The North Devon property market has proven to be incredibly resilient, the question is whether it will continue throughout 2019? Are you ready for a shaky ride, or expecting something else? Let’s dive into the stats!
North Devon Property Price Trends!
Before I dive into this, I will nail my opinion to the mast; I am bullish when it comes to house prices over the medium to long term. But let’s dive into the figures to see what is happening!
According to the UK House Price Index which relies on completed sales data, the last quarter of 2018 saw house prices drop by -0.48%.
The latest monthly figures that are currently available also saw house prices actually drop by -1.58% in December 2018. However, despite this December’s drop, this is against a backdrop of 5 previous months of house price growth in North Devon. So it’s not all bad.
Overall despite this last quarter drop, there has been a year on year positive growth of 5.72%.CLICK TO TWEET
This leaves the average property price in North Devon at £241,851 (Dec 2018) compared to £228,762 (Dec 2017). Interestingly growth of 5.72% is significantly up on the figures for the beginning of 2018, which saw year on year growth for January 2018 standing at 1.46%.
However, this positivity needs to be a little more considered as the year saw significant fluctuations in annual percentage changes each month with 4 months showing negative growth (drop in house prices) of up to -5.79% and then significant swings the other way. This suggests to me the market is fragile and uncertain or the market sample (the size of the North Devon market) is too small to use typical averages (the mean) which can be affected by extremes at either end of the sample data. Either way, it is hard to spot any trends in the data.
How will Brexit affect the North Devon Property Market?
As we approach the Brexit deadline, there is clearly uncertainty in the North Devon property market. Lots of people are waiting and watching and the experts have their own views.
In fact, you can see a video of me interviewing a local North Devon property expert which you can see here.
A possible indicator of the future direction of North Devon property prices is that during the twelve months of 2018 we saw 5 or those months with negative growth month on month. This is not a one-off as 2017 also had the same number of months with negative growth.
The other interesting statistic is the drop in the number of transaction that took place in 2018. The November and December figures have not been published yet, so it is an incomplete picture, but so far it looks likely 2018 transaction levels of people buying property is going to be significantly down on the previous year. The question is whether this will continue and if the drop in the transaction levels will impact house prices in North Devon.
My feeling is that the lack of activity and transactions will continue for a while, but we must remember overall growth is still positive year on year. It’s just hard to identify what the trend is likely to be moving forward as this is unclear due to the swings from positive growth to negative growth when looking at the yearly percentage changes each month. It’s really erratic and up and down!
Is the North Devon Property Market About to Wipe-Out!?
Personally, I don’t see it, yet!
The demand for property is still strong in North Devon and I can’t see this changing anytime soon. Yes, there is a risk, but this has been driven by outside factors which have had a knock-on effect in activity and therefore transactions levels. Although transaction levels are down, they are still significantly above the lows seen in 2009 which saw the lowest average house prices over the last 10 years.
Let’s also not forget at the moment mortgage lenders also have an appetite to lend (although lending criteria is still tough), and when taking into account low-interest rates and North Devon being an attractive place for people to migrate to,there doesn't seem to be a reason to be overly negative when looking at the fundamentals of the North Devon property market.CLICK TO TWEET
In fact, we could see an initial Brexit bounce despite the drop in activity, as the demand hasn’t disappeared, it’s just been put on hold. People have been waiting and watching and there is pent-up demand in the system. Subject to positive outcomes in the wider economy post-Brexit we could see this pent-up demand enter the market, and potentially lead to a bounce in North Devon house prices before finding a sustainable level of growth.
However, the positive fundamentals must be tempered by outside factors which inevitably can impact sentiment and confidence in the property market. With uncertainty, there is always the potential for a surprise! Whether that is a systemic economic crisis and/or a large interest rate increases it’s hard to know, but this would change the game! Interestingly the lows of 2009 followed the last big economic shock, so for me, the question is more about whether there is another surprise around the corner, more than the overall market itself.