A few weeks ago, I suggested property values in Stoke-on-Trent
would be between 1.4% and
2.1% different by the end of the year. It might surprise some people that Brexit
hasn’t had the effect on the Stoke-on-Trent property market that most feared at
the start of 2018.
The basis of this point of view can clearly be seen in
the number of property transactions (i.e. the
number of property sold) that have taken place locally since 2008. The most
recent property recession was the Credit Crunch years of 2008/2009/2010.
In property recessions, the headline most people look
at is the average value of property. Yet, as most people that sell also go on
to buy, for most home movers, if your property has gone down in value, the one
you want to buy has also gone down in value so you are no better or worse off.
If you are moving up market - which most people do when they move home - in a
repressed market, the gap between what yours is worth and what you will buy
gets lower ... meaning you will be better off.
The Average Number of Properties
Sold Per Month Over the Last 10 Years in Stoke-on-Trent
| |||
|
2008 to 2010
|
2014 to 2017
|
2018
|
Jan
|
145
|
231
|
263
|
Feb
|
200
|
254
|
280
|
March
|
212
|
337
|
375
|
April
|
209
|
277
|
271
|
May
|
253
|
316
|
282
|
June
|
235
|
350
|
295
|
July
|
201
|
330
|
305
|
Aug
|
199
|
318
|
327
|
Sept
|
202
|
322
|
282
|
Oct
|
202
|
340
|
288
|
Nov
|
189
|
313
|
304
|
Dec
|
219
|
329
|
295
|
Then, I looked at the average quarterly figures for those chosen date ranges ... and created this graph ...
In that 2008 to 2010 property Credit Crunch recession, the average number of properties sold in the Stoke-on-Trent area was 205 per month. Interesting when we compare that to the boom years of 2014 to 2017, when an average of 310 properties changed hands monthly … yet in the ‘supposed’ doom laden year of 2018, an impressive average of 297 properties changed hands monthly … meaning 2018 compared to the boom years of 2014 to 2017 saw a drop of 3.9% - yet still 44.7% higher than the Credit Crunch years of 2008 to 2010.
It is these issues which will ultimately determine and form the rather unexciting, yet still vital, long term outlook for the Stoke-on-Trent (and national) housing market, as I feel the Brexit issue over the last few years has been the ‘current passing diversion’ for us to worry about. Assuming something can be sorted with Brexit, in the long term property values in Stoke-on-Trent will be constrained by earnings increases with long term house price rises of no more than 2.5% to 4% a year.
Fundamentally, the question I am asked by many Stoke-on-Trent buy to let
landlords and Stoke-on-Trent homebuyers is ... “should I wait to buy or not?”
As a Stoke-on-Trent homebuyer, one shouldn’t be
thinking of what is happening in Westminster, Brussels, Irish Backstop, China
or Trump and more of your own personal circumstances. Do you want to move to
get your child in ‘that’ school or do you need an extra bedroom for your third
child? For lots of people, the response is a resounding yes - and in fact, I
feel many people have held back, so once we know what is finally happening with
Brexit and the future of it, there could a be a release of that pent-up demand
to move home as people humbly just want to get on with their lives.
There is little to be lost in postponing a house purchase
until there is better clarity on the situation. If it isn’t Brexit it will
something else - so just get on with your lives and start living. We got
through the global financial crisis/Credit Crunch in ‘08/’09, Black Wednesday
in ’92 where mortgage interest rates went from 8.5% to 15% in one day, we got
through the worst stock market crash with Black Monday in ’87, hyperinflation,
power shortages, petrol quadrupling in price in less than a year and a 3 day
week in the ‘70’s … need I go on?
Stoke-on-Trent Landlords? Well, where else are
you going to invest your money? Like I said earlier in the article, we aren’t
building enough homes to keep up with demand ... so as demand outstrips supply,
house values will continue to grow. Putting the money in the building society
will only get you 1% to 2% if you are lucky. In the short term though, there
could be some bargains to be had from shortsighted panicking sellers and in the
long term ... well, the same reasons I gave to homeowners also apply to you.
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