House asking prices in the UK have been rising steadily over the last few years but that growth appears to be slowing, something that is leading to questions being raised about housing affordability. Demand for property in the UK is as high as it has ever been so the laws economics tell you that prices should be rising. However, many analysts are predicting that the housing bubble may burst as incomes simply aren’t rising proportionally.
The average asking price for a house in the UK, in July 2017 is £316,421, just 0.1% higher than the previous month according to online property portal Rightmove. The respect real estate agent also noted that the annual growth rate had slowed to just 2.8% but the number of sales recorded had risen by 4.6% over the same period with 45% of agents’ stock sold.
The theory being put forward for slowing prices rises has been attributed to stalling of the property market in London since the Brexit referendum last year. The capital, where prices are understandably some of the highest in the country, has been affected more by the uncertainty created by Brexit than other areas of the country. There are still concerns for The City and impact the exit will have on the banking and financial sectors – often seen as forming part of the backbone of the UK economy.
As you move further north through the country the property market is still buoyant although there are concerns that this is unsustainable as wage growth in muted. Consumer credit lines have been tight for several years with lenders naturally wary of repeating their mistakes of the late 1990’s and at the start of the new millennium. Mortgage interest rates are certain to rise soon, a rise that will be the first for a decade and this too will come as a shock to many home owners, a significant proportion of whom will never have experienced this before.
A few months ago, we reported that pressure was being place upon the UK government to create more affordable housing, mainly in the form of rental accommodation. If prices do become simply unaffordable to most, and the effect of an interest rise is as serious as some are predicting, the demand for affordable rental accommodation will only rise. How quickly developers and the government, not to mention private landlords can respond if a very pertinent question.
In a report published by Countrywide, it reported that the number of overseas landlords had fallen from 12% in 2010 to 5% at present. This had been blamed on tax changes and falling expectations regarding the price growth in the property market. Johnny Morris, research director at Countrywide said: “As well as having to contend with increased stamp duty and the annual tax on enveloped dwellings (ATED), overseas investors also saw the removal of capital gains tax exemptions in 2015.”
What is interesting, 33% of landlords in London come from Asia so this suggests that there is still plenty of investment money coming from those shores. However, with interest rates low globally, could what the UK is currently experiencing extend globally? Will there be a need for a greater supply of rental accommodation in countries such as Thailand with expats and long-term visitors feeling that they don’t want to buy or simply can’t afford homes in which to live?
Property prices in some parts of Thailand have risen quite sharply in some regions, especially Bangkok over the last decade but even the most ardent of real estate agent in Pattaya must concur that prices have been pretty stagnant in recent years. The rising value of the Thai baht against many major currencies, the tightening of visas regulations and simply a changing market have done little to encourage expats to upsize their homes.
Like the UK, the rental market in Pattaya is still relative strong, although there has been a notable shift in recent years away from long-term rentals, and more towards holidays lets. The legalities of such rentals that aren’t through recognised hotels can be debated, but what was once avoided by most agents – the short-term rental, now makes up a significant part of their business.
Pattaya as a city is certainly thriving, the number of visitors is increasing year on year and there are plenty of developments taking place around the city. The demographics have changed however, the western expats are declining, being replaced by tourists, largely from China which has seen the old high earners reduce in numbers. The high earners were the people bought a large proportion of properties so there is some resemblance to the UK with wages no longer matching rising property prices.
Properties are still selling here, let’s not view things too negatively, they are just different properties that are bought for a different purpose – investment. Whilst ever properties are being built, bought and sold, and the tourists keep flocking to the city, Pattaya has a very bright future. Rental accommodation seems to be the way forward at the present time, similar to lots of other countries. The developers just have to react accordingly, which they are doing, to a provide the accommodation that is what people want, demand and can afford.
Those who travel and look around Pattaya can see that the city has so much to offer. Significant investment is taking place in around the city, you only have to witness the construction of the new Terminal 21 shopping centre and the expansions at U-Tapao, and you realise that things are still looking bright. The city has attractions for families and singles, great golf course, fantastic weather and much, much more. Is a rise the number of rental units that are available a bad thing?
As always, space is running short. Pattaya is evolving and moving to meet demand, perhaps the UK property market will adjust accordingly. One thing is for certain, Pattaya has a bright future with so much to offer and will probably change and adapt several times in the next few years. Until next time, keep enjoying the Land of Smiles.