After the shock of the Conservatives returning to power with a majority at Westminster, all the potential issues and possible uncertainties of a hung parliament has lifted the cloud from the East Dulwich property market. Talking to other agents, surveyors and solicitors in the area over the last few days, there are signs (as reported in the previous article) that there is a new impetus in the East Dulwich property market after a subdued six months
So, with all that uncertainty now removed, where next for the East Dulwich property market? Well with inflation at zero and with the Money markets happy David Cameron is still at No.10, the Bank of England have no reason to raise interest rates until 2016 at the earliest. As mortgage rates are at their lowest levels since 2010, landlords (and buyers) with large deposits will now be wooed by the mortgage companies in the coming months with low rates.
Over the past couple of years, East Dulwich landlords have benefitted from a booming East Dulwich job market. Unemployment has dropped further to 3.5% in the Dulwich and West Norwood Westminster Parliamentary Constituency and now stands at 2,217. With more jobs and better pay there will be a continued pressure on prices in both the rental and sale market.
Some landlords might be nervous about Tory’s plans for the housing market over the next five years in terms of tenant demand for their rental properties. One plan is for Housing Association tenants to have the right to buy their property. These kind of tenants were never in the private rented sector and will actually increase the supply of properties in the overall housing stock in decades to come. The Governments ‘Help to Buy Scheme’ has only helped to buy six East Dulwich, Dulwich and West Norwood properties since April 2013 ( ie the Dulwich and West Norwood Westminster Parliamentary Constituency). Considering 809 properties have changed hands in the last year alone in Dulwich (227) and East Dulwich (582), I don’t think it has made a huge difference to our local property market.
The biggest matter, when it comes to tenant demand of rental property going forward, comes from the shift in the mindset and attitudes towards renting itself. Twenty years ago you were seen as a second class citizen if you rented a property. In East Dulwich, as in the rest of the UK (apart from Central London), renting continues to offer good value for money for tenants. If you are an existing landlord in East Dulwich or thinking of becoming one (or as we like to call you .. a FTL .. a ‘first time landlord’), then I must suggest you seek out specialist advice and opinion. Like many agents in East Dulwich, we will happily give you our opinion on the current state of the market and the advantages/disadvantages to investing in the East Dulwich property market if you pop into our offices. the run-up to the General Election. This puts the average price of a property in East Dulwich at £631,500, 11% higher than in March 2014.
Interestingly, the Council of Mortgage Lenders and Estate Agent trade bodies over the last few months have reported seeing a fall in mortgage lending and enquiries from prospective homebuyers. This is important because it comes amid an overall fall in housing market activity in East Dulwich. Data from the Land Registry said completed house sales in East Dulwich in the three months to January 2015, (the most up-to-date figures available) fell by 51.02% compared to the same three-month period up to January 2014. In the short term a shortage of properties on the market was helping to support prices but now the election is out of the way May has seen a 34% increase in properties on the market across the SE postcodes and we believe the market will return to a normal level now.
As I have said many times before, the population in SE22 is growing at a much higher rate than the number of properties being built. The result is a severe imbalance in the East Dulwich housing market making homeownership an ever increasingly distant dream for many first-time buyers.
In fact, I still maintain the view that house prices are likely to rise by around 5% to 6% in East Dulwich in 2015, even after taking into account this blip at start of the year. The reason being is that the rise reflects both strong economic conditions and steady market conditions with (and this is the most important factor) very low numbers of properties on the market.
Many Buy to Let landlords (along with residential purchasers) know that investing in the East Dulwich property market is a long-term strategy of 10, 20 even 30 years. Governments come and go, but unless Southwark Council and the private sector start to build hundreds of new properties a year to make up for the shocking lack of supply there will always be an increasing demand for rental properties.
As my existing landlord clients will testify, whether you manage your property yourself, or another agent manages your properties, everyone is always made to feel welcome when they pop in for a coffee at our offices in East Dulwich to discuss anything to do with the property market. I don’t bite, I don’t do hard sell, I will just give you my honest and straight talking opinion.