In amongst all the articles and debates of whether housing prices are going up down or sideways, every now and then I like to do an analysis of my investment local area. After all, regardless of statistics, as a general rule the average investor doesn’t invest nationally, they invest locally. I’ve noticed some new letting trends too, but that’s a separate blog!
Where To Go For Info
One of the best places to get oodles of data all in one place is at mouseprice.com and as a back up I like to confirm it over at Hometrack.co.uk. Mouseprice shows you the data against the national stats- so it’s always interesting to see the differences. As an experienced investor I can easily tell by whats happening at street level too. In our local area over the last year we have seen an increase in flats and a decrease in middle range property come on to the market. By middle market, I mean standard 3/4 bed houses. So those at the lower end (flats) are finding it very tough. I’ve also noticed a huge upsurge of high end property come on to the market.This is property that has not been sold for many decades in prime locations.
To me this suggests that the high end owners are possibly trying to get out while the prices are deemed to be at the top. Flat owners, who in many cases will have over reached themselves in the ‘good’ times, are now looking to sell and cut losses. This could be down to lack of jobs in many cases, together with finances being squeezed with ever tighter taxes and problems in the economy.
Prices are static, suggesting owners are really not that keen to sell. They may be just testing the market. Those that do need to sell are reducing price. Prices are still 5% overvalued- as per the sales to asking price ratio. ( Do agents never learn?) Last year we saw an increase of 5% in price. This is largely due to the supply and demand factor. There is a glut of property on the market and not many folks can achieve the squeaky clean mortgage requirements, hence the false rise.
Any number of things in the economy or market can lead to the delicate balance being tipped towards a dip. Rising inflation or interest rate hikes, taxes and job losses could lead to repossessions. Repossessions lead to lower prices if we get a flood of them. Ive seen quite a few at all levels coming through in the last month or so.
Some Quick Local Market Facts
- Average earnings: £23k
- Average 3 bed house: £183K
- Price to earnings ratio 7.68% to 10.72% depending on where in the borough you live.
Result? People cannot get a mortgage for that level, and, even if they could the prices are too high to afford. Eventually, either wages will need to rise, or prices come down.( Or a combination of both.)
Auction Round Up
There are a lot more auction properties around too. I checked one postcode alone and saw 8 auction properties. Interestingly, the guide prices are a big mix of very high and very low, which kinda makes you think the local agents are sticking together in pricing the market high. Properties are selling for very close to the guide too, which means in reality they are dipping because in a buoyant market auction listings generally exceed the guide by up to 20%. There are still a lot of plots available with pre-approved planning permission, which says many local builders are in trouble. My guess is that this is largely down to lack of finance and general economic conditions forcing businesses to the wall.
I’m wondering if this is common to many other areas. What trends have you noticed?