I had an interesting
conversation with a local Fitzrovia accountant the other day. He is quite an
observant chap (I know this because I have known him for a few years .. but I
suppose you have to be to be an accountant!). He knew property values had increased
in the area, but wasn’t sure by how much. He also thought the number of
properties for sale in Fitzrovia (and more importantly ones with sold slips on
them) had slightly decreased over the last couple of years.
The rate of house
price inflation in Fitzrovia continues to slow with growth of 11.2% in the 12
months to February 2015 compared to annual growth of 19.2% just over six months
ago, according to the latest Land Registry data. However, there is considerable
local variation in our part of London, with annual house price growth (up to
Feb 15) ranging from 7.8% in Ken and Chelsea to 14.4% in Camden over the last
12 months.
Fitzrovia has seen
property values rise by 29.2% in the last two year, on the other side of the
coin though, Fitzrovia has seen a slight reduction in the number of properties
sold throughout 2014 as base line demand for housing tempers. The 5.2% drop in
property transactions in Fitzrovia in 2014, compared to 2013, indicates a
tempering of house market in Fitzrovia as affordability and tightening yields
start to kick in.
When you compare
London with the rest of the UK, you could be looking at two different
countries. In London, its mid/late teens house price to earnings ratios are
impacting demand (ie the average property value is often 15 or 17 times the
average wage in London .. in fact in Fitzrovia, the ratio is in the early 30’s
to 1). However, prices have remained strong because the number of people
wanting to sell has dropped considerably, meaning that falling sales volumes
combined with a general slowdown in activity in the run up to the General
Election are resulting in lower mortgage approvals for home purchase.
Transactions are a
great indicator for house prices. The acceleration in house price growth in
London in the last two years was preceded by three years of rising
transactions. A similar pattern is being registered in the rest of UK, as pent
up demand returns to the market supported by low mortgage rates and an
improving economic outlook. This is good news as other areas catch up with
London, the UK property market will be more in balance as a whole across the
Country.
It might be
interesting to note though, the number of Fitzrovia property sales in 2014 are
still 30.8% lower than the level seen in 2007 (when property values were rising
at an impressive 21.36% per annum), so depending on a positive outcome on the
General Election, the ongoing housing recovery is far from stalled. In fact I
believe the market will become focused on the middle to higher value areas
(such as Fitzrovia) where households have equity and find it easier to access
mortgage finance.
