Northampton property values rose by 0.2% last month, meaning
they are 5.7% higher than 12 months ago. Overall, I expect future property
price growth to remain firm, built on the foundations of an improving labour
market, strengthening economy and very low mortgage rates. In fact, talking to
a number of other agents in the town, mortgage arrangers and solicitors (all of
whom have their direct finger on the pulse of the Northampton property market),
the steady long term growth in Northampton property prices tied in by strong
demand conditions so far this summer, alongside an underlying lack of supply
and the continued low mortgage rate environment, means the slow but steady
upward momentum of the Northampton property market is likely to continue in the
second half of 2015.
However, there are a couple points I wish to highlight as
all my blog readers will know, I like to give a balanced and honest opinion of
what is happening in the Northampton property market. The two main points being low interest rates
and a lack of supply of property.
Interest rates
first - Mark Carney (Chief of the Bank of England) said in a speech a few
weeks ago at Lincoln Cathedral, the Bank will be seriously considering raising
interest rates around Christmas time. An upward movement in interest rates will
temper demand and result in a marked slowdown in house price growth. Mr Carney
said that only six out of ten people that had a mortgage (57% to exact) had a
variable rate mortgage, compared with more than one in seven (73% to be exact)
in the Summer of 2012. Now I am not a mortgage arranger and cannot give advice,
but rates are only going in one direction, so whether you are a landlord or
homeowner, this might be a time to consider fixing your mortgage rate? Don’t say I didn’t warn you!
Tie this in with the stricter mortgage lending rules which were
introduced in 2014, which affected people’s ability to have larger mortgages,
this means homeowners will need to be realistic in their pricing if they want
to sell. Reading other recent reports though, property owners have continued to
pay off mortgages at a faster rate while mortgage rates have been low.
Therefore, when mortgage rates rise, the affect on home movers sentiment which,
given the shortage of supply, would result in a marked slowdown in the rate of
house price growth.
Shortage of Supply – As I have mentioned in previous articles, the number of houses on the market in Northampton is at an all time low. One reason is the large number of buy to let landlords who have bought Northampton property over the past fifteen years. Unlike first time buyers who tend to move on after a few years, landlords tend to keep their properties long term, meaning there are less properties coming onto the market ... thus restricting supply and sales. In fact over the last four months, only 3,412 properties in the Northamptonshire County Council area have changed hands and sold, compared to 3,892 in the same time frame in 2014, a not so insignificant drop of 12.33%.
Shortage of Supply – As I have mentioned in previous articles, the number of houses on the market in Northampton is at an all time low. One reason is the large number of buy to let landlords who have bought Northampton property over the past fifteen years. Unlike first time buyers who tend to move on after a few years, landlords tend to keep their properties long term, meaning there are less properties coming onto the market ... thus restricting supply and sales. In fact over the last four months, only 3,412 properties in the Northamptonshire County Council area have changed hands and sold, compared to 3,892 in the same time frame in 2014, a not so insignificant drop of 12.33%.
If you are planning on investing in the Northampton property
market, or just want to know more, things to consider for a successful buy to let
investment please feel free to contact me on 01604 607080.
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