Property Values rise by 0.6% in Huddersfield

Property values in Huddersfield rose by 0.6% in March. This follows several months of sluggish activity in the Huddersfield property market in the run up to the Election, putting the average price of a property in Huddersfield at £156,100, 5.6% higher than in March 2014.

Interestingly, the Council of Mortgage Lenders and Estate Agent trade bodies over the last few months have reported seeing a fall in mortgage lending and enquiries from prospective homebuyers. This is important because it comes amid an overall fall in housing market activity in Huddersfield. Data from the Land Registry said completed house sales in Huddersfield in the three months to January 2015, (the most up-to-date figures available) fell by 15.85% compared to the same three month period up to January 2014.

However, I believe that the slowdown in property sales in Huddersfield is supporting Huddersfield property values, as there is a shortage of houses coming onto the market. Even though in the whole of the first Quarter of 2015, Huddersfield property value increases may seem subdued when compared to 2014, let us remember, property values are still rising well above the level of inflation. 

As I have said many times before, the population in Huddersfield is growing at a much higher rate than the number of properties being built. This increasing demand for a roof over people’s head, which is outpacing the supply of new houses being built in Huddersfield, is creating a severe imbalance in the Huddersfield (in fact the whole of UK’s) housing market, thus making homeownership an ever increasingly distant dream for many of Huddersfield’s potential first time buyers.

In fact, I still maintain the view that house prices are likely to rise by around 3 to 5% in Huddersfield in 2015, even after taking into account this blip at start of the year. The reason being is that the rise reflects both strong economic conditions and steady market conditions with (and this is the most important factor) very low numbers of properties on the market. 

Many Buy to Let landlords know that investing in the Huddersfield property market is a long-term strategy of 10, 20 even 30 years. Governments come and go, but unless Kirklees District Council start to build hundreds and hundreds of new properties a year to make up for the shocking lack of supply, Huddersfield people will always want a roof over their head, and irrespective of which party is in power, if there aren’t any council houses and they can’t (or are unable to buy), a demand for rental properties will always remain.

As my existing Huddersfield landlord clients will testify, whether you manage your property yourself, or another Huddersfield agent manages your properties, everyone is always made to feel welcome when they pop in for a coffee at our offices in Huddersfield to discuss anything to do with the Huddersfield property market, how Huddersfield compares with its closest rival towns. I don’t bite, I don’t do hard sell, I will just give you my honest and straight talking opinion. However, if you are too busy to pop into town, you could always visit the Huddersfield Property Blog for advice, intelligent commentary and analysis of the Huddersfield Property market.

What will General Election result do to the Huddersfield Property Market?

After the shock of the Conservatives returning to power with a majority at Westminster, all the potential issues and possible uncertainties of a hung parliament has lifted the cloud from the Huddersfield property market.  Talking to other Huddersfield agents, surveyors and solicitors in the area over the last few days, there are signs this has started a new impetus in the Huddersfield property market after a subdued six months, when an amalgamation of tougher lending conditions, a natural correction after the strong recovery in Huddersfield property prices in 2014, and political uncertainty ahead of the General Election slowed demand.

Against the back drop of Labour’s election promises of rent controls and three year tenancies, some Huddersfield buy to let landlords were waiting to see how these new policies would be implemented before they committed themselves to buying more property for their buy to let portfolio. Now that uncertainty has been removed, the long term picture is very positive.

So, with all that uncertainty now removed, where next for the Huddersfield property market?  Well with inflation at zero and with the Money markets happy David Cameron is still at No.10, the Bank of England have no reason to raise interest rates until 2016 at the earliest. As mortgage rates are at their lowest levels since 2010, landlords with large deposits will now be wooed by the mortgage companies in the coming months with low rates.

You see over the past couple of years, Huddersfield landlords have benefitted from a booming Huddersfield job market. Unemployment in Huddersfield has dropped to 5%, as a year ago, 3,072 people were claiming unemployment benefit compared to today’s 2,320. With more jobs and better pay, as the level of rents is directly linked to tenant’s wages, there has been an increase in the rental prices tenants are willing to pay for good quality Huddersfield properties.

Some landlords might be nervous about Tory’s plans for the housing market over the next five years in terms of tenant demand for their rental properties. One plan is for Housing Association tenants to have the right to buy their property. These kind of tenants were never in the private rented sector and will actually increase the supply of properties in the housing stock in decades to come. The Government ‘Help to Buy Scheme’ has only helped to buy 11 (yes only eleven) Huddersfield properties since April 2013. Considering 2,264 properties have changed hands in the last year alone in Huddersfield, I don’t think it has made a huge difference to our local property market.

