Supply and Demand Issues produce 1.9% rise in Staines' Property Values over the Last 12 Months

The most recent set of data from the Land Registry has stated that property values in Staines and the surrounding area were 1.89% higher than 12 months ago and 18.59% higher than January 2015. Whilst the increase for the last 12 months may not feel impressive, it is much better than the sharp drop that some were predicting after the Brexit vote and does point to a pretty resilient market.  By comparison Londoners have seen a drop of between 3% and 5% in the last 12 months.

So despite the continued uncertainty surrounding Brexit,   Staines (and most of the UK’s) property values continue their medium and long-term upward trajectory. As economics is about supply and demand,  it is worth looking at the story behind the Staines property market from both these angles.  
 

From the supply side of the Staines’ property market,  the main reason for this sustained house price growth is our historic failure to build enough new homes.

The draconian planning laws, that over the last 70 years (starting with The Town and Country Planning Act 1947) have meant the amount of land built on in the UK today, only stands at 1.8% (no, that’s not a typo – it’s 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 blotting our landscape by building massive,  out of place,  ugly 1,000 home housing estates around the beautiful countryside, locally for example close to villages like Englefield Green or Laleham.

 

But the fact is,  the restrictions on building homes for people to live in,  due to these 70-year-old restrictive planning regulations, mean that the homes the youngsters of Staines badly need, simply aren’t being built.

 

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 Staines saw in property values was just 21.91% during the 2008/9 credit crunch.
 

Despite the slowdown in the rate of annual property value growth in Staines to the current 1.89%, from the heady days of 15.71% annual increases seen in mid 2010, it can be argued the headline rate of Staines 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 Staines (and the UK).