As the property market returns to the previous levels seen before the global pandemic, we review some of the factors that have a significant bearing on what influences property prices.
As you’d expect, demand drives the market. When there are more buyers, this typically makes the market more limited and allows those selling to raise their prices. You’ll often find that some properties can sell for much more than they were initially listed at just because people were trying to outbid each other. Property demand is determined by area too. Some areas are highly desirable to own property in by investors that have seen significant capital growth such as Manchester and Preston. Cities such as London have been through a period where they have seen a substantial rise in house prices, so much so that there has been a slight backlash on the pricing expected now from new sales. A 3-bedroom semi-detached property in the London area would be expected to sell for anything over £400,000. A similar-sized property in Preston would be less than £200,000 in most cases. In Central London, this is often in the millions!
The rental market typically drives demand, desirability to live in the area and the local economy. Recently, cities such as Manchester and Preston have invested heavily in their economy and infrastructure. HS2 has driven interest in living in the North of England, with the expected economic boost due to people looking to commute to London in much faster times. We also see masterplans released by cities such as Preston. They are looking to rejuvenate and regenerate the city centre and surrounding areas to cater to young professionals and students as well as existing professionals in the area. What this has resulted in is a significant surge in investors, people looking to buy-to-live and renters looking for a property.
Location and Amenities
It’s no secret that people want to live closer to areas that make their lives easier. Usually, the proximity to a train station is a deciding factor if the buyer/renter is looking to commute into another area. There are other amenities too that drive the decisions of those looking to buy property such as the ease to “forget it all” and go to the countryside or the beach. Areas that boast proximity to places such as the Lake District, Nature Reserves and the ilk have now become increasingly desirable due not only to the “staycation” market increasing but also added stresses seen in everyday life. Living near areas of natural beauty can be a great way to unwind, and as a result, it means that areas close to these have seen an increase in house prices. Investors are taking advantage of this fact in areas like Preston – less than an hour’s drive can take you to the Lake District. There are numerous beaches nearby such as Formby, Southport and even Prestatyn in Wales.
Due to a cultural shift towards a more “city” or “urban” lifestyle for young professionals, they need to be fulfilled when looking for bars and restaurants. With significant chains setting up within cities, they’re becoming a popular choice for those looking for something else. Driving in for dinner and drinks isn’t something that appeals – the preference is to live close enough to these places to enjoy them to their fullest. Manchester now has a thriving restaurant scene and now has many novelties or “character” bars that offer slightly more than drinking, such as Flight Club or Roxy’s Ballroom that integrate a more fun evening have seen a surge in popularity.
Perhaps rather obviously, the type and size of the property have a deciding factor in the house price – it is becoming more common to desire certain features when buying a property such as the room for expansion. This isn’t, however, something that has seen a significant change as more now people are looking just as much for 1 and 2 bedroom apartments rather than houses. Property owners and renters are now appreciating the advantages of living in apartments over those offered by living in a house. Rents that are charged for 2-bedroom apartments in the city centre compare to the rents you’d see for a 2-bedroom house. Typically for a 2+ bedroom house, you have to look outside of city centres and with demand for renters in city-centre locations rising, this market is more for those looking to buy-to-live as investors take advantage of purchasing apartments in these locations instead.
Buyers are now looking for more “open space” at their properties with gardens being an essential factor in the purchase process. The recent pandemic has made people desire the ability to sit out in their garden as/when they wish a very desirable trait in their property and as such property with this feature has increased in value considerably of late.
Interest rates/Stamp Duty
The Bank of England recently announced that interest rates would be at 0.1% - motivating those looking to borrow from banks and to entice those with savings to invest in the economy, due to the decreased rates they will receive as savers. Property has been a “safe bet” as the last ten years has seen exponential growth in house prices and chargeable rent. We have seen new investors lately who have looked to take advantage of the fact that property values increase quicker than the rate by which they would accrue interest.
The recent announcement from Rishi Sunak too that Stamp Duty would be changed and a “holiday” introduced should be a motivation for buyers as considerable savings can be made on properties – first-time buyers AND investors can take advantage of these changes as they don’t only affect the first purchase, they’re for those looking to buy more than one property too. This is more of a link to demand, but it was intended to boost the housing market, and evidence so far suggests that it may do just that.
If you’re looking to invest, or you have any questions, then the sales team would be delighted to speak with you. For more information email us on email@example.com or call on 01942 251945