Neighbourhood watch - Owning a Didsbury house is winning life for the suburb's mostly younger buyers and sellers.
A home in Didsbury buys them a slice of the best vibe in Manchester, justly popular for its on-trend bars and restaurants and relentless sense of style. The last ten years have seen Didsbury become a magnet for young professionals turning it into a destination whose only equals are London hotspots like Islington. So it’s no surprise that Didsbury has provided a welcome home for many BBC staff relocating from the capital.
According to Bridgfords Didsbury is on a one-way escalator. Average sale prices have risen sharply in the last five years – up 3.9 per cent this year, 17 per cent over five years, both massively outpacing the regional norm. And prices show no sign of slowing.
Didsbury vendors might think they have the whip hand, and are free to price optimistically – but that’s not quite right. Didsbury’s buyers are overwhelmingly first-timers (42 per cent) often with little or no help from parents (cash buyers are just 18 per cent). Many are pushing themselves to the mortgage limits to afford a Didsbury life – and that puts a cap on prices so the average Didsbury semi is £302,000 compared to Wilmslow’s £349,000.
The good news for committed Didisburgians is that they don’t need to give up the Didsbury life when kids arrive. A new primary school at Beaver Road will provide 1,050 new places making it one of the largest in the UK. The new school, due to open in September 2018, could persuade more 30 somethings to stay put rather than relocate to popular alternatives like Wilmslow or Hale. That in turn could mean fewer houses coming onto the market, helping to push prices up.
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.