Chelmsford property values rose by 1% last month, meaning they are 8.9% higher than 12 months ago. Overall, I expect future property price growth to remain firm, built on the foundations of an improving market, strengthening economy and very low mortgage rates. In fact, talking to a number of other agents in the city, mortgage arrangers and solicitors (all of whom have their direct finger on the pulse of the Chelmsford property market), the steady long term growth in Chelmsford property prices tied in by strong demand conditions so far this summer, alongside an underlying lack of supply and the continued low mortgage rate environment, means the slow but steady upward momentum of the Chelmsford property market is likely to continue.
However, there are a couple points I wish to highlight as all my blog readers will know, I like to give a balanced and honest opinion of what is happening in the Chelmsford property market.
Interest rates first – It has been announced that the Bank Of England will be seriously considering raising interest rates around Christmas time. An increase in interest rates will temper demand & result in a marked slowdown in house price growth. Now I am not a mortgage broker and can’t give advice, but rates are only going in one direction, so, landlord or homeowner, this might be a time to consider fixing your mortgage rate? Don’t say I didn’t warn you!
Tie this in with the stricter mortgage lending rules which were introduced in 2014, this means homeowners will need to be realistic in their pricing if they want to sell. Reading other recent reports though, property owners have continued to pay off mortgages at a faster rate while mortgage rates have been low. Therefore, when mortgage rates rise, the affect on home movers sentiment which, given the shortage of supply, would result in a marked slowdown in the rate of house price growth.
Shortage of Supply – As I have mentioned in previous articles, the number of houses on the market in Chelmsford is at an all time low. One reason is the large number of buy to let landlords who have bought Chelmsford property over the past 15 years. Unlike first time buyers who tend to move on after a few years, landlords tend to keep their properties longer, meaning there are less properties coming onto the market, thus restricting supply and sales. In fact over the last 3 months, only 5,903 properties in the Essex County Council area have changed hands and sold, compared to 6,720 in the same time frame in 2014, a significant drop of 13%!
If you are planning on investing in the Chelmsford property market, or just want to know more, things to consider for a successful buy to let investment, drop me a note to stephen.frost@martinco.com
