I was having lunch the other day at Armstrong’s Restaurant,
Marine Parade East, in Clacton, with a local Clacton solicitor friend of mine, when the subject of
property came up. He asked me my thoughts on the Clacton property market for
the next five years. Property prices are both a British national obsession and
a key driver of the British consumer economy. So what will happen next in the
property market? So here is what I told him, and now wish, my blog reading
friends, to share with you.
Before I can predict what will happen over the next five
years to Clacton house prices, firstly I need to look at what has happen over
the last five years. One of the key
drivers of the housing market and property values is unemployment (or lack of
it), as that drives confidence and wage growth – key factors to whether people
buy their first house, existing homeowners move up the property ladder and even
buy to let landlords have an appetite to continue purchasing buy to let
property.
When the Tory’s came to power in May 2010, the total number
of people who were unemployed in City stood at 2,373 (or 7.3% of the working
age population in Clacton parliamentary constituency). Last month, this had
dropped to 1,406 people (or 4.4% of the working age population).
As the Clacton job market has improved with better job
prospects, salaries are rising too, growing at their highest level since 2009,
at 3.4% per year in the private sector (as recently reported by the ONS). That is why, even with the turbulence of the
last few years, property values in the Clacton area are 20.62% higher today
than they were five years ago.
Many home occupiers have held back moving house over the
past seven to eight years following the Credit Crunch but with the outlook more
optimistic, I expect at least some to seize the opportunity to move home,
releasing pent up demand as well as putting more stock onto the market. With a
more stable economy in the City, this will, I believe, drive a slow but clearly
defined five year wave of activity in home sales and continued house price
growth in Clacton.
I forecast that the value of
the average home
in Clacton will increase by 19.8% by 2021
19.8% might sound optimistic to some, but according to Land
Registry, values are currently rising in Clacton at 7.9% year on year, I
believe my forecast to be fair, reasonable and a reflection of both positive
(and negative) aspects of the local property market and wider UK economy as
whole.
However, it wouldn’t be correct not to mention those
potential negative issues as I do have some slight concerns about the future of
Clacton housing market. The number of
properties for sale in Clacton is lower than it was five years ago, restricting
choice for buyers (yet the other side of the coin is that that keeps prices
higher). Interest rates were being predicted to rise around Easter 2016, but now
I think it will be nearer Christmas 2016 and finally the new buy to let taxation
rules which are being introduced between 2017 and 2021 (although choosing the
right sort of property / portfolio mix in Clacton will, I believe, mitigate
those issues with the next taxation rules).
I am telling the landlords I speak to, that with interest
rates at their current level 0.5%, the cash in your Building Society Passbook
is going to grow so slowly that it might as well be kept under their bed.
Property prices, by contrast, have rocketed over the years, even after the
property crashes, far outstripping bank accounts and inflation.
So my final thought ... property is a long term investment, it has
its’ up and downs, but it has always outperformed, in the long term, most
investments. Those in their 40’s and 50’s in Clacton would be mad not to include property in their long term
financial calculations. Just make sure you buy the right property, at the price
in the right location. One source of information on such matters would be the Clacton
Property Blog www.clactonproperty.blogspot.co.uk
