Following my article a couple of months ago on property
values up to July, I am pleased to say that Teddington house prices edged up by
a further 1.8% in the last 3 months. As a result, the annual pace of house
price growth in Teddington is up to 12.7% from 10.9% in July. We need to go
back to March 2010 to see such a high growth, as house price growth continues
to outpace earnings by a wide margin, with average wage growth running at less
than 1% in recent months.
I am not an estate agent, but know most of the estate agents
in town pretty well and they say new buyer enquiries have moderated somewhat in
recent months. Coupled with the prospect of interest rate increases together
with subdued wage growth may temper demand in the year to come. The demand
should be there as the brightening economic outlook and consumer sentiment
remains buoyant thanks to declining inflation and sustained decreases in
unemployment down in Teddington to one of its lowest rates of 1.5%
Nevertheless, Teddington housing affordability does not
appear stretched by historic standards, in part, due to the low level of
mortgage rates. However, a decent two bed flat can be yours in Teddington for
£350,000, meaning if you could save the £52,500 deposit (85% LTV), it would be
cheaper to rent than buy. So why are first time buyers buying their first house
instead of renting?
It comes down to choice and lifestyle of the tenants. In many cases renting provides
the flexibility some people, especially young people, want and need. For
others, home ownership is top priority but when there is no social pressure to
buy and you can ring the landlord and sort out any issue, why would someone
want to buy? Youngsters find it hard to save for the deposit when Apple launch
their latest iPhone every six months or the next 50 inch LCD TV needs buying.
Renting is a choice and we are developing a more European mind-set it would
seem.
Therefore, my message to Teddington landlords is renting is
here to stay for the medium to long term, whilst the outlook in the short term
for the Teddington and Richmond Borough housing market remains uncertain. The
number of mortgage approvals fell by almost 20% between January and August,
suggesting that activity was cooling. However, there was a modest rebound in
September and it is unclear how much of the slowdown was due to the
introduction of Mortgage Market Review rather than an underlying loss of
momentum.
It’s all about buying a property that will attract the right
sort of tenants, a good balance of yield and capital growth and when you do
come to sell it in ten or twenty years, it will sell at whatever the market is
doing at the time. I can give you my honest opinion on any property. Many
landlords send me Rightmove links to property, asking my advice. You can too if
you want... It’s no trouble at all, but I will warn you, I will always tell you
what you need to hear, not want you want to hear! Email me on rebecca@rebeccasmithpropertyservices.co.uk
Rebecca Smith
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