The average detached family home hits seven figures in 2016
2016 saw the value of an average detached family home in Alderley Edge pass through the £1 million mark for the first time. Over the last year prices have risen 15%, leaving the cost of a detached family home higher in Alderley Edge than anywhere else in the country north of Watford. Alderley Edge has joined the ranks of only eight other towns outside London where the value of a detached family home has passed the seven figure mark.
The million pound barrier was first broken in 2000 when a large home on Beechfield Road changed hands for £1.1 million. Fast forward sixteen years and today it’s more modest villas set in smaller grounds that go for £1 million. Larger, more secluded, Tudorbethan, Italianate and Arts and Crafts style homes now cost £2 million upwards. 40% of detached homes sold last year for at least £1 million but in Alderley Edge’s southern fringes, the figure is close to 100%.
As the Macclesfield Road rises up towards the Peak District, it passes through Alderley Edge’s 19th century heart. Overlooking the road are generously sized plots bounded by stone walls and mature landscaping.
Given the unprecedented degree of privacy and potential to extend they are particularly sought after by those with the largest of budgets from right across the North. 78% of these homes are bought by someone moving into the village, frequently from some of the most expensive towns in the country.
While Alderley Edge has a unique mix of architectural styles from over the last 150 years, in these most desirable streets the potential for re-modelling or wholesale re-development means homes themselves can play second fiddle to their setting.
Is a little bit of inflation a good thing? Maybe, maybe not.
As markets go into turmoil at each bit of Brexit news, it’s worth looking behind the volatility and seeing what the latest set of economic numbers are actually showing us.
The big news this month is the pick-up in inflation. It only reached 1 per cent, half of the Bank of England’s target, but the market only expected 0.6 per cent and this has caused some anxiety. It’s not because we weren’t expecting inflation to pick up – the drop in the currency means that it is inevitable – but because the increase in inflation “is not explicitly linked” to the fall in Sterling according to the Office for National Statistics. Rather its rise is due to the cost of clothing and fuel compared with last year when their prices were particularly low.
That doesn’t mean we should not expect price rises. Oil is priced in US$ and a 16 per cent fall in the US$/£ exchange rate means that this will flow through. And producer prices are now increasing as the effect of Sterling’s fall against major currencies hits too. That will hit all of our pockets in the coming months, especially as the cost of food and fuel – essentials we can’t avoid spending money on, rise.
But better news is that the UK’s labour market is still holding up despite the changes in sentiment across the rest of the economy. Even better news is that wage growth is still outstripping inflation which will provide some cushion to rising prices.
Fasten your seatbelts - it will be a bumpy time ahead, but not a hard landing.
The Brexit shock…
The vote to leave the European Union (EU) has unsettled the housing market, but the major driver of its performance will be the path of the economy. That is uncertain as the arrangements for decoupling from the EU and the effect this will have on trade have yet to be seen.
…will weaken markets…
In our central scenario we expect the economy to weaken and for this to affect house price growth and transaction levels as consumer confidence, household incomes and the labour market are affected. We expect UK house prices to see a growth of just 2.5 per cent in 2016 and -1.0 per cent in 2017, before recovering to 2 per cent in 2018.
… and the North and Midlands don’t escape
While London and South Eastern markets are expected to see the largest slowdown in prices, the North and Midlands are also expected to slow. Weaker economic growth takes part of the responsibility, but so too will uncertainty about export tariffs and inward investment, despite the support of a weaker currency. However we expect the North West to see the strongest growth out of all regions in 2018 to make up for price growth historically lagging behind that of the South.
Supply shortages will support prices while ultra-low interest rates will help to support demand…
The continuing lack of supply of property will remain a supportive factor for house prices across most of the country. And as the Bank of England has reduced rates and introduced more quantitative easing, mortgage finance will be available to help demand.
Uncharted territory brings big forecast uncertainties
There are higher than usual risks to these forecasts given the extraordinary nature of the challenges ahead. Most risks are to the downside and will be dominated by the UK’s ability to leave the EU in an orderly fashion and maintain its trade links and markets.