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What’s the latest on property prices and rents?


Kate Faulkner is one of the UK's leading property experts and in this article, she gives her view on the Autumn statement. 


The property price reports are giving quite a consistent view of the year for 2016. Reports suggest prices rose by just over 3% to 6.5%. Taking an average increase of 4%, for a property worth £200,000, that’s an increase in value of £8,000. 

However, this is a broad average growth rate as, regionally, there are huge differences to property price changes which have even seen some areas fall in value versus the previous year. 


According to the government’s sold property price data for November 2016, one of the poorer performing areas was Hammersmith and Fulham registering a -2.3% fall, which equates to approximately £17,000 off the ‘average price’. But, as average price is nearly £750,000 and prices have risen from £520,000 in 2007 just before the credit crunch hit, that’s nothing for local homeowners to worry about too much and good news for buyers too. 

Less than 20 miles away in Barking and Dagenham, prices rose by 17% year on year but to a much lower average of £288,873, so great growth year on year for those who bought in the last year or so. 


Around the rest of the UK, top performers include Bristol, where prices are up by nearly 14% year on year, with Reading not far behind, achieving growth rates of 11%. Meanwhile, further north, natural capital growth continues to be tough to secure with prices rising just over 1.6% in Liverpool and Bradford and just over 2% in Newcastle and Sheffield. 

From a buy-to-let perspective though, year on year property price growth figures are useful but not the most important measure. What’s more interesting is what’s happening to supply and demand in the market as this determines landlords’ capital growth returns over a longer period of time. And, in the main, it’s good news with both the Royal Institution of Chartered Surveyors and the National Association of Estate Agents (NAEA) both reporting that supply is mostly constrained versus demand, likely to help drive prices upwards into the future. 

Of more interest though, is the NAEA are reporting that 84% of properties sold for less than their asking prices and this, coupled with forecasts and the resulting media reports that property prices will soften this year, those looking to expand their portfolios may find this is a good year to hunt for some bargains. 


From a rental perspective, this year will be an interesting one. Based on the previous history of rental trends, rents should stagnate this year - because they tend to move in line with changes to ‘real’ wage growth. In other words, if wages outstrip the cost of living rises (inflation) then rents move upwards, as they have done over the last few years. However, if costs rise faster than wages, then people have less money in their back pockets and rents tend to stagnate as a result. 


But the big change this year is the rise in costs that landlords are likely to incur through increasing rules and regulations to let property, plus taxation changes, including the additional 3% stamp duty landlords have to pay for buying more than one property. As a result, many landlords are having to put up rents, whether they want to or not. What we don’t know, though, is whether this will force tenants into not renting, thus reducing demand… or whether tenants will be able to cut back enough to afford the rises, especially in areas where demand outstrips supply. 


If rents do rise, it will be the first time they have exceeded real wage growth in over a decade (on average) and if you are not sure whether to raise rents or not as a landlord, it’s probably better to do so sooner rather than later as tenants are going to see increases in their cost of living over the coming months. 


For landlords and buy-to-let investors, a lot is changing this year, from a market perspective, through to legals and taxation, so if you aren’t already, it’s important to be on top of your property returns and of course, make sure you are on the best mortgage deal you can be to ensure you maximise your net cash. 


For further information call: Michael Lawlor on 02083431777 or