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Property Mini Boom In UK
ini Boom very good reasons: First, when it
comes to cheap house price rises
If you've read a lot of it's just not as big as the boom
price articles on property for of 1998-2004.
sale in recent months you will
have come across quite a few Second, because it's not
references to the existence of affecting the whole of the UK.
something called a property It's a bit of a London phenomenon
'mini-boom'. - or, at the best, London and the
South East.
Apparently this phenomenon has
been with us for at least 6 And third, because its life is
months now - probably more than 6 expected to be relatively brief.
months if you take into account The Boom, you'll remember, just
the market revival in the price went on and on. But almost
of cheap houses that began when everybody expects the mini-boom
the Bank of England cut rates to fade in the second half of
last August. this year.
You might be asking what is a Is there any sense in this talk
mini-boom? The phrase is an of a mini-boom? Yes, there is.
interesting one – but it shows The property for sale market has
that the cheap property market been doing quite well and since
has recovered from the slow and the start of 2006 it's been in
depressing days of 2005 without fine form.
actually frightening anyone with
the prospect of one mad rise But it's all relative, annual
before an inevitable collapse. growth rates are now in single
digits, monthly inflation is
Why is it mini? For the following acceptable but hardly racing
ahead, and the days when a broom were moribund (8% and 7%,
cupboard could fetch £150,000 are respectively).
way gone.
So neither the reach nor the
The recent pick up has also been strength of the current recovery
limited to the South: "The is capable of pushing the market
growing divide between London and for cheap houses back towards the
the remainder of the country days of rampant double digit
means that it is dangerous to inflation. But what of the third
read too much into the cheap point, that is the belief that
property price rises," comments the mini-boom will fade away
Richard Donnell, Director of toward the end of the year.
Research at a company called
Hometrack. Several factors can be cited in
support of this view, the main
"The London effect has been ones being that affordability is
making the overall picture of a now very stretched; council tax
relatively buoyant housing market rises and fuel bills have put
look better than it really is. pressure on people's finances;
Outside London, house prices unemployment is going up; and
remain static across 70% of all rates may rise in the future.
postcode areas."
All very reasonable, and already
This has been confirmed by The some reports suggest the slowdown
Royal Institution of Chartered is underway. Halifax said that
Surveyors, who note that in May, May's 0.1% rise was the smallest
71% more surveyors reported a increase since January's 0.2%
rise in prices than a fall in fall.
London. But other areas such as
Yorkshire and the East Midlands Nationwide agreed, noting that
May's 0.2% rise was the second and take some of the pressure off
month of neutral growth in a row. buyers. And there are signs that
more property is coming onto the
And Hometrack, as we have seen, market.
argue that most of the country is
already slowing - "it's really a In November 06, new instructions
case of whether cheap houses in to sell rose at the fastest pace
London can keep going," says since April 2005 – 18% more
Richard Donnell. surveyors reported a rise in new
properties on their books. Will
Recent price rises, of course, this calm the market down?
have been fuelled by lack of
decent property. Yorkshire & It might. But as any expert will
Humberside, which had one of the tell you, there are counter
lowest rates of cheap house price balancing weights on the other
rises in May, also had the side of the cheap property market
largest increase in supply. seesaw. Demand, fuelled by
demographic trends; relatively
London, on the other hand, had cheap finance and low rates,
one of the largest price rises in property investors still in the
cheap property thanks to a market.
significant supply and demand
imbalance. In the Capital, 32% All of these still keep the
more surveyors reported rising pressure on. And even as RICS
demand, while a negative balance reported a rise in supply they
of -10% reported a fall in also saw a rise in both demand
instructions. and in sales agreed. The latter
takes properties off the active
So you would expect a rise in property for sale market and the
supply to create a easier market former increases the competition
for those remaining available. would like things to slow into
'orderly slowdown' territory
But surely it can't keep going … again, and this should happen.
or can it? We shall have to wait
and see. Property market analysts
About the Author:
The author of this article has been involved in property investing for 15 years and also runs a website for property investors. Property For Sale www.investalist.co.uk is the UK's No.1 resource for finding cheap houses and investment property.
Read more articles by: Andrew Stefanczyk
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