London property asking prices jumped by more than £16,000 to £582,438 in February according to Rightmove, an increase of 2.8% from January, and 9.7% higher than a year ago. After the traditionally quiet months of January and February, the property market has started to warm up. However, talking with some East Dulwich Estate Agents, they are reporting low levels of quality property for sale which is an indication of the general lack of supply still being experienced.
Only 14,616 properties were built in the last decade in the borough of Southwark, but the population grew by 43,417. There is a further debate on whether this shortage is being exacerbated by Landlords purchasing property in an already restricted market. Landlords tend to purchase a property as part of a long-term strategy (buy and hold) or as a pension plan, and this has the potential to limit the flow of property to the market. In some cases, homeowners are reluctant to put their property on the market as they are unable to find suitable properties that will make the next move worthwhile.
The above looks like it might be the new norm, at least for the time being as the historical lack of house building, lack of existing property coming back on to the market work together with the growth in the number households to push prices upwards.
Click on the graph above to be taken to the Home.co.uk website for more information.
When one looks at the historical data, in August 2007, there were 721 properties on the market in East Dulwich compared to today’s 268. Should we be worried? In December 2009, there were only 242 properties for sale in East Dulwich, ten months later in October 2010 this had jumped to 524 properties, for it to drop to 121 properties in November 2013. You can see from the home.co.uk chart above that property volumes are still well below their previous peak in 20o7.
So are landlords really to blame? In London, Landlords rent out 50.4% of the property stock, as this sector continues to grow it’s fair to say there will be less supply for those looking to purchase a residential home. The fact remains people need a roof over their heads, whatever is driving the price of property in London this fundamental need still needs to be met somehow. The Council and private developers aren’t building enough properties to meet current demand. If people can’t afford to purchase their own home, there is a continuing need supply quality private rented accommodation which is where SE22 landlords have stepped in and are part of the solution, not the problem. East Dulwich tenants are in fact getting a good deal when you look at current rents alongside inflation. Average rents in East Dulwich are 21.4% above what they were seven years ago, but inflation has been 21%, so really they are no worse off. That sounds like a win-win situation for everyone to me. Let’s stop blaming landlords and start building more properties in East Dulwich .. that is the only answer.
In the meantime, the demand tenants for East Dulwich property is only set to rise over the coming years. If you want some advice and opinion on where (or not) to buy, please give us a call.