The biggest matter, when it comes to tenant demand of rental property going forward, comes from the shift in the mindset and attitudes towards renting itself. Twenty years ago you were seen as a second class citizen if you rented a property. In Huddersfield, as in the rest of the UK (apart from Central London), renting continues to offer good value for money for tenants.  If you are an existing landlord in Huddersfield or thinking of becoming one (or as we like to call you .. a FTL .. a ‘first time landlord’), then I must suggest you seek out specialist advice and opinion. Like many agents in Huddersfield, we will happily give you our opinion on the current state of the  market and the advantages/disadvantages to investing in the Huddersfield property market if you pop into our offices. However,  if time is at a premium, another source of information on the Huddersfield Property Market is the Huddersfield Property Blog http://huddersfieldproperty.blogspot.co.uk/

Is the Huddersfield Property Market in crisis?

Since the 1960’s more people have owned their own home than rented but, for many young Huddersfield people, the dream of buying their own home is dying...or is it? Since the turn of the Millennium, in Huddersfield (as in the rest of the Country) there has been a significant change in the proportion of people who own their own home in Huddersfield. In 2001, 61.8% of homes in Huddersfield were owner occupied, today the figure is 58.61%, a significant decline in such a short time.  Buy to let landlords can find tenants because young people say they cannot afford a deposit to buy unless they inherit money or are given a loan from the Bank of Mum and Dad

In Huddersfield, only 49.29% of 25 to 34 year olds have a mortgage. When you compare Huddersfield against the national average of 35.93%, it just shows how different parts of the country have different housing markets. However, the really interesting fact is this  ...Roll the clock back to 1991 and nationally, 67% of 25 to 34 year olds had a mortgage. After WW2, the supply of properties being built kept up with demand as millions of council homes were built (the most being built in 1950s, surprisingly under Tory Governments!). Also private house building increased in the 1950’s, but especially in the 1960’s and 1970’s, and as the Country  got more prosperous it meant that by 1971, there were more home owners than renters.

However, since the 1970’s, the population has grown but the number of new properties being built hasn’t kept up at the same rate, the result is that there have been huge rises of property prices in the early ‘70s, the late 80s and more recently between 1999 and 2004. Interestingly, since the early 1970’s, out of the 34 richest countries in the world, the UK has seen highest property prices rises.

95% mortgages have been available to first time buyers since late 2009, but with property prices rising by 100.34% since the early Spring of 1995 in Huddersfield, as property prices have been rising and first time buyers have been saving, the amount they have to save is continually rising at the same time. The stress on saving even for that kind of deposit, coupled with the new stricter mortgage rules introduced in 2014, means that most 20/30 something’s in Huddersfield are renting instead of buying.

The issue quite simply comes back down to a lack of new homes being built. In Huddersfield, only 361 properties a year are being built whilst the population is rising by 972 a year. The supply of new homes has been limited by planning laws, local councils not having the money to build council houses, hard hitting green belt limitations, and our old friend NIMBY’ism.  With a rising population and net migration, especially from the EU, the mismatch between demand and supply is why we have the problem. Until Politian’s have the backbone to realise the Country needs a lot more decent homes built, the problem will just get worse.

In the meantime, demand for rental property will continue to grow because people need a roof over their head at the end of the day ......fact.

745% Return for Huddersfield Buy To Let landlords since 1999?

Buy to let is essentially different from investing in stocks and shares or putting money in the Building Society. Whilst these other investments (Building Society Passbooks, Stocks and Shares etc) are passive  ie once the  money has been invested it you leave it alone, with buy to let, things are more hands on, in fact it’s almost a business. One thing the landlords I speak to say is the fact that they like buy to let because it is both an investment as well as a business. It is this factor that attracts many of my Huddersfield landlords – they are making their own decisions rather than entrusting them to others (such as City Whiz Kidzs in London playing roulette with their Pension Pot).

So if you are investing in the Huddersfield property market, you can earn from your investment in two ways. When a property increases in value over time, it is known as 'capital growth'. Capital growth, also known as capital appreciation, this has been strong in recent times in Huddersfield, but the value of property does go up as well as down just like shares do but the initial purchase price rarely decreases.  Rental income is what the tenant pays you - hopefully this will grow over time. If you divide the annual rent into the value (or purchase price) of the property, this is your yield, or annual return.

I was talking to a landlord who bought a terraced house in the Sufton Street area of Huddersfield. He bought a very pleasant 3 bed terraced house in 1999 for £36,500. It sold again in January just gone for £104,500, a rise of 186.30% in just over 15 years – a compound annual return of 7.26%.

However, the real returns are for those Huddersfield landlords who borrowed money to purchase their buy to let property. They have made significantly higher returns than those who paid 100% cash. If the landlord had borrowed 75% of the £36,500 purchase price of the Sufton Street terraced house on an interest only 75% mortgage, he would have only needed to invest £9,125 (as his 25% deposit... borrowing the remaining £27,375), but his £9,125 would be worth today, £77,125  (£104,500 less £27,375 interest only mortgage)... a rise of 745.20% - a compound annual return of 15.29%... and I haven’t even mentioned the rent he would have received in those 15 years!

