The most recent set of data from the Land Registry has stated that property values in Lancaster and the surrounding area were 0.18% lower than 12 months ago but 5.85% higher than January 2015.
Despite the uncertainty over Brexit as Lancaster (and most of the UK’s) property values continue their medium and long-term upward trajectory. As economics is about supply and demand, the story behind the Lancaster property market can also be seen from those two sides of the story.
Looking at the supply issues of the Lancaster property market, putting aside the short-term uncertainity of property on the market, one of the main reasons of this sustained house price growth has been down to of the lack of building new homes.
The harsh planning laws, that over the last 70 years (starting with The Town and Country Planning Act 1947) has meant the amount of land built on in the UK today, only stands at 1.8% (no, that’s not a typo – its one point eight percent) and that is made up of 1.1% with residential property and 0.7% for commercial property. Now I am not advocating building modern ugly carbuncles and high-rise flats in the Cotswolds, nor blot the landscape with the building of massive out of place ugly 1,000 home housing estates around the beautiful countryside of such villages as Cockerham and Bolton-le-Sands.
The facts are, with the restrictions on building homes for people to live in, because of these 70-year-old restrictive planning regulations, homes that the youngsters of Lancaster badly need, aren’t being built. Adding fuel to that fire, there has been a large dose of “not in my back yard” and landowners deliberately sitting on land, which has kept land values high and from that keeps house prices high.
Looking at the demand side of the equation, one might have thought property values would drop because of Brexit and buyers uncertainty. However, certain commentators now believe property values might rise because of Brexit. Many people are risk adverse, especially with their hard-earned savings. The stock market is at an all-time high (ready to pop again?) and many people don’t trust the money markets. The thing about property is its tangible, bricks and mortar, you can touch it and you can easily understand it.
The Brits have historically put their faith in bricks and mortar, which they expect to rise in value, in numerical terms, at least. Nationally, the value of property has risen by 635.4% since 1984 whilst the stock market has risen by a very similar 593.1%. However, the stock market has had a roller coaster of a ride to get to those figures. For example, in the dot com bubble of the early 2000’s, the FTSE100 dropped 126.3% in two years and it dropped again by 44.6% in 9 months in 2007… the worst drop Lancaster saw in property values was just 21.91% in the 2008/9 credit crunch.
Despite the slowdown in the rate of annual property value growth in Lancaster to the current drop of 0.18%, from the heady days of 9.72% annual increases seen in early 2010, it can be argued the headline rate of Lancaster property price inflation is holding up well, especially with the squeeze on real incomes, new taxation rules for landlords and the slight ambiguity around Brexit. With mortgage rates at an all-time low and tumbling unemployment, all these factors are largely continuing to help support property values in Lancaster (and the UK).