Over the last
12 months, the UK has decided to leave the EU, have a General Election with a
result that didn’t go to plan for Mrs May and to add insult to injury, our
American cousins elected Donald Trump as the 45th President of the United
States. It could be said this should have caused some unnecessary
unpredictability into the UK property market.
The reality is
that the housing and mortgage market (for the time being) has shown a
noteworthy resilience. Indeed on the back of the Monetary Policy pursued by the
Bank of England there has been a notable improvement of macro-economic
conditions! In July for example it was announced that we are witness to the
lowest levels of unemployment for nearly 50 years. Furthermore,
despite the UK construction industry building 21% more properties than
same time the previous year, there has still been a disproportionate
increase in demand for housing, particularly in the most thriving areas of
the Country. Repossessions too are also at an all-time low at 3,985 for the
last Quarter (Q1 2017) from a high of 29,145 in Q1 2009. All these things have
resulted in...
Property values in Crawley according to the
Land Registry are 6.4% higher than a year ago
So, what does
all this mean for the homeowners and landlords of Crawley, especially in
relation to property prices moving forward?
One vital bellwether of the property market (and property
values) is the mortgage market. The UK mortgage market is worth £961,653,701,493
(that’s £961bn) and it representative of 13,314,512 mortgages (interestingly, the UK’s
mortgage market is the largest in Europe in terms of amount lent per year and
the total value of outstanding loans). Uncertainty causes banks to stop lending
– look what happened in the credit crunch and that seriously affects property
prices.
Roll the clock back to 2007, and nobody had heard of the
term ‘credit crunch’, but now the expression has entered our everyday
language. It took a few months throughout
the autumn of 2007, before the crunch started to hit the Crawley property
market, but in late 2007, and for the following year and half, Crawley property
values dropped each month like the notorious heavy lead balloon, meaning …
The credit crunch caused Crawley property values to drop by 22.5%
Under
the sustained pressure of the Credit Crunch, the Bank of England realised that
the UK economy was stalling in the early autumn of 2008. Loan book lending
(sub-prime phenomenon) in the US and across the world was the trigger for this
pressure. In a bid to stimulate the British economy there were six successive
interest rates drops between October 2008 and March 2009; this resulted in
interest rates falling from 5% to 0.5%!
Thankfully,
after a period of stagnation, the Crawley property market started to recover
slowly in 2011 as certainty returned to the economy as a whole and Crawley
property values really took off in 2013 as the economy sped upwards. Thankfully,
the ‘fire’ was taken out of the property market in Spring 2015 (otherwise we could have had another boom and
bust scenario like we had in the 1960’s, 70’s and 80’s), with new mortgage
lending rules. Throughout 2016, we saw a return to more realistic and stable
medium term property price growth. Interestingly, property prices recovered in Crawley
from the post Credit Crunch 2009 dip and are now 77.8% higher than they were in
2009.
Now, as we enter the summer of
2017, with the Conservatives having been re-elected on their slender majority,
the Crawley property market has recouped its composure and in fact, there has
been some aggressive competition among mortgage lenders, which has driven
mortgage rates down to record lows. This is good news for Crawley homeowners
and landlords, over the last few months a mortgage price war has broken out
between lenders, with many slashing the rates on their deals to the lowest they
have ever offered. For example, last
month, HSBC launched a 1.69% five-year fixed mortgage!
Interestingly,
according to the Council of Mortgage Lenders, the level of mortgage lending had
soared to an all-time high in the UK.
In the Crawley postcodes of RH10
& RH11, if you added up everyone’s mortgage, it would total £2,292,369,322!
Since
1977, the average Bank of England interest rate has been 6.65%, making the
current 323 year all time low rate of 0.25% very low indeed. Thankfully, the
proportion of borrowers fixing their mortgage rate has gone from 31.52% in the autumn
of 2012 to the current 59.3%. If you haven’t fixed – maybe you should follow
the majority?
In
my modest opinion, especially if things do get a little rocky and uncertainty
seeps back in the coming years (and nobody knows what will happen on that
front), one thing I know is for certain, interest rates can only go one way
from their 300 year ultra 0.25% low level ... and that is why I consider it
important to highlight this to all the homeowners and landlords of Crawley.
Maybe, just maybe, you might want to consider taking some advice from a
qualified mortgage adviser? There are plenty of them in Crawley