The founder of Ivy Gate, Jason Tebb, gives his latest views on the property market, and gives his predictions for the rest of 2015.
What’s happening in the market?
The market tends to slow down in terms of new available properties, in the run up to a general election. The reasons for this revolve around seller and landlord sentiment and a ‘wait and see’ approach. This is one of the most open elections for years, even seasoned political commentators are struggling to call the outcome, so it makes sense that important decisions are put off until the election result. However, this hasn’t changed buyer or tenant appetite, and we are seeing higher than expected applicant levels. Therefore demand is yet again outstripping supply, and our homes are currently selling at 97.7% of asking price, making it a great time to sell.
What’s happening in the economy as a whole?
There is still fragile but continued growth as the country emerges from recession. However, the City is predict ing that there will be negative inflation of about -0.5% by the end of the second quarter this year. Inflation as a whole is vital for the stability of the economy. We are starting to see real terms wage rises of about 2% following the latest budget indications and growth forecasts. However, in order to get GDP growth kickstarted properly we need to see a real term wage rise of about 4-5% in order to give average homes more money in their pockets, thereby increasing spending. Unemployment is down to its lowest level in 7 years. This has a positive effect on both the exchequer and general sentiment of the country.
The latest budget announcement has provided some further stimulus for first time buyers. The scheme will provide a government bonus to each person who has saved into a Help to Buy ISA at the point they use their savings to purchase their first home. For every £200 a first time buyer saves, the government will provide a £50 bonus up to a maximum bonus of £3,000 on £12,000 of savings. This will have limited impact, but important for sentiment nonetheless.
How is the lettings market?
With the increased employment levels and growth from UK based businesses come increased demand in the private rented sector. We have seen a significant increase in corporate tenancies, and have current requirements from The Korean Embassy, Shell Oil, JP Morgan, Hyundai and Samsung. As such there is huge demand for well proportioned three and four bedroom family homes with good transport links in to and out of Central London. These corporate tenants are reliable, secure and usually pay in advance, making them excellent tenants for first time Landlords.
What types of property are in most demand?
We have the highest levels of demand for mid and upper mid range family homes from £650,000 to £1.25m. Most of our buyers are either locals upgrading to larger homes or professional couples with small families moving out of central London and into this area for the first time.
What’s going happen to the market for the rest of the year?
Most forecasters predict an average house price increase of around 5% this year and we broadly support this view. However, we believe that in some areas we will see double digit growth in 2015.
This will be fuelled by a lack of supply in key areas, particularly where growing families are looking for larger homes in good school catchment areas, and close to transport links into central London.
We predict that the lettings market will also gather considerable pace in the second half of the year. Increasing numbers of tenants move to West London, Surrey and the home counties seeking more affordable homes which still provide good access in to the City.
Jason Tebb
7th March 2015
Jason Tebb is the Founder of Ivy Gate – the personal and bespoke estate agents covering Greater London and the home counties. For more information contact hello@ivygate.co.uk