Supply and Demand Issues mean Ashford Property Values Rise by 9.9% in the Last 12 Months

new homes to meet supply and demand in Ashford

 

The most recent set of data from the Land Registry has stated that property values in Ashford and the surrounding area were 9.97% higher than 12 months ago and 21.42% higher than January 2015.

Despite the uncertainty over Brexit as Ashford (and most of the UK’s) property values continue their medium and long-term upward trajectory. As economics is about supply and demand, the story behind the Ashford property market can also be seen from those two sides of the story.

Looking at the supply issues of the Ashford property market, putting aside the short-term shortage of property on the market, one of the main reasons of this sustained house price growth has been due to of the lack of building new homes.

Outdated Planning Regulations

The UK’s draconian planning laws over the last 70 years, starting with The Town and Country Planning Act 1947, have meant the amount of land built on in the UK today stands at just 1.8% (no, that’s not a typo – its one point eight percent) made up of 1.1% residential property and 0.7% commercial property.Pie Chart showing land use in the United KingdomNow I am not advocating building ugly modern carbuncles and high-rise flats in the Cotswolds, nor blot the landscape with massively out of place 1,000 home housing estates around beautiful villages such as Chilham, Westwell and Wye.

The facts are with the restrictions on building homes for people to live in, because of these 70-year-old restrictive planning regulations, homes that the youngsters of Ashford badly need aren’t being built. Adding fuel to the fire has been a large dose of nimby-ism and landowners deliberately sitting on land which has kept land values – and thus house prices, high.

A Safe Investment

Looking at the demand side of the equation, one might have thought property values would drop because of Brexit and buyers’ uncertainty. However, certain commenters now believe property values may rise because of Brexit. Most people are risk averse, especially with their hard-earned savings. The stock market is at an all-time high (ready to pop again?) and many people don’t trust the money markets. The thing about property is it is a tangible asset – bricks and mortar – you can touch it and easily understand it.

The Brits have historically put their faith in bricks and mortar, which they expect to steadily rise in value – in Sterling terms at least. Nationally, the value of property has risen by 635.4% since 1984 whilst the stock market has risen by a very similar 593.1%. However, the stock market has had a roller coaster of a ride to get to those figures. For example, in the dot-com bubble of the early 2000’s, the FTSE100 dropped 126.3% in two years and it dropped again by 44.6% in 9 months in 2007… the worst drop Ashford saw in property values was just 18.11% in the 2008/09 credit crunch.

Despite the slowdown in the rate of annual property value growth in Ashford to the current 9.97%, from the heady days of 12.85% annual increases seen in mid 2010, it can be argued the headline rate of Ashford property price inflation is holding up well, especially with the squeeze on real incomes, new taxation rules for landlords and the slight ambiguity around Brexit. With mortgage rates at an all-time low and tumbling unemployment, all these factors are largely continuing to help support property values in Ashford (and the UK).

For more thoughts on the Ashford Property Market, please visit the full blog at www.ashfordpropertynews.co.uk