The Future of Shepperton House Prices
Discover the future short- and medium-term trajectory of Shepperton’s property market in our latest insightful article. Uncover how recent trends and economic factors are shaping the local housing landscape, offering valuable predictions for homeowners and landlords. Stay ahead of the curve and make informed decisions for your property investments
In the ever-changing landscape of the Shepperton property market, predicting future house price trends can be akin to navigating a labyrinth. The past two years have witnessed unprecedented upheaval, primarily due to fluctuating interest rates that significantly impacted household finances, reminiscent of the challenges not faced since 2008.
The average rates for fixed-rate mortgages have dramatically risen, notably from late 2021. This hike in the Bank of England base rates has led to a substantial increase in monthly mortgage payments, consequently affecting people's ability to purchase new homes.
However, the Shepperton property market has
begun to show signs of stabilisation.
Recently, there's been a pause in the rise of the Bank’s base interest rate, maintaining the same rate for two consecutive months after a consistent increase since late 2021. This stability is mirrored in the mortgage sector, with lenders offering more competitive rates.
As an agent who likes to analyse the Shepperton property market, I have found it difficult to predict the market trends.
The initial forecasts by many pundits at the start of the year saw them predicting a significant decline in property prices. Savills were expecting a drop of 10% in 2023, whilst Jones Lang LaSalle predicted a 6% drop. Yet, looking at the press in the last few weeks, these opinions have been adjusted, with recent data indicating a less drastic reduction than anticipated. This trend suggests a potential levelling out of house prices soon.
Looking locally…
Shepperton house prices are 2.06% lower
than December 2022.
The average home in Spelthorne was £425,974 in December, and the last set of figures for August showed that it had decreased to £417,216.
Overall, these statistics look very good considering the dark clouds at the start of the year, yet four months of statistics are still left before the year ends. In measuring house prices, the Land Registry is often seen as the definitive measure of local property market house prices. The issue is the time lag in the data.
However, the Land Registry house price index can be predicted with very high certainty. The key to this forward-looking perspective lies in the sale agreed (i.e., when a property becomes sold stc) pound per square foot figures.
A meticulous examination of both the £/sq.ft at sale agreed and the Land Registry Index data over the last five years by Denton House Research reveals a robust 90.5% positive relationship between the national £/sq.ft at sale agreed and the eventual national Land Registry Index four or five months later.
For homebuyers and sellers, this insight is groundbreaking. It means that the pulse of the property market can be gauged in advance, allowing for strategic decisions well before the official figures roll in, giving them a substantial edge in the property market.
Therefore, whilst UK house prices are currently 0.236% higher from December 2022 to August 2023, the £/sq.ft data suggests they will end the year between 0.5% and 1.3% lower.
Again, nothing like the 6% to 10% drops suggested at the start of the year by many.
What about 2024 and 2025 in Shepperton? To judge that, we must look at the national picture first.
The first half of 2024 will see continued treading water of house prices (when some months there will be a slight increase and other months where they will dip slightly). By the end of December 2024, the net effect will show national house prices around 2% to 3% lower.
Then, in 2025, there should be a slow and steady increase in average national house prices between 2% and 3%, with more normal rises of 4% to 6% a year by 2027/8.
Another key indicator of market confidence is the surveyor sentiment, which, although still cautious, shows signs of improvement despite the lower number of property transactions predicted for the current year compared to pre-pandemic levels.
This resilience is partly attributed to homeowners managing the increased financial strain of rising interest rates better than expected, with minimal cases of forced sales or repossessions. Financial institutions have played a role, offering flexible mortgage options and extended terms.
Another factor contributing to this resilience is the financial buffer created by savings accumulated during the pandemic. These savings have allowed many to continue their purchase plans or meet increased mortgage payments. A robust employment market and rising wages have also helped mitigate the mortgage debt burden.
The landscape for first-time buyers also appears promising, with their numbers potentially recovering more rapidly than home-movers. This trend is partly fuelled by financial support from the Bank of Mum and Dad, a contrast to home-movers who might be constrained by higher rates and larger mortgages.
The rental market, however, faces continued challenges.
Some doom-mongers have pointed their finger at the buy-to-let market as signs of an impending house price crash as buy-to-let landlords are reportedly 'dumping' their rental portfolios on the property market.
The number of landlords selling their portfolios has indeed increased. On average, 96,700 rentals are sold by UK buy-to-let landlords yearly; the tax year ending April 2023 that had risen to 153,000 UK rental properties. Many have picked up on this in the press as an indication of a massive landlord exodus. However, it must be remembered that there are 4.6 million private rental properties in the UK, so these disposals only represent 3.32% of all the rental properties. Also, whilst fewer landlords are expanding their portfolio, buy-to-let purchases (looking at the stamp duty statistics) show that they are only 22% lower than the long-term average. Interestingly, 144,000 properties were bought for buy-to-let in the tax year ending April 2023. So overall, it's not the exodus the newspapers are saying!
Therefore, with the number of buy-to-let properties available to rent remaining roughly the same as last year but demand increasing, that has created upward pressure on rents. This situation is exacerbated by landlords’ increased mortgage costs, resulting in the need for even higher rents (as I have discussed many times in my articles recently).
So, where will Shepperton house prices be in 2028?
Subject to no further black swan events getting out of control (e.g., energy prices, Ukraine, Taiwan or the Middle East, etc.), Shepperton house prices will be between 14% and 16% higher by the middle of 2028.
This is an educated guess, yet the Shepperton property market is navigating through a period of adjustment marked by gradual stabilisation and cautious optimism. While challenges remain, particularly in the rental sector, the overall outlook for the Shepperton property market suggests a slow but steady recovery, with variations in different parts of the village and a shift in buyer behaviour. As the property market adapts, potential buyers and investors must remain attuned to these evolving dynamics to make informed decisions.
As we look ahead to the future of the Shepperton property market, I'd like to hear your thoughts. Do you agree or disagree with my perspectives? Please share your views in the comments—every opinion is valuable and contributes to our understanding. Also, don't forget to check out my previous articles on Shepperton property market growth for more insights. Your engagement and feedback are what make these discussions genuinely insightful.