions.
I believe locally, Southampton property value growth will be
more reserved in 2019 after two decades of weaker wage rises. One of main drivers
in the demand (and thus the price people are prepared to pay for a home) is the
growth of peoples wage packets. Interestingly, wage inflation over the last six
months has risen from 2.4% in the late summer to its current level of 3.3% (which
is higher than the average since the Millennium, which has been a modest 2.1%).
One of the reasons why wages are growing in the short term is the unemployment
rate in the country currently only stands at 4.1%, continuing to stay close to
its lowest level since the 1970’s.
However, even though Southampton salaries and wages are
rising comparatively higher than they were last year, looking over the long
term, Southampton property values are 120.85% higher than they were in January
2002, yet average salaries are only 76.1% higher over the same time frame. This
means over the last few years, with average property values so high comparative
to salary/wages, many Southampton potential buyers have been priced out of
being able to purchase their first home.
At first glance, these stats are actually rather positive during
this reported time of political uncertainty and the height of Brexit commotion
... because I genuinely believe that to be the case. The press have always
looked for the bad news (well they do say it is that that sells newspapers),
and whilst I am not entering into the pros and cons of Brexit itself, the
numbers do stack up quite well since the Brexit vote took place nearly 3 years
ago.
Moving forward, when taken with the recent reduction in short
to medium term number of property transactions (i.e. the number of Southampton
properties sold), it should be noted that a lot of this
buoyant house price increase has a lot more to do with a shortage of properties
on the market rather than an uplift in the Southampton housing market
generally.
And we can’t forget that Southampton isn’t in its own little
bubble, as there are noteworthy differences across the UK in property value inflation.
House prices in London and the South East have hardly risen or even fallen in
some places, whilst in the Midlands, North and other parts of the country they
have generally increased.
Looking forward, I would say to the homeowners and buy to
let landlords of the locality that I expect Southampton house price growth to
remain stable between 0.6% and 1.4% by the end of this year (although they
could dip slightly during the summer) ... as long as nothing unexpected happens
in the world economically or politically of course.
If you are looking for an agent that is well established, professional andcommunicative, then contact us to find out how we can get the best out of your investment property.
Email me on brian.linehan@belvoir.co.uk or call on 023 8001 8222.
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