I was having lunch the other day in Melton Mowbray, with a local Melton Mowbray solicitor friend of mine, when the subject of property came up. He asked me my thoughts on the Melton Mowbray property market for the next five years.
Firstly I need to look at what has happened over the last five years. One of the key drivers of the housing market and property values is unemployment, or the lack of it.
When the conservatives came to power in May 2010, the total number of people who were unemployed in town stood at 1,175 (or 2.3% of the working age population in Melton Mowbray parliamentary constituency). Last month, this had dropped to 458 people (or 0.9% of the working age population).
As the Melton Mowbray job market has improved with better job prospects, salaries are rising too, growing at their highest level since 2009, at 3.4% per year in the private sector (as recently reported by the ONS). That is why, even with the turbulence of the last few years, property values in the Melton Mowbray area are 7.16% higher today than they were five years ago.
Many home occupiers have held back moving house over the past seven to eight years, but with the outlook more optimistic I expect at least some to seize the opportunity to move home. With a more stable economy in the town, this will, I believe, drive a slow but clearly defined five year wave of activity in home sales and continued house price growth in Melton Mowbray.
I forecast that the value of the average home
in Melton Mowbray will increase by 19.1% by 2021
19.1% might sound optimistic to some, but according to Land Registry, values are currently rising in Melton Mowbray at 2.8% year on year, I believe my forecast to be fair, reasonable and a reflection of both positive (and negative) aspects of the local property market and wider UK economy as whole.
It wouldn’t be correct not to mention those potential negative issues. The number of properties for sale in Melton Mowbray is lower than it was five years ago, restricting choice for buyers (yet the other side of the coin is that that keeps prices higher). Interest rates were being predicted to rise around Easter 2016, but now I think it will be nearer Christmas 2016 and finally the new buy to let taxation rules which are being introduced between 2017 and 2021 (although choosing the right sort of property / portfolio mix in Melton Mowbray will, I believe, mitigate those issues with the next taxation rules).
I am telling the landlords I speak to, that with interest rates at their current level 0.5%, the cash in your Building Society Passbook is going to grow so slowly that it might as well be kept under their bed. Property prices, by contrast, have rocketed over the years, even after the property crashes, far outstripping bank accounts and inflation.
So my final thought ... property is a long term investment, it has its’ up and downs, but it has always outperformed, in the long term, most investments. Those in their 40’s and 50’s in Melton Mowbray would be mad not to include property in their long term financial calculations. Just make sure you buy the right property, at the price in the right location.