Cheltenham & Gloucester property prices .. the long climb back to 2007 prices

Some landlords have been speaking to me recently about stories in the press and their concerns about booming house prices and the next housing bubble in Cheltenham and Gloucester. In the past few years, if you were going to be buying in Cheltenham and Gloucester, it was vital to ensure you built in some capital growth by buying cheaply or finding a way to add value.  With property values increasing in both Cheltenham and Gloucester are properties becoming too expensive?

The height of the boom was 2007 then, prices dropped nationally by 10% to 15% in 2008 and only started to rise a couple of years ago.  According to the Halifax average property values in the South West still have to rise by 8.5% to reach those heady days of 2007. However, I have been looking at the recent Land Registry sales reports on both towns ( which make fascinating reading by the way) and looking at every property sale in both Cheltenham and Gloucester that completed in the Spring, my calculations show that Gloucester property market has in fact done better than the SW average and we are now 2% over (on average) the prices we were achieving in 2007. Cheltenham is even better at 3.2% (on average) over the 2007 peak.  So does that make them too expensive?

Yes and No. Let’s take Cheltenham as an example. In 2007(the peak of the boom) the average value of a property in Cheltenham was £279,900 and today its 3.2% higher at £288,900, so yes, they are too expensive. But then again No, because these headline figures don't take into account inflation. Since 2007, inflation has risen by around 19%. If  ‘2007 property prices’ had kept up with inflation, that same average Cheltenham property wouldn’t be £288,900 today but £279,900 plus 19% inflation which equals £333,081. Most people think inflation is a bad thing, eating away at the real value of your savings. It can however, be advantageous to property investors. With average values in Cheltenham running at around the £289k mark (or £288,900 to be precise) property has never been as cheap (in real terms) since the early 1990’s, even with the recent house price inflation. 

My answer to landlords is get the best advice and opinion you can. Speak to me, speak to others, do your homework and drive a hard bargain when buying. The market is good, very good, but if it was a runaway train, why have only 104 of the 526 properties that have come on the market  between the middle of June and middle of July in Gloucester found a buyer .. if you look hard enough, you  can still find the property bargains.

Please contact me if you would like some advice on neil.west@belvoirlettings.com