The Future of Harlow House Prices
In the ever-changing landscape of the Harlow property market, predicting the future of Harlow house prices can be akin to navigating a labyrinth. The past two years have witnessed unprecedented upheaval. Primarily due to fluctuating interest rates that significantly impacted household finances. This is reminiscent of the challenges that were faced in 2008.
The average rates for fixed-rate mortgages have dramatically risen, notably from late 2021. This hike in the Bank of England (https://www.bankofengland.co.uk/) base rates has led to a substantial increase in monthly mortgage payments. Consequently affecting people’s ability to purchase new homes.
However, the Harlow property market has begun to show signs of stabilisation.
Recently, there’s been a pause in the rise of the Bank’s base interest rate, maintaining the same rate for two consecutive months after a consistent increase since late 2021. This stability is mirrored in the mortgage sector, with lenders offering more competitive rates.
As an agent who likes to analyse the Harlow property market, I have found it difficult to predict the market trends and specifically the future of Harlow house prices.
The initial forecasts by many pundits at the start of the year saw them predicting a significant decline in property prices. Savills were expecting a drop of 10% in 2023, whilst Jones Lang LaSalle predicted a 6% drop. Yet, looking at the press in the last few weeks, these opinions have been adjusted. Recent data has indicated a less drastic reduction than anticipated. This trend suggests a potential levelling out of house prices soon.
Looking locally …
Harlow house prices are only 4.89% lower than December 2022.
The average home in Harlow was £325,780 in December. The last set of figures for August showed that it had decreased to £309,847.
Overall, these statistics look very good considering the dark clouds at the start of the year. Yet three months of statistics are still left before the year ends. In measuring house prices, the Land Registry is often seen as the definitive measure of local property market house prices. The issue is the time lag in the data.
However, the Land Registry house price index can be predicted with very high certainty. The key to this forward-looking perspective lies in the sale agreed (i.e., when a property becomes sold stc) pound per square foot figures.
A meticulous examination of both the £/sq.ft at sale agreed and the Land Registry Index data over the last five years by Denton House Research reveals a robust 90.5% positive relationship between the national £/sq.ft at sale agreed and the eventual national Land Registry Index four or five months later.
For homebuyers and sellers, this insight is groundbreaking. It means that the pulse of the property market can be gauged in advance. This allows for strategic decisions well before the official figures roll in, giving them a substantial edge in the property market.
Therefore, whilst UK house prices are currently 0.236% higher from December 2022 to August 2023, the £/sq.ft data suggests they will end the year between 0.5% and 1.3% lower.
The big price drop didn’t happen
The figures above are nothing like the 6% to 10% drops suggested at the start of the year by many.
What about 2024 and 2025 in Harlow? To judge that, we must look at the national picture first.
The first half of 2024 will see continued treading water of house prices (when some months there will be a slight increase and other months where they will dip slightly). By the end of December 2024, the net effect will show national house prices around 2% to 3% lower.
Then, in 2025, there should be a slow and steady increase in average national house prices between 2% and 3%, with more normal rises of 4% to 6% a year by 2027/8.
So where will Harlow house prices be in 2028?
Subject to no further black swan events getting out of control (e.g., energy prices, Ukraine, Taiwan or the Middle East, etc.), Harlow house prices will be between 13% and 15% higher by the middle of 2028.
This is an educated guess. However, the Harlow property market is navigating through a period of adjustment marked by gradual stabilisation and cautious optimism. While challenges remain, the overall outlook for the Harlow property market suggests a slow but steady recovery. As the property market adapts, potential buyers and investors must remain attuned to these evolving dynamics to make informed decisions.