Friday, 21 October 2016

House Prices in Thanet rise by more than 18% in the last 18 months

House Prices in Thanet rise by more than 18% in the last 18 months

Over the last month, the Thanet property market has seen some interesting movement in house prices, as property values in the Thanet Borough Council area rose by 1.9% in the last month, to leave annual price growth at 16.8%. These compare well to the national figures where property prices across the UK saw a monthly uplift of 0.42%, meaning the annual property values across the Country are 8.3% higher, this is all despite the constraining factors of Stamp Duty changes in the spring and more recently our friend Brexit.

Looking at the figures for the last 18 months makes even more fascinating reading, whereby house prices are 18.5% higher, again thought provoking when compared to the national average figure of 13.6% higher.

However, it gets more remarkable when we look at how the different sectors of the Thanet market are performing. Over the last 18 months, in the Thanet Borough Council area, the best performing type of property was the semi, which outperformed the area average by 0.83% whilst the worst performing type was the apartment, which under-performed the area average by 1.67%.

Now the difference doesn’t sound that much, but remember two things, this is only over eighteen months and the gap of 2.5% (the difference between the semi at +0.83% and apartments at -1.67%) converts into a few thousand pounds disparity, when you consider the average price paid for a semi-detached property in Ramsgate itself over the last 12 months was £214,000 and the average price paid for a Thanet apartment was £130,200 over the same time frame.

I know all the Thanet landlords and homeowners will want to know how each of the property types have performed, so this is what has happened to property prices over the last 18 months in the area...

·         Overall Average          +18.5%
·         Detached                     +19.4%
·         Semi Detached            +19.5%
·         Terraced                     +18.6%
·         Apartments                 +16.6%

So what does all this mean to Thanet homeowners and Thanet landlords and what does the future hold? 

When I looked at the month-by-month figures for the area, you can quite clearly see there is a slight tempering of the Thanet property market over these last few months. I have mentioned in previous articles that the number of properties on the market in Thanet has increased this summer, something that hasn’t happened since 2008. Greater choice for buyers means, using simple supply and demand economics, that top prices won’t be achieved on every Thanet property. You see, some of that growth in Thanet property values throughout early 2016 may have come about because of a surge in house purchase activity, an indirect result of the increase in stamp duty on second homes from April, thus providing a temporary boost to prices.
However, it may be possible the recent pattern of robust employment growth, growing real earnings and low borrowing costs will tilt the demand/supply seesaw in favour of sellers and exert upward pressure on prices once again in the quarters ahead.

...And Thanet property values, assuming that everything goes well with Brexit, I believe in twelve months’ time we should see values in the order of 5% to 10% higher.

Friday, 14 October 2016

942% - Rise in Thanet Property Prices since 1981

Roll the clock back 35 years to 1981, and Mrs. T was in power, we had a Royal Wedding, Britain won the Ashes and Bucks Fizz won Eurovision with ‘Making your Mind up’.   Haven’t things changed.  The number of homeowners and property investors who said they wish they had hindsight and bought up every house in Thanet all those years ago, especially when you consider what has happened to Thanet property values, as…

Thanet Property Values since 1981 have risen by 942%.

Not bad when you consider inflation over the same time period has been 271.9%, meaning in real terms (i.e. after inflation), property values in Thanet are 670.1% higher.   It’s no wonder people can’t afford to buy property anymore and landlords are attracted by bricks and mortar. Yet the changes to the Thanet Property market run much deeper than property value changes as no one could have predicted how the property market has changed in Thanet over the last 30 years.

Looking at the Local Authority data for Thanet District Council in 1981, 18.1% of Thanet people lived in a Council House, whilst today its 12.7% ... a drop which can mostly be attributed to Margaret Thatcher allowing Council tenants the right to buy their Council House.  The private rental sector since 1981 has, as one would have expected, also changed.  The proportion of properties privately rented in the Thanet area (i.e. through a private landlord or a letting agency) has doubled, rising from 13.6% to 23.8% of property.

So, let us consider those people who own their own home, surely that has had a massive drop?  In 1981, the proportion of people who lived in the Thanet District Council area who owned their own home was 68.1% … and today its … 62%. Not the seismic change most of you were expecting (including myself!).