This demonstrates how the Huddersfield buy to let market has not only provided very strong returns for average investors since 1999 but how it has permitted a group of motivated buy to let Huddersfield landlords to become particularly wealthy. In fact, if this landlord had continued to remortgage the property as it went up in value, he could by our reckoning have had an additional two or three properties (albeit with larger mortgages but greater future potential).

As my article mentioned a few weeks ago, more and more Huddersfield people may be giving up on owning their own home and are instead accepting long term renting whilst buy to let lending continues to grow from strength to strength. If you want to know what (and would not) make a decent property to buy in Huddersfield for buy to let, then one place for such information would be the Huddersfield Property Blog.

Are Attitudes to Home Ownership changing in Huddersfield?

Speaking to a Bank Manager the other day in Huddersfield, we got talking about the state of the Huddersfield property market and whether we, as a Country, are turning more and more to the European style of property ownership, where it is the norm to rent as a opposed to automatically buying once you have a good job etc.

Even though a recent report by the Halifax stated homeownership remains a goal for 85% of twenty to forty five year olds, there is information emerging that attitudes in the UK towards renting your own home as opposed to owning it have softened, showing more and more, that renting is being seen as a life style choice.  In fact it is recognised in learned circles that the cycle of renting is also repeated by the fact that people who grow up primarily in rented accommodation are themselves more likely to rent than buy.

The biggest barrier often mentioned to buying a house is the claim that they are not buying property at the moment because of a lack of sufficient wages and by the high level of deposits but in Huddersfield, if a couple, one on the average Huddersfield salary of £21,816 pa and the other on say the minimum wage, assuming they had a reasonable credit history they would be showered with lenders offering them a 95% mortgage (a reasonable credit history means they haven’t defaulted on loans, paid all their bills on time nor got any County Court Judgements. Just because you missed just one credit card payment won’t mean you have messed up your credit score and your ability to get a mortgage) and they would need to find a sizeable, but nothing stratospheric, £5,100 as a deposit to buy a decent two bed modern semi detached house or larger (but older) top of the range 3 bed Victorian terraced house ...  it comes down to the perceived capability of the youngsters in Huddersfield to buy nowadays.

Interestingly, when I looked at the Huddersfield figures, the average Huddersfield tenant has a slightly younger profile (especially the sub 24 year old age range) than the English and Welsh average, as can be seen from the graph below. What interested me as well was the relatively large number of people renting over the age of 50! I know we have a large number of mature tenants at our agency, but I always thought that was the exception to the rule. Obviously not!  (And that is good news for landlords as they make excellent tenants)

So what does all this mean for Huddersfield landlords and future Huddersfield landlords? I honestly believe there is a difference between the hope and perceived capability of the younger generation to buy a home. Although homeownership is seen as advantageous by a majority, many tenants admitted in the Halifax report they are not taking the steps they need to purchase their own home.

As the local authority aren’t building any properties in Huddersfield, people still need a roof over the head, and that is why, as I mentioned a few weeks ago in the Huddersfield Property Blog, the demand for rental properties will only continue to steadily rise in the coming decade. If want to know where the Huddersfield Property market is heading and where you should (and shouldn’t buy), maybe the one place you should visit is the Huddersfield Property Blog  http://huddersfieldproperty.blogspot.co.uk/ or send me an email: chan.khangura@whitegates.co.uk

Huddersfield Property Market – What is really happening?

I had an interesting conversation with a local Huddersfield accountant the other day. He is quite an observant chap (I know this because I have known him for a few years .. but I suppose you have to be to be an accountant!). Anyway, he mentioned a few things he had noticed recently in Huddersfield, one that Huddersfield property prices had gone up in the last few years but nowhere near the growth levels that were being achieved in central London, and secondly, that he thought the number of for sale boards in Huddersfield (and more importantly ones with sold slips on them)  had increased over the last couple of years.

The rate of house price inflation in Huddersfield continues to grow, with growth of 4.4% in the 12 months to February compared to 2.2% just over six months ago, according to the latest Land Registry data. However, there is considerable local variation with house price growth ranging from 2.1% in Bradford  to 3.4% in North Yorkshire  over the last 12 months.

Whilst Huddersfield hasn’t seen the 20%+ per year in house price growth of London over the last couple of years,  Huddersfield has seen  a sharp uplift in the number of properties sold throughout  2014 as base line demand for housing grows, which suggests there is substance to the recent pick-up in house price growth in the town. Since the Second World War in the UK, when the number of properties sold has grown, property values grew soon after. The 14.8% uplift in property transactions in Huddersfield in 2014, compared to 2013, indicates the most significant recovery in house market activity in Huddersfield (outside London) since 2007.

