I was having lunch the other day at The County Kitchen, The County
Hotel on Rainsford Road in Chelmsford, with a local Chelmsford solicitor friend of mine, when
the subject of property came up. He asked me my thoughts on the Chelmsford
property market for the next five years. Property prices are both a British
national obsession and a key driver of the British consumer economy. So what will happen next in the property
market? So here is what I told him, and now wish, my blog reading friends, to share
with you.
Before I can predict what will happen over the next five years to Chelmsford
house prices, firstly I 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 (or lack of it), as that
drives confidence and wage growth – key factors 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 purchasing buy to let property.
When the Tory’s came to power in May 2010, the total number of
people who were unemployed in City stood at 1,866 (or 3.3% of the working age
population in Chelmsford parliamentary constituency’s). Last month, this had
dropped to 854 people (or 1.5% of the working age population).
As the Chelmsford job market has improved with better job prospects,
salaries are rising too, growing at their highest level since 2009, at 3.4% per
year in the private sector (as recently reported by the ONS). That is why, even with the turbulence of the
last few years, property values in the Chelmsford area are 20.62% higher today
than they were five years ago.
Many home occupiers have held back moving house over the past seven
to eight years following the Credit Crunch but with the outlook more
optimistic, I expect at least 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 Chelmsford.
I forecast that
the value of the average home
in Chelmsford
will increase by 24.1% by 2021
24.1% might sound optimistic to some, but according to Land
Registry, values are currently rising in Chelmsford at 7.9% year on year, I
believe my forecast to be fair, reasonable and a reflection of both positive
(and negative) aspects of the local property market and wider UK economy as
whole.
However, it wouldn’t be correct not to mention those potential
negative issues as I do have some slight concerns about the future of Chelmsford
housing market. The number of properties
for sale in Chelmsford is lower than it was five years ago, restricting choice
for buyers (yet the other side of the coin is that that keeps prices higher).
Interest rates were being predicted to rise around Easter 2016, but now I think
it will be nearer Christmas 2016 and finally the new buy to let taxation rules which
are being introduced between 2017 and 2021 (although choosing the right sort of
property / portfolio mix in Chelmsford will, I believe, mitigate those issues
with the next taxation rules).
I am telling the landlords I speak to, that with interest rates at
their current level 0.5%, the cash in your Building Society Passbook is going
to grow so slowly that it might as well be kept under their bed. Property
prices, by contrast, have rocketed over the years, even after the property
crashes, far outstripping bank accounts and inflation.
So my final thought ...
property is a long term investment, it has its’ up and downs, but it has
always outperformed, in the long term, most investments. Those in their 40’s
and 50’s in Chelmsford would be
mad not to include property in their long term financial calculations. Just
make sure you buy the right property, at the price in the right location. One
source of information on such matters would be the Chelmsford Property Blog ...
http://chelmsfordproperty.blogspot.co.uk/
