Some landlords have been speaking to me recently about stories in the press and their concerns about booming house prices and the next housing bubble in Chelmsford. In the past few years, if you were going to be buying soon in Chelmsford, it was vital to ensure you build in some capital growth by buying cheaply or finding a way to add value. Interestingly, property values in Chelmsford have increased by an impressive 9% in the last 12 months and in the last six months, properties have been going for their asking prices, some over the asking price. So are properties too expensive?
Looking at the market and looking at every property sale in Chelmsford that sold in 2007 and again in the last few months f 2014, property values are on average 13.8% higher in Chelmsford than they were in 2007, which was the last boom before they dropped by 15% to 20% in 2008. On the face of it, a 9% increase over the last 12 months in Chelmsford property values is impressive, especially as those same property values are 13.8% higher than the boom of 2007. Does this suggest properties are too expensive in Chelmsford?
Well, the answer is both Yes and No. Yes, the headline price that the property sells for is 13.8% higher than 2007, yet No, because these headline figures don't take into account inflation. Since 2007, inflation has risen by around 19%. So instead of property values being 13.8% more expensive than the 2007 boom, they are in fact 5.2% cheaper than the boom (19% less 13.8% equates to 5.2%). People think inflation is a bad thing, eating away at the real value of your savings. It can however, be advantageous to property investors.
My answer to landlords is get the best advice and opinion you can. Speak to me, speak to others, do your homework and drive a hard bargain when buying, thus ensuring when prices do start to rise again, you are in pole position.