I had an interesting conversation with a local Grantham
accountant the other day. He is quite an observant chap (I know this because I
have known him for a few years .. but I suppose you have to be to be an
accountant!). Anyway, he mentioned a few things he had noticed recently in Grantham,
one that Grantham property prices had gone up in the last few years but nowhere
near the growth levels that were being achieved in central London, and
secondly, that he thought the number of for sale boards in Grantham (and more
importantly ones with sold slips on them)
had increased over the last couple of years.
The rate of house price inflation in Grantham continues to
slow with growth of 4.3% in the 12
months to February compared to 6.7% just
over six months ago, according to the latest Land Registry data. However, there
is considerable local variation with house price growth ranging from 1.6% in the
City of Leicester to 6.9% in Leicestershire over the last 12 months.
Whilst Grantham hasn’t seen the 20%+ per year in house price
growth of London over the last couple of years,
Grantham has seen a sharp uplift
in the number of properties sold throughout 2014 as base line demand for housing grows,
which suggests there is substance to the recent pick-up in house price growth
in the town.. Since the Second World War in the UK, when the number of
properties sold has grown, property values grew soon after. The 14.8% uplift in
property transactions in Grantham in 2014, compared to 2013, indicates the most
significant recovery in house market activity in Grantham (outside London) since
2007.
When you compare Grantham with London, you could be looking
at two different countries. In London, its mid/late teens house price to
earnings ratios are impacting demand (ie the average property value is often 15
or 17 times the average wage in London .. in fact in Knightsbridge the ratio
can be 30 to 1). However, the number of
people wanting to sell has dropped considerably, meaning that falling sales
volumes combined with a general slowdown in activity in the run up to the
General Election are resulting in lower mortgage approvals for home purchase.
Transactions are a great indicator for house prices. The
acceleration in house price growth in London in the last two years was preceded
by three years of rising transactions. A similar pattern is being registered in
the Grantham area, as pent up demand returns to the market supported by low
mortgage rates and an improving economic outlook.
But before you get the Champagne out, while the
uplift in activity is welcome news, the number of Grantham property sales in
2014 are still 24.96% lower than the
level seen in 2007 and property values are 11.7% below the 2007 levels. The ongoing housing recovery
is far from broad based and remains focused on middle to higher value areas
within Grantham where households have equity and find it easier to access
mortgage finance
