Tom Gladwin is CEO of local estate agents Parkheath, who have just opened a brand new branch at 148 Kentish Town Road. In this regular Property column, he talks about the current state of the market, and how the benefits – and the dangers – of current prices effect us all.
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The recent housing market boom in and around London has prompted media warnings of a “property bubble” set to burst. But here in Kentish Town, if it is indeed a bubble, it looks unlikely to pop anytime soon.
However, I do feel we’ve reached a turning point. After a very lively start to the year, when supply was low and subsequent competition for homes were pushing prices higher, we are now sailing into steadier waters and the market is a lot calmer.
In the first quarter of 2014, at Parkheath we saw price rises of almost 8%, a huge increase over such a small period of time. We have also seen a 20% jump in the number of sales, and yet buyers continue to outnumber new properties coming to market.
Every property sold seems to set a new record price as competition amongst buyers soars.
The alarming headlines and cautionary tales of bubbles or “boom and bust” are based on the sales statistics of prime areas of London and small, desirable pockets around country. Bank of England bosses urged caution and warned of measures to combat the rising market.
It is however, unlikely that any measures which are taken will curb house price growth in prime neighbourhoods in north London, and these days that certainly includes Kentish Town.
If interest rates were to go up, some landlords and homeowners may be forced to sell, yet these additional properties coming to the market would only partially satisfy the current demand, having little or no effect on boom areas. However, any premature raising of rates would kill off the green shoots of recovery in less stable areas of the UK.
Businesses would stop investing, homeowners would have less money for spending, retailers would make fewer sales and the outlook would be bleak again. Something I doubt the government would be pleased to see with an election due within a year.
A rise in stamp duty may slow the middle market in London but would do little to halt record sales such as Britain’s most expensive apartment, which recently sold for £160 million. Any further increase in property taxation is likely to congest the market further.
Homeowners looking at moving up the property ladder are likely to be deterred from doing so if stamp duty rises. This would further decrease stock levels – and consequently drive prices even higher.
