Thursday, 18 May 2017

What will the General Election do to 33,986 Thanet Homeowners



In Thanet, of the 55,719 households, 18,327 homes are owned without a mortgage and 15,659 homes are owned by a mortgage. Many homeowners have made contact me with asking what the General Election will do the Thanet property market?  The best way to tell the future is to look at the past.

I have looked over the last five general elections and analysed in detail what happened to the property market on the lead up to and after each general election. Some very interesting information has come to light.

Of the last five general elections (1997, 2001, 2005, 2010 and 2015), the two elections that weren’t certain were the last two (2010 with the collation and 2015 with unexpected Tory majority). Therefore, I wanted to compare what happened in 1997, 2001 and 2005 when Tony Blair was guaranteed to be elected/re-elected versus the last knife edge uncertain votes of 2010 and 2015 ... in terms of the number of houses sold and the prices achieved.

Look at the first graph below comparing the number of properties sold and the dates of the general elections


It is clear, looking at the number of monthly transactions (the blue line), there is a certain rhythm or seasonality to the housing market. That rhythm/seasonality has never changed since 1995 (seasonality meaning the periodic fluctuations that occur regularly based on a season - i.e. you can see how the number of properties sold dips around Christmas, rises in Spring and Summer and drops again at the end of the year).

To remove that seasonality, I have introduced the red line. The red line is a 12 month ‘moving average’ trend line which enables us to look at the ‘de-seasonalised’ housing transaction numbers, whilst the yellow arrows denote the times of the general elections. It is clear to see that after the 1997, 2001 and 2005 elections, there was significant uplift in number of households sold, whilst in 2010 and 2015, there was slight drop in house transactions (i.e. number of properties sold).

Next, I wanted to consider what happened to property prices. In the graph below, I have used that same 12-month average, housing transactions numbers (in red) and yellow arrows for the dates of the general elections but this time compared that to what happened to property values (pink line).


It is quite clear none of the general elections had any effect on the property values.  Also, the timescales between the calling of the election and the date itself also means that any property buyer’s indecisiveness and indecision before the election will have less of an impact on the market.


So finally, what does this mean for the landlords of the 13,661 private rented properties in Thanet? Well, as I have discussed in previous articles (and just as relevant for homeowners as well) property value growth in Thanet will be more subdued in the coming few years for reasons other than the general election. The growth of rents has taken a slight hit in the last few months as there has been a slight over supply of rental property in Thanet, making it imperative that Thanet landlords are realistic with their market rents. But, in the long term, as the younger generation still choose to rent rather than buy ... the prospects, even with the changes in taxation, mean investing in buy-to-let still looks a good bet. If you want to read more about the Thanet property market – then why not visit the Thanet Property Market Blog for more information? www.thanetpropertyblog.com

Monday, 24 April 2017

With 16,287 people in Private Rented Properties in Margate - Should you still be investing in Margate Buy To Let?



If I were a buy to let landlord in Margate today, I might feel a little bruised by the assault made on my wallet after being (and continuing to be) ransacked over the last 12 months by HM Treasury’s tax changes on buy to let. To add insult to injury, Brexit has caused a tempering of the Margate property market with property prices not increasing by the levels we have seen in the last few years. I think we might even see a very slight drop in property prices this year and, if Margate property prices do drop, the downside to that is that first time buyers could be attracted back into the Margate property market; meaning less demand for renting (meaning rents will go down). Yet, before we all run for the hills, all these things could be serendipitous to every Margate landlord, almost a blessing in disguise.

Margate has a population of 59,986, so when I looked at the number of people who lived in private rented accommodation, the numbers astounded me …

Margate - Accommodation Type and the Number of Occupiers
Owned outright - Margate
Owned with a mortgage - Margate
Shared ownership (part owned and part rented) - Margate
Social rented (aka Council Housing) -  Margate
Private rented - Margate
Living rent free - Margate
15,462
20,261
177
7,298
16,287
501
25.8%
33.8%
0.3%
12.2%
27.2%
0.8%

Yields will rise if Margate property prices fall, which will also make it easier to obtain a buy to let mortgage, as the income would cover more of the interest cost. If property values were to level off or come down that could help Margate landlords add to their portfolio. Rental demand in Margate is expected to stay solid and may even see an improvement if uncertainty is protracted. However, there is something even more important that Margate landlords should be aware of: the change in the anthropological nature of these 20 something potential first time buyers.

I have just come back from a visit to my partners relations after a family get together. I got chatting with my partners nephew and his partner.  Both are in their mid/late twenties, both have decent jobs in Margate and they rent. Yet, here was the bombshell, they were planning to rent for the foreseeable future with no plans to even save for a deposit, let alone buy a property. I enquired why they weren’t planning to buy? The answers surprised me as a 40 something, and it will you. Firstly, they don’t want to put cash into property, they would rather spend it on living and socialising by going on nice holidays and buying the latest tech and gadgets. They want the flexibility to live where they choose and finally, they don’t like the idea of paying for repairs. All their friends feel the same. I was quite taken aback that buying a house is just not top of the list for these youngsters.


So, as 27.2% of Margate people are in rented accommodation and as that figure is set to grow over the next decade, now might just be a good time to buy property in Margate – because what else are you going to invest in?  Give your money to the stock market run by sharp suited city whizz kids – because at least with property – it’s something you can touch - there is nothing like bricks and mortar!

For more views and opinions on the Margate Property Market – visit the Thanet Property Market Blog . www.thanetpropertyblog.com

Wednesday, 12 April 2017

Thanet Rents To Rise Quicker Than Thanet Property Prices In Next 5 Years




The next five years will see an interesting change in the Thanet property market. My recent research has concluded that the rent private tenants pay in Thanet will rise faster than Thanet property prices over the next five years, creating further issues to Thanet’s growing multitude of renters. In fact, my examination of statistics forecasts that ..

