I had an interesting conversation with a local Camberwell accountant the other day. He is quite an observant chap (I know this because I have known him for a few years .. but I suppose you have to be to be an accountant!). He knew property values had increased in the area, but wasn’t sure by how much. He also thought the number of properties for sale in Camberwell (and more importantly ones with sold slips on them) had slightly decreased over the last couple of years.

The rate of house price inflation in Camberwell continues to slow with growth of 7.5% in the 12 months to December 2014 compared to annual growth of 20% just over six months ago, according to sold house prices data. However, there is considerable local variation in London, with annual house price growth ranging from 7.8% in Kensington and Chelsea to 12% in Peckham over the last 12 months.

Camberwell has seen property values rise by 25% in the last two years, on the other side of the coin though, SE5 has seen a slight reduction in the number of properties sold throughout 2014 (vs 2013) and this has accelerated in Q1 of 2015. Q1 of 2015 has actually seen a 48.3% drop in property transactions in Camberwell vs Q1 2014. This indicates a tempering of the house market as affordability and tightening yields start to kick in. However, now the uncertainty of the Election is over we expect the number of property transactions to recover significantly and there will be a busy second half of 2015.

When you compare London with the rest of the UK, you could be looking at two different countries. In London, its early teens house price to earnings ratios are impacting demand (i.e., the average property value is often 12 or 13 times the average wage in London .. in fact in Camberwell, the ratio is 16.29 to 1). However, prices have remained strong because the number of people wanting to sell has dropped considerably, meaning that falling sales volumes combined with a general slowdown in activity in the run-up to the General Election resulted in lower mortgage approvals for home purchase.

Transactions are a great indicator for house prices. The acceleration in house price growth in London in the last two years was preceded by three years of rising transactions. A similar pattern is being registered in the rest of UK, as pent-up demand returns to the market supported by low mortgage rates and an improving economic outlook.

It might be interesting to note though, the number of Camberwell property sales in 2014 are still 25.6% lower than the level seen in 2007 (when property values were rising at an impressive 17.09% per annum), now there has been a positive outcome to the General Election, we believe the ongoing housing recovery is far from stalled. In fact, I believe the market will become focused on the middle to higher value areas (such as Camberwell) where households have equity and find it easier to access mortgage finance.