Earlier this week Spicer-Hart boss Paul Smith added his name to those in the industry who believe that property prices have topped with transactions falling in recent months across the UK.
Many will see similarities between these claims and those made in 2007 by housing commentators, but homeowners and investors would be well-advised to understand that a reduction in growth does not equate to a property market in free-fall. Housing prices vary widely across the UK, and whilst the national trend might indicate a slow-down, regions will all perform differently. Savills 5-year report continues to see the South West as one of the strongest performing regions across the country, suggesting price rises of 19.9% over the course of the next 5 years – only the South-East and East of England are predicted to rise at a faster rate.
As always, predicting property prices is an uncertain and constantly evolving science. It is true to say that Land Registry sold price data for Plymouth has seen a steady year-on-year reduction in house price inflation from a peak of 5.8% in August 2014 to 0.2% for the last results published in March this year.
HMRC data published earlier this month showed a reduction in completed sales between March-April of this year of 45.2%. The impact of the reduced number of sales transactions is largely a consequence of the inflated pre-SDLT rush to buy, and there is likely to be a hangover from this until at least after the EU referendum and possibly beyond. As a consequence, we predict a slight reduction in sales prices in Plymouth through into Q3 of this year.
So, what does that mean for homeowners and investors in Plymouth?..... Well, vendors may need to be slightly more conservative in their asking prices. Those agents that routinely price on the assumption of continued growth are likely to be left with large numbers of unsold properties with price reductions to follow. Vendors would be well-advised to interrogate valuers to provide better evidence to support their pricing claims. The next six months will also provide ample opportunity for pro-active agents to prove their mettle and vendors should again ask how their chosen agent intends to actively market their property as opposed to merely listing it.
As always, slowing conditions present opportunities to investors who are willing to take advantage by shopping around, waiting for vendor expectations to realign and offering low on those properties that are failing to sell.
Landlords and homeowners wanting to discuss their property investments are welcome to visit our offices on Mutley Plain or visit our website.