Price correction to hit parts of UK as expert warns “Don’t buy at peak”
A property management company is warning that some areas of the UK could be in line for a price correction this autumn – and that purchasers should be careful not to buy at peak price.
David Alexander of property management firm D J Alexander warns:
“I think some areas are now facing a correction in prices.”
Although he says this will not be as bad as at the time of the financial crisis in 2007 he adds that investors need to be aware of the wide variations in prices across the UK “and tailor their spending accordingly.”
And he adds:
“You wouldn’t invest in a share that was at its all-time peak so equally I would caution against buying property that was at its highest ever level.”
His company has analysed house price movements over the past 20 years and says it’s a story of two halves.
Average house price growth from June 1998 to September 2007 was an eye-watering 172.4 per cent; but there’s been an increase of only 20.2 per cent in the 11 years to June 2018.
Across the countries of the UK the greatest increase recorded was in England which saw average property prices rise by 25.8 per cent between September 2007 to June 2018 with Scotland next at 5.7 per cent and Wales at a mere 5.2 per cent.
Within the English regions there were considerable differences in increases with London the highest rising by 59.8 per cent since September 2007.
Eastern England increased 39.9 per cent and the South East by 36.4 per cent; Yorkshire and Humber average property prices have risen by 7.6 per cent over the same period and in the North East prices have actually fallen 7.9 per cent.
David Alexander says:
“I think that most people would be surprised to find that the average house price has risen by just 20.2 per cent since September 2007.
“Given the time it took to climb back from the 2007 price fall it is interesting to note that many areas of the UK have not experienced large price increases and there is less fervour and frothiness to the marketplace compared to the early noughties” he says – although he notes that this is not the case across the whole of the UK “and some areas clearly look a bit top heavy with prices having increased substantially once more.”
He says there are clear signs of the market flattening in London and the South East and he warns:
“I would expect this to continue for some time to come, perhaps even a few years as prices correct and become more in line with the marketplace and with reality.”
While the rest of the UK may not be as bad – and he highlights Edinburgh and Manchester as bucking the trend and likely to see good price growth – he says there are lessons from the past which show that high price rises are not always good.
David Alexander adds:
“The enormous growth in average property prices between June 1998 and September 2007 – which was as high as 218.7 per cent in the South West to 180.3 per cent in the South East – was not a healthy period for the property market as it created a view that property could never fail.
“The seven-year period before prices recovered from the 2007 fall is an indication of just how out of kilter these prices were with the marketplace.”
DJ Alexander was established in 1982 by David Alexander and currently manages over 5,000 properties.
Kindly shared by Estate Agent Today