Tag: national trends

Crawley Property: Market Review 2015

Here’s wishing you a Happy & Prosperous 2016.

Just before the Christmas break one of our long standing landlords popped into the office to wish us the Seasons Best and we got talking about what the Crawley property market has in store for the coming year. There are numerous changes afoot in the property market in general and in particular for the private rented sector (PRS). However, as we were just collecting information together for this article we were able to take a brief look at what the market here in Crawley had done in 2015. Here’s the bones of what we discussed.

When our landlord came into the office the Nationwide Building Society had just published their December 2015 House Price Index (see http://www.nationwide.co.uk/about/house-price-index/headlines). The index had shown a steady annual increase in average property prices of 3.7% to the year ended Nov 15. This puts the average price for a property in the UK at just over £196 000 compared with just over £189000 a year earlier – see Table 1 for details. As always there is considerable regional variation in prices, with London & the Southeast coming out on top, with areas to the North & in Scotland lagging some way behind. Indeed, the Nationwide survey shows that the so-called North – South divide is alive and kicking (at least in terms of property prices) and has actually widened further. More on this later.

So much for the national picture, what about our local property market here in Crawley ?

In order to compare national trends with those in Crawley, we’ve used Land Registry price paid data and calculated the average change in local property prices. As the latest property price information from the Land Registry is up to the end of Nov 15, we’ve used this date to compare local and national trends. The information comparing Crawley and UK wide property prices is shown in Table 1 for the years ending Nov 13, 14 & 15.

Table 1

16-1-16 Table 1

* Price data from Nationwide Building Society

** Calculated as 3 month moving averages from HM Land Registry Price Paid Data to the nearest £100

As you can see from Table 1, the average Crawley property price in Nov 15 was £264500. This is some 35% above the national average as quoted by the Nationwide at £196305. The difference between these prices is only to be expected for a town like Crawley which lies in the South East of England, one of the most expensive parts of the UK. The table also shows the year on year rate of property prices rises, which are also shown on Graph 1.

 

Slowing Rate of Property Prices Rises

As we are all no doubt aware, prices in Crawley have been increasing over the last few years. However, as shown in Graph 1, the rate of increase has slowed to 6.8% for the year ended Nov 15 from a peak in 2014. The trend of year on year property price rises seen in Crawley  over the last few years is mirrored nationally, but at a lower rate – as shown in Graph 1.

Graph 1

Graph 1 16-1-16

The reduction in property price rises shown in Graph 1 is not unexpected, as wage rises have increased at a much lower rate. In addition, the Government, via the Bank of England, has tried to clamp down on the availability of mortgages and imposed much stricter lending criteria in the so-called MMR (Mortgage Market Review). More recently, the Bank of England has also announced a tightening on Buy-to-Let lending, in an effort to limit property prices rises to a more sustainable long term level. So the slowdown in the rate of property price rises is to be expected and is largely welcome – after all, no one really wants another boom & bust ! Let’s hope the politicians and the Bank of England know what they’re doing !

 

Increasing North – South Divide

Both Graph & Table 1 also show another interesting trend in property prices – the so-called North – South divide. As clearly seen in Graph 1, the rate of property price increases in Crawley (blue line) has been consistently higher compared with the national trend (red line). Prices in Crawley have therefore been increasing at a faster rate than those nationally.

The difference in average prices between Crawley and the rest of the UK is shown in more detail in Graph 2. Again, the blue line shows Crawley prices and the red line, the UK average. You will notice that the price data for Crawley is more “lumpy” than that seen nationally from the Nationwide. This is due to the relative amounts of data used to produce the two graphs. Nonetheless, the upward trend in property prices in both cases is obvious to see. Trendlines have also been added to the graphs (the dark grey dashed lines) for clarity.

Graph 2Graph 2 16-1-16 Firstly notice that the trendlines are good fits to both sets of data. Secondly, it can be seen quite clearly that the trendline for Crawley has a steeper slope than that for the UK as a whole. This indicates the more rapid rise of property prices here in Crawley. By way of example, in Nov 13 the difference in average prices between Crawley and the rest of the UK was just under £52000. Fast forward to the end of Nov 15, however, and the difference had increased by nearly 32% to just over £68000. So, the North – South divide in property prices continues to widen.

