Market Update August 2017
We have waited a long while, but at last we have got to the stage where average house prices in Calderdale are above the level seen at the peak of the last housing market boom.
In 2007, transaction volumes were considerably higher and those of us that were around then recall the 100 and even 125% mortgages that were available. Sadly, Government help with mortgages these days is confined to the new build sector, which seems unfair on many younger buyers who might want to buy second hand.
In May 2007 the index figure for Calderdale was 107 and following a sharp decline and then some years in the doldrums, prices have started to slowly recover. In May 2017 (the most recent available data), the index had risen to 110.
Calderdale lies between Leeds and Manchester, which are of course much bigger commercial centres, both being within comfortable commuting distance. Rising markets in Leeds and Manchester will help to pull prices up in Calderdale through a ripple effect. So it is good to note that Leeds has seen its index rise from 105 in 2007 to 114 in 2017, and Manchester has performed even better, rising from 97 to 120 over the same period. The rises, which have been coming through since 2013, are slow but steady, although Manchester is clearly a stronger performer.
Source: UK HPI data published by HM Land Registry Crown Copyright 2016
UK Consumer Price Inflation – Office for National Statistics
The average price of a house in Calderdale in May 2017 was £137,802 (Detached - £250,663, Semi - £153,433, Terraced - £115,555); In Leeds the average price was £171,052 and in Manchester the average price was £161,611.
But although selling prices are roughly the same, sales volumes are still some way below the levels seen in 2007. The Bank of England Interest base rate in 2007 was 5.5%, by May 2009 it had fallen to 0.5% since then it has come down even further, to 0.25%.
The orange line in the above chart shows Consumer Price Index inflation. If 2007 is taken as the start point with a figure of 100, then by 2017 the index had risen to 125. That is to say that prices of general consumer goods have risen by 25% over the period in question. So, relative to other items, house prices in real terms are still well below the 2007 levels. Historically these would have been the triggers for a property market boom, but in the present economic environment a slow but steady growth in prices seems to be the order of the day.
As well as the big property market cycles there is a smaller annual cycle that we always encourage clients to react to.
Each spring there is a rise in sales volumes, followed by a lull, after which there is a second, usually smaller, autumn rise. This year has been no exception with a good start to the year and a quieter spell that we are now in. Fingers crossed, we should start to see some more market activity as the autumn market rise gets under way.