I was having lunch the other day with a local Stoke upon
Trent solicitor friend of
mine, when the subject of property came up. He asked me my thoughts on the Stoke upon
Trent 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 Stoke upon Trent 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 led government came to power in May 2010, the
total number of people who were unemployed in the City stood at 2,765 (or 6.56%
of the working age population in Stoke upon Trent parliamentary constituency).
Last month, this had dropped to 1,012 people (or 2.4% of the working age
population).
As the Stoke upon Trent 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 Stoke upon Trent area are 0.24%
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 Stoke upon Trent.
I forecast that the value of
the average home
in Stoke upon Trent will
increase by 17.2% by 2021
17.2% might sound optimistic to some, but according to Land
Registry, values are currently rising in Stoke upon Trent at 5.5% 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
Stoke upon Trent housing market. The
number of properties for sale in Stoke upon Trent 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 Stoke
upon Trent 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 Stoke upon Trent 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.
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