Thursday 28 May 2015

Chelmsford v London... It’s like being in a different country!

I had an interesting conversation with a local Chelmsford 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! Anyway, he mentioned a few things he had noticed recently in Chelmsford, one that Chelmsford property prices had gone up in the last few years but nowhere near the growth levels that were being achieved in central London, and secondly, that he thought the number of for sale boards in Chelmsford - and more importantly ones with sold slips on them - had increased over the last couple of years.

The rate of house price inflation in Chelmsford has slowed down slightly with growth of 5.3% in the 12 months to April. However, there is considerable local variation with house price growth ranging from 3.8% in Witham, to 6% in Braintree over the last 12 months. Good news for Braintree homeowners!

Whilst chelmsford hasn’t seen the 20%+ per year in house price growth of London over the last couple of years, Chelmsford has seen a sharp uplift in the number of properties sold throughout 2014 as base line demand for housing grows, which suggests there is substance to the recent pick-up in house price growth in the City. After the Second World War in the UK, when the number of properties sold grew, property values grew soon after.

When you compare Chelmsford with London, you could be looking at two different countries. In London, its mid/late teens house price to earnings ratios are impacting demand; i.e. the average property value is often 15 or 17 times the average wage in London... in fact, in Knightsbridge the ratio can be 30 to 1.  However, 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 are resulting 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 Chelmsford area, as pent up demand returns to the market supported by low mortgage rates and an improving economic outlook.

If you want to know more about the Chelmsford Property Market, please to not hesitate to contact me! Mobile, office, text, e-mail, carrier pigeon - I'm not bothered!

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