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.
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