As estate agents with our finger on the pulse of the Battersea and Brixton property market, this is the time of year when we are often asked whether the value of homes in this part of London will rise or fall over the next 12 months.
The honest answer is we cannot predict the future. Estate agents cannot say for certain whether interest rates will rise in 2016, nor whether London’s economy will continue to boom.
However, it is safe to say while the demand for homes in London continues to outstrip supply, property values will continue to grow over the medium to long term.
Paul Smee, Director General of the Council of Mortgage Lenders, is more bullish. While admitting that the mortgage market got off to a slow start at the beginning of 2015, he said last month: “This quarter shows it is now firmly on an upward trajectory.
“With competitive rates and high levels of product choice currently available, alongside generally improving economic conditions, we expect this to continue as we head into the New Year.”
This contrasts with the gloomy view put forward by Swiss bank UBS, which says the London property market represents the world’s largest housing bubble.
According to UBS, London property values will experience a price correction of 30% in the near future.
Even if the Bank of England raises its base rate from 0.5% in 2016 – as governor Mark Carney has said he wants to – this is unlikely to destabilise the local property market.
Sure, any increase in mortgage rates is going to have a negative effect on house prices in Brixton and Battersea in the short term, but the chief driver of rising property values is the gap between the demand for homes and the property available.
And that gap doesn’t look like closing any time soon in Brixton.
A large part of the difference between supply and demand has been driven by the failure of successive governments to build enough houses, something which finally seems to have impacted on the powers that be.
One of the most eye-catching announcements in Chancellor George Osborne’s Autumn Statement last month was a commitment to build 400,000 homes in the next five years, but even this represents little more than a sticking plaster on a gaping wound.
Predictions have the population of London hitting the 10 million mark in the next 15 years, a figure which would call for 62,000 houses per year to be built for the next 10 years, an ambition in stark contrast to the 35,000 homer per year actually completed in the run up to the last election.
This helps explain why property prices in Brixton have risen by 16.29% over the past 12 months, with the average price of a home here now £517,377.
The contemporary appeal of Brixton is clear. The development of Brixton Village into a foodie destination attracting customers from a wide area only adds to the vitality of SW2 and SW9.
And it’s easy to see why a growing number of young professionals are settling in Brixton. Victoria Station and it’s transport links to the rest of London and beyond is just four Tube stops away, making this part of London the ideal base for those who want to minimise that daily commute to work in the city centre.
Dick Whittington used to proclaim that the streets of London were paved with gold, and we know from experience that it’s a metaphor which still holds sway today – especially in Brixton and Battersea.
If you plan to enter the Brixton or Battersea property market next year, contact Eden Harper today for honest advice about buying, selling, letting or renting homes.