Anyone who has taken a keen interest in the property market will know that recent times have been difficult for buyers and investors. But with consistent price rises across England and Wales over the past 12 months, has the market really recovered? Read on and find out.
Taking England and Wales as a whole it is true to say that the property market has almost recovered from the 2008 crash. According to the Land Registry, the average price of a home in March 2015 was £178,007, only £3,042 less than its pre-2008 peak. But this positive overall growth hides a mixed picture across the English regions and Wales.
Some areas are booming, while others still have some way to go to recover.
In London property prices started to boom in 2012 and today the average cost of a home in the capital is 32% above its 2008 peak. With a thriving prime property sector, huge demand from UK and overseas residents and the most attractive jobs in the country, prices look set to rise exponentially. This is a market that has most certainly recovered from the crash.
As a result of London’s rising market, the value of homes in the counties surrounding the capital has also risen. Londoners who have been priced out of the city have sought cheaper homes within commuting distance. At the same time, some London homeowners have taken advantage of the demand for prime property and exchanged small homes in the centre for cheaper, more spacious homes in the suburbs.
Bright in the South East
Across the South East, the market is generally in rude health. Average property prices have now risen 7% above their 2008 peak. More desirable locations such as Oxfordshire have seen 12% rises, while more modest rises (5%) were seen in Cambridgeshire. On the south coast however, counties such as East Sussex are yet to see average prices rise to their pre-crash levels. On average, homes here still cost 1.2% less than in 2008.
Improving Outlook in the South West
Things are beginning to look more positive for those who bought homes in the South West of England before the crash. For the region as a whole, average prices have yet to reach values seen in 2008 (-2.5%). However, those living in major cities such as Bristol have seen the market rise, with asking prices now 6% above the pre-crash peak.
Bath and North Somerset has also seen healthy gains since the market gathered pace in 2014, with the average home in this area how fetching 9% above 2008 prices. Unfortunately the same cannot be said for more rural counties such as Cornwall, whose market will need to rise a further 9.5% before it reaches the 2008’s market pinnacle.
A Mixed Picture in the Midlands
The Midlands also presents a mixed picture. Taken as a whole, an average property in the West Midlands region is now worth 90% of its 2008 value. Unfortunately, counties such as Shropshire and the West Midlands are worse off, with prices needing to rise 11.5% and 12% in order to match previous market highs.
The East Midlands has also yet to experience a full recover of property prices, with homes still valued 8.5% below their 2007 peak. The country of Warwickshire is in a better position, however, with average homes now selling for about the same as they did before the crash.
The North Has Been Hardest Hit
For sellers and pre-crash buyers, the areas worst affected by the crash have been Yorkshire and the Humber, the North East and the North West. Despite being home to the major cities of Manchester, Leeds, Sheffield, Durham, Hull and Newcastle, as well as some of England’s most popular tourist draws, property prices have suffered two slumps, one following the 2008 crash and a second in 2013.
The good news is that today, across the region, prices are rising slowly and steadily. In Yorkshire and the Humber, the average price of a home is now 16% below its 2007 peak, while in the North West values will need to rise 18.3% to match 2008 prices. In the North East, homes have yet to recover almost a quarter of their 2007 value (with homes down 24.1% on their pre-crash peak).
In Wales, house prices have taken time to stabilise after the crash and the economic downturn that followed. However, the market has been rising steadily since 2013, with the average price of a home now 15.5% below peak prices.
Signs of Recovery Everywhere
While the fastest price rises have been seen in areas of highest demand, the property market is showing signs of a nationwide recovery, albeit at very different speeds. The extent of the price falls seen in the Yorkshire, the North East, the North West and Wales means that property sales have been limited because of the numbers of homeowners who have been unable to sell because of negative equity.
However, since 2014 the overall financial picture has been looking brighter. With low interest rates keeping mortgage payments down, lower oil prices helping to reduce the cost of food and transport, and the Government’s Help to Buy scheme enabling more buyers to access the market, the signs of recovery are there for those hit hardest.
In fact, with unemployment falling to pre-crash levels and UK wages seeing their first real-term rises for several years, demand may now begin to increase across the country. Areas with the lowest prices are also the most affordable for those who aspire to own their own home. This increase in economic confidence should help boost worst hit areas, allowing everyone to participate in the recovery of the market.