SPECIAL REPORT: Preston's homeowners are missing out on the housing boom

Those of us of a certain age will be familiar with the '˜how much?' moment when we see a favourite product from our younger days now on the shelves for what seems like an exorbitant price.
First time buyers have been helped by Prestons stable housing market. 	(Picture posed by models)First time buyers have been helped by Prestons stable housing market. 	(Picture posed by models)
First time buyers have been helped by Prestons stable housing market. (Picture posed by models)

The vast majority of us, therefore, would be more than happy if prices simply went up with inflation.

But when it comes to house prices, vast amounts of column inches are devoted to fluctuations in the market with each peak or trough seemingly representative of the boom or bust state of our economy.

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Recent figures suggest UK homeowners have seen the value of their homes increase by more than 40 per cent over the past eight years, a result of a “once in a generation” record low interest rate environment.

However, Preston has apparently missed out on this boom. The city’s house prices have remained at almost the same level since 2009.

Compared with areas of London and the South East that have seen average prices almost double during the same period, the research by online estate agents HouseSimple.com suggests our homeowners have not been part of this golden period.

According to local estate agents though, this may not be all doom and gloom. And with the housing bonanza from City Deal on the not so distant horizon, there may be good news for both first-time buyers and those already on the housing ladder.

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HouseSimple.com’s research ranks Preston within the lowest 15 areas of the UK in terms of average property price growth – based on Land Registry data - with a 0.1 per cent increase (£111,264 to 111,414).

But this is not the experience of Moving Works Preston sales director Mark Worrall, who said the figures come as a surprise.

He told the Post: “We have always viewed the market here as being pretty robust from our experience in Preston, and South Ribble, especially.

“There seems to be steady growth, when we hear about fluctuations elsewhere in the country it doesn’t seem to follow here.

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“Whereas other areas across the country seem to have peaks and troughs, we don’t.”

One interpretation of the impact of house prices stagnating could be that those already on the housing ladder may be unable to move on. With little prospect of making money on their property, owners staying put and saving restricts movement up the chain, making it a more challenging environment for first-time buyers.

But Mr Worrall says that isn’t necessarily the case.

He said: “I would argue that it makes it easier for first time buyers in some ways because it makes the houses more attainable, if the prices remain at a constant rate. People always move for much more reasons than just for house price rises. Their needs change, they might start a family, for example, and although price rises can help them to move, it’s not the only thing.

“It’s a great time for first time buyers, I would say, given the incentive deals on mortgages and government schemes available at the moment.”

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This reading of the figures was echoed by Martin Monks, director for Reeds Rains estate agents. Constant prices mean buyers can easily budget for their purchase without the fear their funds, and deposits, will be subject to sudden increases.

Problems arise, however, when people want to move into an area where prices are on a steeper increase than Preston’s.

He said: “Whilst sellers may have seen little appreciation in the value of their home, the price of their next home (if in Preston) will probably have remained relatively stable – the problem is where they plan to move to another location.

“In these instances those selling in Preston may experience difficulty in raising funds to buy property elsewhere and, worst still, those who bought at the height of the market may be in negative equity.”

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Returning to HouseSimple.com’s analysis, they suggest the “golden period of house price growth” could be drawing to an end as “three members of the Bank of England’s Monetary Policy Committee (MPC) voting for an interest rate rise in June, and inflation steadily rising, we could be close to the first rate rise in almost 100 months.”

But this, inversely, comes at a time when Preston, flush with City Deal funds, is on the verge of a house-building bonanza. Around 20 construction sites across the north of the city are creating thousands of new homes.

Mr Worrall views the vast development plans as a catalyst for the city’s housing market. House prices may see a rise as a result, he predicted.

And so homeowners who may have missed out on the advantages of rising house prices during the last eight years may be able to reap the rewards in the coming years.

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Mr Worrall added: “I would say across Preston the demand for houses has been on a steady increase for years but the supply has not kept up with that so the new builds will help bring that back on track.

“There is an opportunity for first time buyers to go for the affordable houses in the schemes. But also, current homeowners will look to move to the new builds and that, in turn, will allow first-time buyers to go for those vacated houses. It will help them get on the ladder.

“It will mean that sellers will have to do their research before they can put their houses on the market, if they are in an area with a lot of new-builds. Sellers will have to be aware that their properties will be compared with the new builds and they will have to adjust.

“The developments scheduled over the next few years are fantastic for us. It will help stimulate the market.”

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