The East of England property asking prices jumped by more than £5,000 to £290,534 in February according to Rightmove, an increase of 1.9% from January and 7.5% higher than a year ago. After the traditionally quiet months of January and February, the property market starts to heat up, but talking to some Chelmsford Estate Agents, they are reporting their lowest ever stocks of quality property for sale. However, asking prices have no relation to what property sells for! With property, the definition of price is what someone is prepared to pay, not what the agent thinks it’s worth!
So, is the issue a lack of supply?
Putting aside Chelmsford’s housing supply shortage, (According to the last Census we only built 5,074 properties in the last decade, but the population of Chelmsford grew by 11,238), this is now, according to some people, being exaggerated by an increase in homes being owned by buy to let investors, who tend to be buying a property as part of a long term pension plan and are more likely to keep it for longer than an owner occupier would. I have also seen unwillingness among homeowners looking to move, to put their own property on the market as they can find few suitable properties to make it worth their while going through the whole moving process. There are some new build developments underway in the Chelmsford area though, so hopefully with the influx of some new properties, this should level out the property market again.
What I would say to that is that I believe this is the new norm in the Chelmsford property market, and is the consequence of not enough homes being built to meet the escalating growth in household numbers, resulting in a lack of quality homes for sale in many popular areas of Chelmsford.
When one looks at the historic data, in March 2008, there were 4613 properties on the market in Chelmsford compared to today’s 3010. Should we be worried? Well in March 2010, there were 3287 properties for sale in Chelmsford but seven months later in October 2010, this had jumped to 4020 properties, for it to drop to 3294 properties in January 2011. The number of properties on the market is a cyclical thing in Chelmsford, it always has been and always will be. As we go into the Spring of 2015, the number of new properties coming onto the market will increase… just as the daffodils will flower.
So are landlords to blame? Well, on one side of the coin, yes they are. If they buy a property to rent out, that means someone can’t buy it to live in. However, it doesn’t matter if someone wants to live in a property if they can’t afford the deposit and upkeep and the youngsters of Chelmsford still need a roof over their head. So, on the other side of the coin, if the building of new properties is slow and people can’t afford the large deposit for the mortgage, then Chelmsford landlords have stepped in and bought property to rent out to them. Chelmsford landlords have bought 7621 properties over the last decade and now house 19,012 Chelmsford people. There is also an issue with supply of housing in the rental sector, whilst investor landlords are buying more property, where properties are currently tenanted; tenants are not moving out, because they are unable to buy due to reasons mentioned earlier. This is having an impact on the rental prices as well, with average rental prices having risen by 23% in the last 2 years.
That sounds like a win-win situation for investors to me! It will be interesting to see what happens once the new developments in Chelmsford are completed.
The demand from Chelmsford tenants for Chelmsford property is only set to rise over the coming years. If you want some advice or an opinion on where, (or not) to buy, please email me or call me on 01245 330500