9.5% rise in Colchester property values affecting town’s housing crisis
Colchester’s continuing housing shortage is putting the town’s (and the Country’s) reputation as a nation of homeowners ‘under threat’, as the number of houses being built continues to be woefully inadequate in meeting the ever increasing needs of the growing population in the town.
In fact, I was talking to my brother at a recent family get together when the subject of the Colchester Property market came up in the conversation. My brother commented that it used to be the case that if you got yourself a decent job and worked hard, you could anticipate that within a few years you would be in a position to put a deposit down on a house, go on holiday once a year and even put some money aside towards a pension. Things seem to have changed somewhat.
Back in the Autumn, George Osborne, used his Autumn Statement to double the housing budget to £2bn a year from April 2018 in an attempt to increase supply and deliver “100,000 new homes a year until 2020”. The Chancellor also introduced a series of initiatives to help get first time buyers onto the housing ladder, including the Help to Buy Scheme and extending Right to Buy from not just Council tenants, but also to Housing Association tenants.
That’s all very well, except when you take into account that the Country is currently only building 137,000 properties a year (114,250 by private builders, 21,560 built by Housing Associations and just 1,680 council houses). If you look at the graph (courtesy of ONS), you will see nationally, the last time the country was building 230,000 houses a year was back in the 1960’s.
I don’t know how Mr Osborne is going to almost double the house building overnight, because using the analogy of greengrocers; if people want to buy more apples (i.e. houses) in a greengrocers’ shop, giving them more money (i.e. with the Help to Buy scheme) when there’s not enough apples in the first place doesn’t really help.
Looking at the Colchester house building figures, in the local authority area as a whole, 650 properties were built in the last 12 months. These were made up by 510 privately built properties, 130 housing association and just 10 council houses. This is simply not enough to met demand and consequently Colchester property values have continued to rise. On average house prices rose by 9.5% in the last 12 months.
The demand for Colchester properties has been particularly strong in the better areas of the town and it is my considered opinion that this is likely to continue throughout 2016. This trend is being driven by growing demand among homebuyers and landlords alike. As Colchester’s economy is quite varied, activity is expected to remain relatively strong into the early Summer of 2016.
Then there is the issue of supply. We have already spoken about the number of new builds in the town holding things back, even though there appears to be plenty going on when you drive around. Believe it or not the number of properties currently for sale in Colchester is significantly down on previous years. Last month there were 600 properties for sale, whereas 12 months ago, that figure was just over 1000, and three years ago it stood at 1,211. That’s a significant drop and enough to encourage buyers to pay more when the right property does come along.
We have noticed in our own office that more buyers from the London suburbs are enquiring about Colchester properties as they offer such good value when compared with say Chelmsford, Shenfield or Brentwood. Even when taking the cost of commuting into account the numbers add up for City workers. All of these factors collectively influence the local property market.
With demand for Colchester property continuing to rise, minimal numbers of new homes being built and less properties coming onto the market, that can only mean one thing … now is a good time to be a homeowner or landlord in Colchester. For more articles like this, please visit the Colchester Property Market Blog: www. colchesterpropertyblog.com