Some
landlords have been speaking to me recently about stories in the press and
their concerns about booming house prices and the next housing bubble in Canterbury.
In the past few years, if you were going to be buying soon in Canterbury, it was
vital to ensure you build in some capital growth by buying cheaply or finding a
way to add value. Interestingly,
property values in Canterbury have increased by an impressive 9.2% in the last
12 months and in the last six months, properties have been going for their
asking prices, some over the asking price. So are Canterbury properties too expensive?
Looking at the market and looking at every property sale in Canterbury that sold in 2007 and again in the last few months of 2014, property values are on average 2.9% lower in Canterbury than they were in 2007, which was the last boom before they dropped by 15% to 20% in 2008. On the face of it, a 9.2% increase over the last 12 months in Canterbury property values is impressive, but should we be worried we are only 2.9% off the boom prices of 2007. Does this suggest properties are too expensive in Canterbury?
Well, the answer is both Yes and No. Yes, the headline price that the property sells for is 2.9% lower than 2007, yet No, because these headline figures don't take into account inflation. Since 2007, inflation has risen by around 19%. So instead of property values being at nearly their 2007 boom prices, they are in fact 21.9% cheaper than the boom (19% inflation plus the 2.9% gap equates to 21.9%). People think inflation is a bad thing, eating away at the real value of your savings. It can however, be advantageous to property investors.
My answer to landlords is get the best advice and opinion you can. Speak to me, speak to others, do your homework and drive a hard bargain when buying, thus ensuring when prices do start to rise again, you are in pole position.
Looking at the market and looking at every property sale in Canterbury that sold in 2007 and again in the last few months of 2014, property values are on average 2.9% lower in Canterbury than they were in 2007, which was the last boom before they dropped by 15% to 20% in 2008. On the face of it, a 9.2% increase over the last 12 months in Canterbury property values is impressive, but should we be worried we are only 2.9% off the boom prices of 2007. Does this suggest properties are too expensive in Canterbury?
Well, the answer is both Yes and No. Yes, the headline price that the property sells for is 2.9% lower than 2007, yet No, because these headline figures don't take into account inflation. Since 2007, inflation has risen by around 19%. So instead of property values being at nearly their 2007 boom prices, they are in fact 21.9% cheaper than the boom (19% inflation plus the 2.9% gap equates to 21.9%). People think inflation is a bad thing, eating away at the real value of your savings. It can however, be advantageous to property investors.
My answer to landlords is get the best advice and opinion you can. Speak to me, speak to others, do your homework and drive a hard bargain when buying, thus ensuring when prices do start to rise again, you are in pole position.
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