Cheltenham's Property Market
The outlook for the housing market is ‘highly uncertain’, according to Nationwide, as it reported prices had fallen in January for the fifth time in seven months. The average property value prices edged 0.1% lower during January, leaving the typical home costing £161,602 - 1.1% less than in January 2010. And while prices are not falling at the rapid rate seen during the recent slump, the market looks set to be stuck in the doldrums with a lack of new homes up for sale frustrating potential homebuyers. The building society said the current pattern of low transaction levels, with prices moving sideways or modestly lower, was likely to continue this year, giving an unpredictable outlook.
However, on the local front, the picture is once again quite different from the rest of the country. According to Nigel Errington-Smith, of Errington Smith estate agents, the market in Cheltenham and the surrounding area is suddenly much busier than anticipated.
Properties in all price brackets are coming onto the market and sales are being agreed. Some which only came on at the beginning of January were under offer by the end of the month and February has been no different. Nigel told me that this was a real surprise, particularly because it was the opposite of what is being reported in the media. An upturn had not been expected till March at the earliest. So that’s good news for those who want to move within this area.
Phil Pugh of Philip Pugh and Partners added, ‘It was extremely difficult to read during January, with many would-be buyers – perhaps encouraged by press forecasts of a fall in values ahead – submitting very low offers but in most cases not succeeding. February, in contrast, has seen a more sensible approach in that generally offers have been nearer to asking prices and so standing a good chance of agreement given some negotiating. This has resulted in a number of sales arranged across most price brackets with that rare animal, the first time buyer, also making a bit of a comeback. We are currently much busier than expected and, although we cannot claim that the market is booming, there are lots more people house hunting and a much better supply of properties coming up for sale, so that’s a good combination at present. House prices do not seem to be rising at the moment, but we are dealing with several instances of two or more people wanting to buy the same property, so – despite obvious uncertainty - there are reasons to be cheerful about the local property market, particularly with spring around the corner.
Gavin Wallace from Isherwoods agrees about the competition for the same property. ‘Buyers are still on the hunt for quality properties in desirable locations,’ he said, ‘convenient for the town centre and good schools. The market still needs more owners to take the plunge and put their property on the market. In theory a good supply of buyers and limited supply of property should make this a great time to sell! We have evidence that this is certainly the case where there is competition for a particular property but it is also the case that buyers are inclined to make low initial offers given negative perceptions of the market.’
I also asked Yolande King, the lettings manager at Errington-Smith about the lettings market. ‘Activity here is high,’ she said. It seems that the demand is there, but locally, ‘there is a shortage of good lettings properties available and when one comes on the market, it goes straight away.’
And Gavin Wallace added, ‘The lettings market is still buoyant and prospects look good. Demand for good quality and well located properties remains healthy and rents for this type of property are creeping upwards. The market is likely to pick up in spring/summer at which point large family properties are likely to be much in demand.’
David Lawrenson, at the consultancy LettingFocus, agrees. ‘In the past year, private sector rents rose strongly in many areas. To some extent rising rents are an overdue “catch-up”, because rents have grown more slowly than house prices since prices began their long march upwards in 1996. Most commentators think strong tenant demand arises from the problems of getting a mortgage.
‘But a likelier explanation,’ says Lawrenson ‘is that renting allows a more flexible lifestyle and is less risky than being saddled with a mortgage if jobs are at risk.’
And with the average age of a first time buyer these days allegedly being around 34 years of age, the lettings market is growing all the time. A young couple living in a one-bedroom rented flat will be looking to move up to a two or three-bedroom rental property when the first baby arrives, rather than stepping onto the property ladder.
For young people it doesn’t help that the media frequently report on the number of predicted repossessions, something that lenders are playing down - despite figures showing that 180,000 households are expected to fall into arrears on their mortgage repayments next year.
Mortgage broker Ray Boulger, at John Charcol, says, ‘three key factors will decide repossession levels in the next 12 months - changes in interest rates, job losses and overall movements in house prices.
‘A sharp fall in prices would push many households into negative equity. If rates stay low, that helps. Job losses will clearly have a negative impact, but my feeling is that house prices will drift down only slowly in the first half of 2011. Thereafter, I expect them to strengthen to produce an overall 2% rise for the year by December 2011. These things take time, and if there was to be a significant increase in repossessions in the first two quarters of 2012, we would have already seen the warning signs of lenders taking action. In fact, there is little evidence of this so far.’
So all in all it looks like a similar picture whether you want to buy or rent. There is still a shortage of good properties on the market and people are now competing for the best ones.
But spring is coming, so by the time we get to April, things may have changed...
Watch this space for an update next month.