Homeownership in the 1980’s and 1990’s in Thanet did in fact rise, but as I have discussed in previous articles in the ‘Thanet Property Market Blog’, that was because nearly every Council tenant was buying their council house. Now there are hardly any Council houses for the younger generation to move into (because of the right to buy scheme) so they have no choice but to privately rent.

.. and this is why the buy to let market in Thanet is an investment sector that will continue to grow as councils aren’t building council houses in their thousands each year (like they were in the 1950’s/60’s and 70’s).  The Thanet property market is constantly changing and buy to let for too long has been heavily dependent on house price growth, where yield has been almost forgotten.  I see the changes in tax and landlord and tenant law in a different perspective to the sooth-sayers and see it as bringing many opportunities where yield will become more important.  You might need to change your buy to let targets, your methodology to financing or even consider places other than Thanet in which to invest your money, but this will shine a light on investing in properties with healthier yields and create more realistic long term buy to let opportunities, instead of short term growth bets and wagers.

Like Bucks Fizz said in their song, it’s time to make your mind up. The advice I give to my landlords, and also to you my blog reading friends is this; these changes will make some landlords panic, meaning competition for decent Thanet buy to let bargains will reduce as fear of change kicks in and amateur investors flee the market.  These opportunities will provide a more stable platform for knowledgeable and wise Thanet buy to let landlords to thrive in.  If you want to learn more about the Thanet Property Market, feel free to pop in for a coffee at our office for a chat with me, or failing that, visit the Thanet Property Blog, where you will find many more articles like this solely on the one topic of the Property Market in

Thursday, 6 October 2016

The 5,803 Margate Savers batten down the hatches with low interest rates set to continue into the 2020’s

You might ask, what has the plight of the Margate savers to do with the Margate Property Market … everything in fact.  Read the newspapers, and every financial wizard is stating that with the decision of the Bank of England’s Monetary Policy Committee in early August to cut the Bank of England base rate to an all time low of 0.25 per cent, savers should prepare themselves for interest rates to stay low well into the early 2020’s.

... And this isn’t some made up story to capture the headlines of newspaper editors. The yield (posh word for interest rate or return) on 10-year Government bonds is currently 0.61 per cent. This indicates that the money markets believe that the Bank of England’s base rate will, on average over the next ten years, be below the 0.61% rate they are buying the 10 year bonds at (because they would loose money if the average was over 0.61%). UK Interest rates are going to be low for a long time.

For those who have saved throughout their working lives and are looking for ways to maximise their savings, tying their money into property could prove advantageous. You see as a saver, I did a search of the internet and the best savings rate I could find was a 5 year fixed rate at 2.5% a year with Weatherbys Bank. Your £200,000 nest egg would earn you £5,000 a year – not much. However, on the other side of the fence, growth in Margate house prices and princely buy to let yields have made property investment in Margate an appealing option for many. According to my research, the...

Average Yield over the last five years for
Margate Buy to let property has been 5.6% a year

… and average Property Values in over the same period have risen by 33.3%.

Using these averages, the Margate landlord’s property would be worth £266,600 and they would have received a total of £56,000 in rent – making the total return £322,600. Meanwhile, whilst our 5,803 Margate Saver’s, using the average savings rates for the last 5 years, even if they had reinvested the interest, their £200,000 would only be £221,184.

There are risks as well as benefits to buy to let though. As my blog readers know, I tell it like it is and investing in buy to let means locking up capital in a property that may fall in value. Another option would be stock market income based investment funds, which are paying around 5%, especially if put your nest egg into a tax free Stocks and Shares ISA. Although you can only add £15,240 a year into an ISA, but you would also have the ability to sell up quickly if you want ... but one last thought…

The other side of the coin is that you cannot buy an unloved ‘stock market income based investment fund’ and set about renovating it and adding value yourself. The investment fund isn’t something that you can touch and feel, isn’t something tangible, isn’t something physical, isn’t something concrete, it isn’t bricks and mortar ... and that is why my fellow Margate homeowners and Margate landlords is why the love affair of the British and Property will continue.

If you are considering becoming a new buy to let landlord in Margate, what do you know about the Margate property market? Do what many established landlords do and visit the Margate Property Blog where there is a catalogue of articles like this and where the best buy to lets deals are in Margate