It’s true. Putney, house prices have fallen by 15% in the last 12 months, that’s where I live… and own a pretty damned expensive flat… sad times.
You read those kinds of stats and it’s enough for your neighbours to start gossiping about what they are going to do, your dog to start getting concerned about fighting for different patches of turf in new neighbourhoods and your thoughts running wild with the visual of £55k’s worth of £’s flying out of your account.
Woah, it’s enough to make you want to sell up quickly and head for a shack, that no one else wants but equally will never lose its value.
Hearsay and Stats will kill the property market. I swear it. It makes people act like all sense was robbed from them whilst they were sleeping.
Actually here’s the real picture. My flat has grown in value by £20k in 12 months… how do I know, well we get it valued regularly (of course I wouldn’t know this if I just listened to stats and my neighbours, or the other dog owners in the park).
So what’s actually happened to cause these figures, because after all, they’ve come from somewhere?
Well, Putney has a huge number of new builds which weren’t here 5 years ago. At first, when supply was low, people rushed to buy these fancy new flats. This pushed prices up, and as new flats came to the market the sale prices went higher and higher. There is always a limit on affordability… and only a limited number of households who want or can buy at high prices. This has meant that flats have been left empty and so prices have had to come down so that buyers will buy.
Similarly, the same has happened with the larger houses in the area. The price of 4,5 and 6 bedroom houses have skyrocketed and again there isn’t a massive amount of households who can spend multi-millions on houses that size. Again prices have to come down to find buyers.
What Putney is seeing is a case of market levelling. Which is necessary… yea house prices can rise, but if wages don’t, then there will be a ceiling.
London has had crazy prices for years… even if I was looking to spend millions of pounds on my next house, I don’t think that I would get value for money inside the M25 and I don’t think I’m alone in this. I would rather spend less for something bigger, outside the city and have less of a mortgage and be able to work flexibly (which I do anyway).
This sentiment will also have a knock-on effect on demand. Which again will translate into property prices.
What do I think this 15% fall in house prices means? Well, it means that the overpriced houses are coming down. It potentially means that demand is moving elsewhere and it shows that property prices have a ceiling.
It also shows that you shouldn’t be so hasty when reading stats. Get out on foot, see the real picture. Stats are a global picture of a property market, they usually take all figures from all property transactions into account (unless otherwise stated). AND the bad stats are used for headlines because it creates chaos.
So I urge you to always do your due diligence on an area, play the detective. Ask yourself ‘what is actually happening?’ This knowledge is gold when deciding where next to buy.
If you need help with your research, please ask… I want you to feel confident in your research, not side-tracked by the hearsay.
NC
