Local W4 market information for homeowners, Landlords & Investors.

Month: September 2016

What will the 0.25% Interest Rate do to the Chiswick Property Market?

I had an interesting chat with a Bedford Park landlord in No197 Chiswick fire station bar & restaurant last week who owns a few properties in the area. We had never spoken before (because she uses another agent in the borough to manage her Chiswick properties) yet after reading my blog on the Chiswick Property Market for awhile, the landlord wanted to know my thoughts on how the recent interest rate cut would affect the Chiswick property market and I would also like to share these thoughts with you……


Well it’s been a few weeks now since interest rates were cut to 0.25% by the Bank of England as the Bank believed Brexit could lead to a materially lower path of growth for the UK, especially for the manufacturing and construction industries. You see for the country as a whole, the manufacturing and construction industries are still performing well below the pre credit crunch levels of 2008/09, so the British economy remains highly susceptible to an economic shock. This is especially important in Chiswick, because even though we have had a number of local success stories in manufacturing and construction, a large number of people are employed in these sectors. In the W4 postcode area, of the 24,829 people who have a job, 915 are in the manufacturing industry and 935 in Construction meaning


3.7% of workers are employed in the Manufacturing

sector and 3.8% of workers are in Construction


The other sector of the economy the Bank is worried about, and an equally important one to the area’s economy, is the Financial Services industry. Financial Services in the W4 postcode area employ 1,851 people, making up 7.5% of the working population.


Together with a cut in interest rates, the Bank also announced an increase in the quantity of money via a new programme of Quantitative Easing to buy £70bn of Government and Private bonds. Now that won’t do much to the Chiswick property market directly, but another measure also included in the recent announcement was £100bn of new funding to banks. This extra £100bn will help the High St banks pass on the base rate cut to people and businesses, meaning the banks will have lots of cheap money to lend for mortgages .. which will have a huge effect on the Chiswick property market (as that £100bn would be enough to buy half a million homes in the UK).


It will take until early in the New Year to find out the real direction of the Chiswick property market and the effects of Brexit on the economy as a whole, the subsequent recent interest rate cuts and the availability of cheap mortgages. However, something bigger than Brexit and interest rates is the inherent undersupply of housing (something I have spoken about many times in my blog and the specific affect on Chiswick). The severe undersupply means that Chiswick property prices are likely to increase further in the medium to long term, even if there is a dip in the short term. This only confirms what every homeowner and landlord has known for decades .. investing in property is a long term project and as an investment vehicle, it will continue to outstrip other forms of investment due to the high demand for a roof over people’s heads and the low supply of new properties being built.

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Post Brexit – Chiswick Property Prices set to drop £38,100 in the next 12 months?

Even the most sane person in Britain has to admit the Brexit vote will, in one shape or another, affect the UK Property market. Excluding central London which is another world, most commentators are saying prices will be affected by around 10%. So looking at the commentators’ thoughts in more detail, property values in Chiswick will be 10% lower than they would have been if we hadn’t voted to leave the EU.


As the average value of a property in the Hounslow Council area is £381,000, this means property values are set to drop for the average Chiswick property by £38,100 … batten down the hatches .. soup kitchens and mega recession here we come ..it’s going to get rough.


.. but before we all go into panic mode in Chiswick .. the devil is always in the detail


Look at the phrase again, and I have highlighted the relevant part “Property values in Chiswick will be 10% lower than they would have been if we hadn’t voted to leave the EU”


Property values today, according to the Land Registry are 12.1% higher than a year ago in the Hounslow Council area. The 12 months before that they rose by 11.75% and the 12 months before that, they rose by 6.3%. If we hadn’t voted to leave, I believe on these figures, we could have safely assumed Chiswick House prices would have been 12% higher by the Summer of 2017.


and that’s the point, we won’t see a house price crash in Chiswick, it’s just that house prices in a years time will only be 2% higher than they are now (ie 12% less the 10% lower figure because of Brexit). Let’s look at the historic figures and how that compares to today’s figures for the Hounslow Council area and Chiswick as a whole.


Average Value of a property 20 years ago                               £ 71,600

Average Value of a property 10 years ago                                £233,700

Average Value of a property 2 years ago                                  £304,100

Average Value of a property 1 year ago                                    £339,800

Average Value of a property today                                            £381,000

Projected Value of a property in 12 months’ time                 £388,600


Therefore, I believe the average value of a Chiswick property will be £7,600 higher in 12 months’ time than today.


That’s not to say Chiswick property prices might not dip slightly in the run up to Christmas (in fact they always have done just about every year since the year 2000 and most of those were boom years) .. but in

12 months time this is my considered opinion of where Chiswick property values will be.. and looking at the historic prices, even if I (and many other property market commentators) are wrong and they drop 10% from TODAY’S figure .. in the whole scheme of things, we have been through a Credit Crunch, Black Monday and 15% interest rates over the last 20 to 30 years .. and still Chiswick house prices have always bounced back.


Whilst the UK’s vote for Brexit has created an uncertainty in the Chiswick housing market, there is no need to panic and prospective buyers should merely use common sense about their purchases.

I always say to people to be prudent and if you are taking out a mortgage, at some stage during the life of that mortgage, circumstances will be difficult. We won’t have a 2008 Credit crunch fire sale of properties because after the Mortgage Market Review which took place in the Spring of 2013, mortgage borrowers are not as highly leveraged this time around.  As a result of this, with any luck there will not be too many distressed sales, which cause widespread price reductions.


.. and Chiswick landlords? They have recently been thrashed by Osborne’s tax changes, but yields could rise if Chiswick house prices fall/stablise and rents grow, and this might also make it easier to obtain mortgages, as the income would cover more of the interest cost. If prices were to level or come down that could help Chiswick landlords add to their portfolio, as rental demand for Chiswick property is expected to stay strong as more people find it more and more difficult to obtain mortgages.

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