One of the most frequently asked questions at this current moment in time is "what is happening with the house prices in the region and why are so many properties increasing in value?"
There are many reasons for the current inflation in house prices, with not just the short term pandemic and stamp duty incentives to blame. While the stamp duty incentive is significant for many people up to the end of June 2021, with a saving of potentially £15,000 if you were buying a house at £500,000 or more, there are also other reasons why the housing market is experiencing a period of growth and inflation. Since the financial crash in 2007, many locations throughout the country experienced very low levels of new build construction and homes, yet the population continued to live longer and expand, and, as a result, the demand for housing has increased year on year with very few examples, until the last few years, of planning permission being granted and sites being developed. The current situation is that we appear, as estate agents, to have some 35%-40% fewer instructions in recent months, mainly due to the pandemic and the concern that people have for buyers viewing their homes. This, also matched with increased demand for property at the moment, appears to be 40%-50% higher than what is normal. The simple economy of those figures indicates that too many people are wanting to buy a house and not enough houses are coming onto the market, so prices are rising. When we appraise houses at this current time, we use comparable evidence to relate to the nearest similar house which has sold, but because we often have anywhere between five to 20 people looking to buy that style of house, the demand is so great that the free market condition pushes the value to the level which the most demanding buyer believes it is worth. In many instances recently, we have seen our asking prices exceed by 10% or 15%, purely down to the individual circumstances of the buyers involved. This cannot continue and the values will eventually slow down as the supply of property increases, which is being very much driven by the new homes sector who are reacting to the high demand for property and are building as many as they can on sites throughout the region. This, combined with the second vaccination of many individuals, will relax people’s fears and will encourage more vendors to place their house on the market so supply should increase over the next six to12 months. Over my career of 35 years in the housing market, we often used to see house price increases every seven years or so, but the crash in 2007 led to a very unique circumstance and a much longer term period of pricing stability. For many people, the value of their home in 2018 was similar to that of 2007, some 11 years earlier. Only in the last three years have values started to rise and recover from where their peak was. It is also fair to reflect that over the period of 2008 – 2011 prices were very volatile and, in many locations, they actually fell. These prices have now recovered well and in recent months are going up well above their greatest price. Another favourable factor is the low cost of borrowing with some excellent fixed rate deals available and, recently, the government’s further incentive to provide a mortgage indemnity guarantee for those who wish to borrow up to 95% of the loan value; all of this will keep demand at a higher level for a period of time and therefore if you’re thinking of moving you should do so sooner rather than later to take advantage of the prices before they rise further. Here at Sanderson Young, we have had a very busy six months and are doing our utmost to provide as many new houses to the market as possible; in particular we are delighted to be presenting a number of new homes schemes and these are extremely popular throughout the region, where buyers have a good choice of smaller starter homes and larger luxury detached in the ever popular Sycamore Square scheme in Gosforth, due to be released in late April 2021.