By 2022, Thanet rents will increase by 23%, whereas Thanet property values will only grow by 17%.

Let me explain why I have come to those conclusions:

Over the last five years, property values in Thanet have risen by 46.3%, whilst rents have only risen by 16.3%.

Throughout the last few years, and compounded in 2016, tenant demand for rental properties continued to go up whilst the Press predicted some landlords expect to reduce their portfolios in the next couple of years, meaning Thanet tenants will have fewer properties to choose from, which will push rents higher. In fact, talking to fellow property professionals in Thanet, there appears to be privation and shortage of new rental properties coming on to the Thanet lettings market.

Landlords have some intriguing challenges ahead of them in the coming years most notably in that the Tory’s have changed the taxation rules for landlords in the way buy to let properties are to be taxed. On top of that, there is the ban on letting agent fees which is still to come into force (probably in 2018). When that happened in Scotland in 2012, Scottish letting agents passed on those fees to their landlords, who in turn increased the rent they charged to their tenants.

All I would say to Theresa May and Philip Hammond is that they must be wary about indicating both red and green lights at the same time to the private rented sector. They can’t expect the armies of small private landlords to continue to house around a fifth of the population and then tax the hell out of them. They didn’t invest in buy to let as a charity or to satisfy any philanthropic urges. Something has to give – and that will be significant rent rises over the coming few years (and before anyone gives me any derogatory comments about landlords … if it wasn’t for landlords buying all these buy to let properties over the last 15 years, I am not sure where everyone would be living today – because most the Council houses were sold off in the 1980’s!).

With the challenges ahead, with the ‘B’ word (that’s budget if you wondered!), house price inflation will be tempered over the coming five years in Thanet. As I have discussed in previous articles, the number of properties on the market in Thanet remains close to historic lows, which is both good as it keeps houses prices relatively stable, yet not so good as it impedes choice for buyers… and hence why I believe property values in Thanet will only be 17% higher in five years’ time.

Whilst on the other side of the coin, with the challenges facing landlords and the significant shortage of new homes being built, Thanet people still need somewhere to live. If those people aren’t buying houses and the local authority aren’t building council houses in there thousands (because they have no money), with the average rent for a Thanet rental property currently standing at £789 per month …

Over the next five years, I predict the average rent
in Thanet will rise to £978 per month

These are interesting times. There is still money to be made in buy to let in Thanet – Thanet landlords will just need to be smarter and more savvy with their investments. If you are looking for such advice and opinion to help you meet those investment goals, one place you can find more information is the Thanet Property Blog. www.thanetpropertyblog.clom

Wednesday, 29 March 2017

Only 514 Properties For Sale in Ramsgate





2017 has started with some positive interest in the Thanet property market.  Taking a snap shot of the Thanet property market for the first quarter of 2017, the picture suggests some interesting trends when it comes to the number of properties available to buy, their asking prices and what prices properties are actually selling for.

Let us first consider the number of properties for sale in Ramsgate, compared to 12 months ago:

Type of Ramsgate Property
Number of Properties on the Market 12 months ago
Number of Properties on the Market now
% change
Detached
103
96
-7%




Semi
121
132
+9%




Terraced
76
94
+24%




Flat
218
163
-25%

So when we add in building plots and other types of properties that don’t fit into the four main categories, that means there are 514 properties for sale today compared with 564 a year ago, a drop of 9%.

Next, Ramsgate asking prices, compared
to the same as a year ago, are 4% higher.

With that in mind, I wanted to look at what property was actually selling for in Thanet. Taking my information from the Land Registry, the last available six months property transactions for CT11 show an interesting picture (note the Land Registry data is always a few months behind due to the nature of the house buying process and so November 2016 is latest set of data). The price shown is the average price paid and the number in brackets is the number of properties actually sold.


Jun-16
Jul-16
Aug-16
Sep-16
Oct-16
Nov-16
Detached
£362,000 (4)
£371,500 (7)
£307,125 (4)
£285,250 (2)
£308,333 (3)
£292,000 (5)
Semi
Detached
£243,444 (9)
£283,607 (14)
£252,833 (15)
£280,790 (5)
£223,360 (10)
£218,294 (13)
Terraced
£209,302 (23)
£219,832 (27)
£216,663 (23)
£207,487 (15)
£186,906 (24)
£222,968 (16)
Flat
£135,438 (17)
£128,423 (13)
£140,964 (14)
£124,124 (8)
£140,409 (11)
£124,899 (15)
All
£202,931 (53)
£232,392 (61)
£213,888 (56)
£202,658 (30)
£191,434 (48)
£198,750 (49)



So what does all this mean for the property owning folk of Thanet?

Well, with less property on the market than a year ago and asking prices 4% higher in Ramsgate, those trying to sell their property need to be mindful that buyers, be they first timers, buy to let landlords or people moving up the Thanet property ladder, have much more price information about the Thanet property market at their fingertips than ever before.

Those Thanet people who are looking to sell their property in 2017, need to be aware of the risks of over pricing their property when initially placing it on the market. Over the last 12 months, I have noticed the approach of a few Thanet estate agents is to suggest an inflated asking price to encourage the homeowner and secure the property to sell on their books. The down side to this is that when offered to the market for the first time, buyers will realise it is overpriced and wont waste their time asking for a brochure. They won’t even view the property, let alone make an offer. So when the price is reduced a few months later, the property has become market stale and continues to be ignored.

Whilst the Thanet property-market has an unassailable demand for property – there is one saying that always rings true - as long as the property is being marketed at the right price it will sell.

If you want to know if your Thanet property is being marketed at the right price, send me a web link and I will give you my honest opinion. www.thanetpropertyblog.com.