So How Does The Reading Property Market Look Like Shaping Up In 2016?

Reading house prices up, treading water, or Reading house prices down, (and if so, by how much)? These are the questions perplexing investors in the Reading property market most during the first weeks of 2016. So much so that I thought I would re-confirm my thoughts regarding these matters.

Those of you who read the Reading Property Blog regularly will know I am not the sort of person who pulls punches nor someone who ever fails to give a forthright and straight talking opinion – so here are my thoughts for Reading homeowners and landlords.

According to the most accurate estimates, the average Reading property is 17.1% higher today than it was a year ago and when you consider inflation is currently running at -0.1% (i.e. consumer/retail prices are dropping) and average salary growth is only around 2.5% pa, this adds up to a difficult market dynamic for first time buyers; as property affordability continues to decrease (although I was reading in The Times the other day that wage inflation, i.e. salary growth, is showing signs of weakening).

Some commentators have said the higher stamp duty taxes announced recently in the Autumn Statement for buy to let landlords, concerns over first time buyer affordability and the outlook of UK interest rate rises in 2016, will really dampen the property market.

Well if you read my previous article about what the new stamp duty rule changes would REALLY mean For Reading landlords in my blog, you will know that, in my opinion, the statement amounted to the worst type of politics and, once again, of governments trying to control market behaviour. I believe the real issue in the Reading property market is the shortage of property to buy, as people either worry there will be no suitable house to move to, or cannot afford to upgrade.

However, on the supply side, Mr Osborne said in his Autumn Statement that he will change the planning laws to ensure the government meets the pledge made at the General Election, (back in May), of building 200,000 new homes a year. All I can say is, good luck Mr Osborne in hitting those numbers!

Why? Because it take years to build large numbers of new houses not months, so Mr Osborne and his fabled house building plans aside, where exactly does that leave us in Reading, during 2016?

Well, talking of supply, whilst Mr Osborne builds his properties (and let’s be honest, a week doesn’t go by without him being filmed on a building site with a high viz jacket and hard hat building a house here and there), let us look at the shortage of properties for sale in Reading.

Back in May 2008, 3,443 properties were for sale in Reading, today that figure is only 754. On the face of it, this means there is less choice for both residential buyers and investors in Reading, but it also means that with a restricted supply of properties for sale, it is keeping property prices high for Reading house sellers.

Everything isn’t all doom and gloom though, back in May 2008, the average property in Reading took 87 days to find a buyer; latest figures state this has dropped to 65 days, a drop of 25% in how long it takes to find a buyer. However, when you delve even deeper, the best performing type of property today in Reading is the semi-detached house, which only takes, on average, 51 days to find a buyer, compared to flats, which take 70 days. It just goes to show that, even though the average has dropped since 2008, how varied that change has been!

So, back to the question everyone is asking, what will happen to property values in Reading in 2016? Well, this year more than any other, this a very difficult question to answer. I am sensing a lot of panic to buy from inexperienced and first time investors, before the increase in stamp duty on second homes, and a herd mentality is forming which is keeping prices high/rising; what I affectionately call a “Momentum Market”.

Unless a property comes on to the market that directly suits your investment aims entirely, I would advise waiting to see how the market settles after the implementation of the increased stamp duty rates.

My fear is that this is the main driver in the investor market at the moment and what happens to momentum after the tax increase is implemented? What keeps the market moving? With average earnings to house price ratios in excess of 10 to 1 in all post code areas of Reading, all the positive drivers for the market being in play, should investors shy away from the market due to collapsing yields, I don’t think the residential buyer can keep the upwards movement on pricing going.

This uncertainty leaves me to think that it will be a “Topsy Turvy” year on pricing this year, with an overall slight increase of 5 to 7.5% this year, on average. As ever though, there will be winners and losers in the property market as not all profiles of property perform the same, in the same way as all stocks and shares don’t perform at the same rate.

I will of course be reporting and analysing the performance  of the Reading property market over coming year, but this year more than any other year recently, the right advice for your property investments will be imperative.

If you would like to explore how I can help you with your property investments, or should you require any advice about investing in the property market, wish to enquire about our Investment Analysis Reports, Property Sourcing, Residential Lettings or Property Management services, please do not hesitate to contact me on 01189 471010 or at [email protected]

If you would like more frequent updates on the Reading property market specifically, please feel free to follow my Reading Property Market Investment Blog at https://www.readingpropertymarket.co.uk

Alternatively please feel free to pop in and see me at our offices in Green Park for a chat, the coffee is always on.