Well, so much for what has happened to the Crawley property market in 2015, what about 2016 ? Over the next few blogs we’ll take a more detailed look at what could lay in store for us in the coming year. We’ll also take a more detailed look at some interesting properties as they come on to the market.

If you’re interested in property investment in Crawley or the surrounding towns, why not give us call on 01293 515588. Our advice is free and we’d love to have a chat with you about our favourite subject – property ! Alternatively, you can also e-mail us on crawley@northwooduk.com. Either way, we’d love to hear from you.

26th October 2015

BBC News Headlines: Prices of flats rising faster than houses, says Halifax

One of our landlords called up recently regarding an article he’d seen on the BBC News website. The headline that grabbed his attention was that capital growth in flats had out-performed houses over the last 10 years, having increased in value by 60%. As he has both flats and a house that he rents out in Crawley, he was wondering if the same trend applied to his properties. If you’re interested, here’s the link to the article on the BBC News website http://www.bbc.co.uk/news/business-34444201.

On reading the BBC article further and looking into the information it was based on, it became clear that the main reason for flats out-performing houses was due to what we term as the “London Effect”. Because of the sheer size & value of the capital’s property market, the “London Effect” often skews house price information for the whole of UK. This can make it difficult to determine trends outside of the capital, unless London prices are excluded.

The BBC News report was based on research by the Halifax. If you want to take a look at their report, here’s the link http://www.lloydsbankinggroup.com/globalassets/documents/media/press-releases/halifax/2015/150923-property-types-final.pdf. In Table 1 below we show the property prices from the Halifax report.

The Halifax data in Table 1 shows that the price of flats have indeed increased UK wide by 60%. In addition, it should not be forgotten that during this period the UK suffered from a credit crunch from 2008 onwards, which saw UK property prices plummet after their peak in 2007. The Halifax data shows that all types of property have similarly shown an increase in value over the same period, with the next highest being terraced houses (41%), then semi-detached (32%), bungalows (28%) and lastly detached houses (21%).

Table 1 26-10-15To see if the same or similar trends apply to Crawley, we looked at the change in flat & house prices using Land Registry data. The results are shown in Table 2.

Table 2 26-10-15The property price trends for flats in Crawley in Table 2 are very different from those reported in the BBC News & Halifax headlines. In contrast to the 60% UK wide increase in the price of flats over the last decade, flats in Crawley have only increased by 26%. One reason for the lower price increase is the “London Effect”, which is obviously not present here in Crawley. In fact, looking at the data in Table 2, we see that the price of flats in Crawley have in fact underperformed houses by at least 15% over the last decade.

In Graph 1 below we show how average prices for houses and flats in Crawley have changed year on year over the last decade. The effects of the double dip recession in the UK economy on prices can also be clearly seen for both types of property. One aspect that is also very clear from this graph is the divergence in prices between flats and houses from 2005 onwards. In 2005, for example, the average price paid for a house in Crawley was 49% higher than for a flat. Over the intervening years this difference has increased. In 2010, it was 73% and in the current year it has increased to 113%. The main reason for this divergence is that the price of flats in Crawley over the last decade have remained relatively subdued compared to houses. Again, this trend is clearly shown in Graph1.

Graph 1 26-10-15

So what conclusions can we draw ?

The first is that the BBC News & Halifax headlines that flats had outperformed houses over the last decade, does not apply to the Crawley market. In fact, by detailed analysis of the Land Registry sold price data, we have shown that the reverse is in fact true for Crawley.

The second conclusion is that price increases seen for flats & houses in Crawley have diverged over the last decade. Flats have performed relatively poorly with only a 26% increase in their value compared with 41% for houses.

In later blogs we will look more closely at the possible reasons to explain the relatively poor capital appreciation achieved by flats in Crawley market over the last ten years.

*Average Flat & House prices calculated from Land Registry data