Are House Prices in Hertfordshire Falling?
- Hertfordshire house prices fall annually for ninth consecutive month.
- The price of the average Hertfordshire home has been rising monthly for the past two months.
- Hertfordshire new-builds have been rising while existing property prices fall.
Worst December on record for property sales in Hertfordshire
Just 493 property sales completed in Hertfordshire in December. This is the second worst single month for sales volume on record for Hertfordshire, beaten only by April 2020 when conveyancing was halted by national lockdown.
We have seen more healthy activity in 2024 which will be reflected by Land Registry data as it is released.
Are house prices falling in Hertfordshire?
Every month from June 2023 to February 2024, the average house price in Hertfordshire was lower versus the same month the previous year. This matches national trends and is due to the weaker buying power of the population through the cost of living squeeze, high inflation and prohibitive borrowing costs.
The good news is the gap is closing. The latest 3 months' data released by the Land Registry shows Hertfordshire house prices at -3.4%, -2.5%, and -2.2% lower than last year's, and house prices in Hertfordshire actually rose monthly in January and February.
How does the Bank of England affect the Hertfordshire Housing Market?
House prices tend to rise with inflation (2021) but fall when the base rate comes up (2023); the higher cost of borrowing means buyers have less to spend. The base rate has held steady at 5.25% since August.
You can see from the graph above that that house prices have remained relatively flat since the higher base rate reached 3.5% and began to bring inflation down. The high cost of borrowing keeps pressure on the mini-housing bubble, as would-be homeowners stack up, waiting to buy at a more favourable time. This suppresses house price growth.
The base rate should begin to come down by September at the latest, Capital Economics' forecast is 4% by the end of this year and an optimistic 3% in 2025. When the base rate drops and pressures ease, a mini flood to the market will get house prices growing again.
Will there be a UK recession in 2024?
"The Quarterly Economic Forecast (QEF), expects the UK economy to grow by 1.1% for 2024, with the projection for 2025 remaining at 1.0%. The economy is expected to grow by 1.1% in 2026, a minor upward revision." - Source: British Chambers of Commerce (BCC)
This, however, is well below the pre-pandemic average. NEISR estimate that Britain's poorest households will not recover fully until 2027.
Would you like conveyancing services for a Hertfordshire property?
Hertfordshire property market on trend with rest of the country
Hertfordshire's property market follows national trends, both down on last years' sales volume by 61%.
Three Rivers Thriving
Property sales volume in Three Rivers was the strongest in Hertfordshire, down by just 47%, while Hertsmere was down by exactly half.
Three Rivers has much to offer, with Visit Herts boasting visitor attractions, festivals, shopping, eating and drinking, sport and leisure, culture and history and places to stay, as well as a low crime rate, and hectares of public woodland and conservation areas.
East Hertford and St Albans have been worst affected, with less than a third of last year's property sales, both down by 69%.
St Albans overtakes Three Rivers as the most expensive place to buy a home in Hertfordshire
The average price of a home in St Albans is £589,270, a mere £573 behind its record peak in September 2022 and £27,135 ahead of close rival Three Rivers, which regularly beats St Albans to top-spot for average house prices in Hertfordshire.
St Albans is an hour's drive or 20 mins by train from St Pancras, combining commuter appeal with historic charm, beautiful scenery and friendly community.
Where are the cheapest houses in Hertfordshire?
Stevenage has the cheapest house prices in Hertfordshire, with the average home costing £328,796. This is £35,788 more expensive than the average home in England and Wales, but £112,534 under the average for the region and a whopping £260,474 below the average in St Albans.
Stevenage is a mere 20-25 min train journey from London, making it an appealing commuter location, with a growing economy, good schools, and plenty of green spaces. Terraced houses and apartments in the town centre are cheaper than the posher old town.
Winners and Losers in the Hertfordshire property market
House prices in St Albans and Welwyn Hatfield are now higher than they were a year ago, with Welwyn Hatfield reaching a record high of £449,020 in February this year; one of very few districts nationally to recover from the 2023 fall.
Stevenage is a way off from beating its record high, but Stevenage house prices have been increasing monthly, since December.
Hertfordshire as a whole has had positive monthly growth on average house prices for the latest three consecutive months of Land Registry data. However, only three districts (St Albans, Stevenage, and Welwyn Hatfield) can match this uplifting spring. Every other district in the region has seen negative growth, except for East Hertfordshire, which rose and fell monthly but has seen some minor positive annual growth of 0.8%.
