Last night the Telegraph released an article ‘Housing Market a “Bubble on a Bubble” as experts warn that prices could be overvalued as much as 12pc’ which SHOULD send ripples through the industry of what’s about to happen.
Let’s be clear… there are still some areas of the country where the market is rising at a steady pace and the housing bubble may not have even started to form yet.
But look to some of the secondary hot spots in London. I’m talking Putney, the South West, prime areas in Zone 2-3. House prices HAVE to level out.
For example, my partner and I have a one-bedroom flat in Putney. In November-17 it was valued at £430,000 by a RICS Registered Valuer. At the time the valuer was muttering about prices coming down. Yet, fast forward to July-18 and the same valuer has now valued the flat at £465,000, this time muttering that it should be valued higher as the flat opposite outs (the same size) has come on the market at £500,000.
On average, statistics suggest that house prices for flats have dropped by 15% in Putney (Source: home.co.uk).
How on earth can my flat be valued at an 8% increase within 9 months… when prices have dropped by 15%!
This is where the housing market bubble is developing. Properties being over valued because no one would be happy knowing their property is losing value (what do you say to your bank?!). And whilst there is the possibility of buyers buying at the price, sellers are happy to keep their properties on the market for longer.
As demand continues to dwindle for overpriced properties the market will have to recalibrate. No longer is there a rush of overseas buyers, who are holding their breath for Brexit outcomes. Lenders are being more careful due to uncertainty, so not valuing properties as highly… therefore borrowers can’t afford these properties. Twin that with more expensive lending and tougher finance criteria.
As the players in the property market continue to play it safe, overpricing property will have to stop to keep the property market moving. Unfortunately, sellers will have to bite their tongue and sell at market value. It’s definitely not a rising market right now!
The warning has been issued, the property bubble in area that are used to steeply climbing prices, is about to burst!
Natasha
