A steady upward momentum of the Solihull property market.

A steady upward momentum of the Solihull property market.
Solihull property values fell by 0.7% last month, however they are still 3.7% higher than 12 months ago. Even though values dropped slightly, overall I expect future property price growth to remain firm, built on the foundations of an improving labour market, strengthening economy and very low mortgage rates. In fact talking to a number of other agents in the town, mortgage arrangers and solicitors, the steady long term growth in Solihull property prices can be attributed to high demand.  Coupled with short supply and the continued low mortgage rate environment.  This all means a slow but steady upward momentum of the Solihull property market which is likely to continue for the remainder of 2015.

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 Solihull property market.  The two main points being low interest rates and a lack of supply of property.

Firstly – interest rates - Mark Carney (Governor of the Bank of England) indicated in a speech in July at Lincoln Cathedral, that the Bank will be seriously considering raising interest rates. An upward movement in interest rates will temper demand and result in a marked slowdown in house price growth.  Mr Carney said that only six out of ten people had a mortgage (57% to exact) had a variable rate mortgage, compared with more than seven out of ten people  ( 73% to be exact) in the Summer of 2012. Now I am not a mortgage arranger and cannot give advice but rates are only going in one direction, so whether you are a landlord or homeowner this might be a time to consider fixing your mortgage rate?  Don’t say I didn’t warn you!

This as well as the more stringent mortgage lending rules, introduced in 2014 which affected people’s ability to have larger mortgages, 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 effect on home movers given the shortage of supply, will be a marked slowdown in the rate of house price growth.

Secondly - shortage of supply – as mentioned in previous articles, the number of houses on the market in Solihull is at an all time low. One reason for this is the large number of buy to let landlords who have bought Solihull property over the past fifteen years, as unlike first time buyers who tend to move on after a few years, landlords tend to keep their properties long term meaning there are less properties coming onto the market.  In fact over the last four months only 856 properties in the Solihull Metropolitan Borough Council area have sold and changed hands, compared to 1,021 within the same time frame in 2014, a not so insignificant drop of 16.16%.
 
If you are planning on investing in the Solihull property market or want advice for a successful buy to let investment, please email me on jane.morcom@centrickproperty.co.uk