Ah the 2010’s, the tens, the teens – What were we supposed to call the decade that has just gone? No matter what it was called, the last decade was a tough one, so does it really matter that we never really got around to giving it a name? Some might say, whatever one calls it, that period coming to an end is the best thing any teen (for people, too) can possibly do!
The last two decades have certainly been tumultuous. At least, for this new decade, we will later be able to say, things like “that style is so ’20s” and fellow humans will essentially know what you are talking about. If you come of age in this decade, you will be a ’20s child and we will discuss ’20s politics and ’20s style and all the things that hadn’t been created on the 31st December 2019; when two nameless decades ended and how finally there was something everyone in the UK could agree on: the name of the decade. Hey – it’s a start!
So, what has happened to the local Ashford property market in the last decade?
The average Ashford property has risen in value from £209,600 to £331,900 in the last 10 years
… meaning each Ashford homeowner has seen a profit of £235.19 per week for those last ten years. Rolling the clock back to the start of the last decade January 2010, and the economy (and housing market) were recovering from the Credit Crunch and the worldwide financial crisis. A decade on and things feel a little different. If you bought an Ashford home over the past 10 years, things have certainly changed.
Ashford property values rose 58.4% on average over the last decade
yet taking inflation into account, they only rose in real terms by 25.3 per cent.
Compare that to a 42.5% rise in the ‘80s, a 13.2% drop in the ‘90s and rise of 62.8% in the 2000s in real terms. So, in real terms after inflation, there has been less of a house price growth in Ashford in the past decade than the previous one.
On average, 1.12 million homes were sold each year last decade, although that was 26.4% less than the decade before (the noughties) when an average of 1.52 million properties were sold annually.
So, what are the underlying issues in the Ashford (and wider UK) property market when, in real terms, property is 25.3% more expensive than a decade ago? Whilst the newspapers tell us both that first time buyers can’t get on the housing ladder and that the housing market is in gridlock – what is the problem? Well I am a firm believer in the adage that ‘bad news sells newspapers’ because the truth is something completely different as 32.7% of homes last year were bought by first time buyers compared with only 22.8% in 2009.
Yet, there are still issues; mainly a persistent lack of new homes being built which curtails the supply and choice of property; but stagnated wages, stiffer mortgage rules and homeowners not moving as much as previous generations are also contributing to the problem. In the UK, the number of homeowners who moved in 2019 was around 14% higher than in 2009, yet this was still just under 50% lower than the average for the noughties. It’s all up and down like a rollercoaster!
My thoughts for the future are based primarily on what will happen to interest rates. Throughout the last decade, the Bank of England base rate was 0.5% at the start and was cut to 0.25% in the Summer of 2016. Even with the increase to its current level of 0.75% in the Summer of 2019, it has made borrowing money on a mortgage extremely cheap.
Nonetheless, bank and mortgage rates will rise again eventually and I am concerned about the effect upon the housing market. Now it won’t be as bad as previous times when mortgage rates went up in the 1970’s and 1980’s (with mass repossessions) because the tougher mortgage rules introduced in April 2014 will have ensured borrowers were stress tested on their affordability if interest rates shot up.
Most borrowers have been stress tested on their affordability of mortgage rates up to 6% to 6.5%, which would obviously squeeze household disposable incomes yet should avoid people losing their homes due to repossession. Whilst I am not giving advice, just personal opinion: if you are one of the 29.3% of homeowners who is not on a fixed rate mortgage– maybe you should seriously consider doing so?
The 2020’s will be an interesting decade – and if you want to be kept up to date with what is happening in the Ashford (and the wider UK) housing market – follow me and this blog to read similar articles.