New houses in Hertfordshire drive up average price
Our analysts at SAM Conveyancing have noticed a widening gap between the average price of existing property versus new builds. The trend is more pronounced in some regions than others, but the overall pattern is obvious. Since the house price peak of 2022, average existing house prices in Hertfordshire and most of the rest of the country fell through the spring, and then fluctuated just under 0% growth.
New build house prices in Hertfordshire, however, have been soaring ever higher since the end of 2022.
"This disparity in price will fuel nearby house prices up as estate agents use these potentially over-priced local comparables when setting sale prices for existing properties in the local area." - Andrew Boast
This could mean new build developments in your immediate location will inflate the value of your home. Great news if you're already a homeowner; bad news if you're a first-time buyer.
What is next for the Hertfordshire property market?
The County Council, alongside Hertfordshire Growth Board, aims to create 100,000 new jobs and 100,000 new homes by the mid 2030's to support a projected population increase of 175,000.
Well-designed, well-connected housing, supported by a greater range of desirable, well-paid job opportunities, will increase demand and investment in the region which will support a strong housing market. Their sustainable growth plan includes:
Well-designed communities
"Recognising there is a need for more housing in the county, we will work with partners to create vibrant communities that are well-connected and environmentally sustainable. Places with a good balance of jobs, homes, services, and amenities where everyone can thrive."
Infrastructure that meets the needs of our communities
"We will deliver and maintain the sustainable transport, digital and community infrastructure necessary to support our growing county. This will include developing a new Hertfordshire Essex Rapid Transit System (HERT) that will provide a new east-west link in our county."
Strong economy
"We will work to ensure that Hertfordshire continues to be recognised as a great place to do business. A county which nurtures local businesses whilst also attracting investment from world class, global businesses in order to drive the economic growth of the county."
Employment opportunities for all
"We will support businesses to recover and grow, working with our schools, colleges and university to increase skill levels to meet current and future employer staffing requirements. Promoting lifelong learning and retraining that provides everyone with job opportunities as we strive for full employment."
Should I buy a house in Hertfordshire?
Hertfordshire is an excellent location to choose to live:
- Transport links to London
- Market towns, garden cities and picturesque villages
- Ancient woodland and unspoiled countryside
- Low crime rate
- Diverse education and employment opportunities
- Affordable living and decent salaries
- Rich history
- Fast broadband
House prices are expected to remain static or fall slightly by the end of this year. If you can afford to buy in Hertfordshire before prices increase, it is likely you'll be able to switch to a more affordable mortgage rate in a couple of years, by which point your investment will hopefully have appreciated in value.
Nationally, house prices are expected to increase over the next 5 years.
If you are renting and can afford to buy at the current rate of interest, this may be a much more desirable option than saving for a bigger deposit, as rents are set to rise nationally this year by 5% or more (but only 2% in London), whereas mortgage rates are likely to fall.
However, if you are stretching your budget to buy in Hertfordshire, consider a cheaper location, or saving for a bit longer. We may not be out of the woods yet, and if the base rate (and mortgage rates) rise, you may not be able to keep up with your monthly repayments. Worse yet, if prices do fall, you could end up in negative equity. Buying a home with a mortgage always comes with risks.
If you are ready to buy a house in Hertfordshire or the surrounding area, we can handle your purchase with a dedicated SAM Conveyancing Consultant to manage your transaction alongside one of our hand-selected panel solicitors.
"Spring will show an increase in sales volume that is more in line with 2022 than the stagnant 2023, offering opportunities for home buyers and homeowners alike. With more affordable mortgage products and the reduction in the cost of living, the housing market can take a breath after a very exhausting 18 months. "
"While the Bank of England states that a base rate fall is "way off" at the moment, this message is meant to calm mortgage providers and the markets so they can plan further ahead through May and June. The delay will help reduce inflation closer to the target of 2% and ensure a longer term of stability through the rest of 2024 and 2025."
"The major curve ball to this is the General Election and what would happen if there was a changing of the guard."
- Andrew Boast FMAAT MIC
CEO and Author | SAM Conveyancing
Sources: Latest data from - Gov.UK, Bank of England, UK House Price Index.
Caragh is an excellent writer and copy editor of books, news articles and editorials. She has written extensively for SAM for a variety of conveyancing, survey, property law and mortgage-related articles.
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