When you compare Huddersfield with London, you could be looking at two different countries. In London, its mid/late teens house price to earnings ratios are impacting demand (ie the average property value is often 15 or 17 times the average wage in London .. in fact in Knightsbridge the ratio can be 30 to 1).  However, the number of people wanting to sell has dropped considerably, meaning that falling sales volumes combined with a general slowdown in activity in the run up to the General Election are resulting in lower mortgage approvals for home purchase.

Transactions are a great indicator for house prices. The acceleration in house price growth in London in the last two years was preceded by three years of rising transactions. A similar pattern is being registered in the Huddersfield area, as pent up demand returns to the market supported by low mortgage rates and an improving economic outlook.

But before you get the Champagne out, while the uplift in activity is welcome news, the number of Huddersfield property sales in 2014 are still 40.9% lower than the level seen in 2007 and property values are 17.8% below the 2007 levels. The ongoing housing recovery is far from broad based and remains focused on middle to higher value areas within Huddersfield where households have equity and find it easier to access mortgage finance. If you want to know more about the Huddersfield Property Market, please visit the Huddersfield Property Blog http://huddersfieldproperty.blogspot.co.uk/  or send me an email: chan.khangura@whitegates.co.uk

Two Speed Huddersfield Property Market?

Even with the General Election on the horizon, property values in Huddersfield are still 1.66% higher than they were 3 months ago, the diversion and ambiguity of an election typically makes house sellers who need to sell, price their property more realistically (although this only lasts a couple of months). Looking specifically at it from a Huddersfield landlord’s point of view, the Huddersfield properties favoured by investors are in short supply in many parts of the town because of a number of factors. One of the factors has been that we seen the number of first time buyers coming to buy their first home increase over the last 12 months in Huddersfield.  Another factor has been the fact that the banks have been pushing ‘let to buy’ (yes ‘let to buy’ is different to ’buy to let’) to homeowners (more of ‘let to buy’ in an up and coming article). Next, because of the banks, who are chasing low risk landlords with high deposits with very low mortgage rates- and the low risk landlords with high deposits tend to be attracted to the safer modern two and three bed town houses and semis in Huddersfield.

As I mentioned a few weeks back, the pension rules are changing which means buy to let landlords can use some, or all, of their pension pot to buy a property.  It shouldn’t be forgotten there are tax implications taking more than a quarter of your pension pot out (see the article from a couple of weeks ago) , so whilst many pension pots may not be able fund a suitably big enough tax free lump sum to buy the property outright, for most it will provide enough for the 25% deposit (required by most BTL mortgage providers). It shouldn’t be forgotten landlords that the interest paid on the mortgage is tax deductible against the rent, thus lowering your income tax paid.

In the last 12 months, I have noticed a particular uplift in interest from ‘50 something’ Huddersfield people wanting to become landlords for the first time. In Huddersfield, the highest returns for the lowest investment are at the lower end of the market eg the classic Victorian terraced house . Unfortunately Victorian terraced houses , with two bedrooms are coming to the market in smaller numbers than the larger four bed’s  in  top end sectors of the Huddersfield property market. When looking at the actual numbers, in the later part of the Summer of 2014 in Huddersfield, in one month alone 255 two bed properties were on the market in Huddersfield. However, in January this year, a notoriously excellent bumper month for properties coming on to the market, there were only 198 two bed properties on the market in Huddersfield to choose from. Today, that figure stands at only 214 ..whilst the number of four and five beds has increased significantly...  

interesting don’t you think?

At that lower end of the property market in Huddersfield, (ie where first time buyers and landlord investors compete with each other to buy those smaller properties), I believe throughout 2015, there will be a slow and steady tipping of the scales between supply and demand. In fact, from what I am seeing and hearing, early anecdotal evidence has suggested over the last few months (although we will need to look at figures later in the Spring once we have the data from The Land Registry), we are beginning to see a polarised Huddersfield property market, where we have high demand but low supply at the bottom end of the property market, yet high supply but lower demand at the top of market .. and that can only mean one thing ... prices will go up quicker on the smaller properties than the larger ones in Huddersfield, thus narrowing the gap for people looking to move up market!

Rents In Huddersfield On The Rise!

Considering we are a quarter of the way through 2015 and Easter under our belt, I was talking to landlord from Highburton the other day about what is happening to the level of rents that are being achieved in the Huddersfield property market.

In terms of rents in Huddersfield, it appears that rents being achieved for new rentals (ie when the tenant moves out and new tenant moves in) have risen in the order of 3.4% in the last 12 months on top of the range properties, yet remained static for more basic accommodation. However, landlords with existing sitting tenants, irrespective of condition are not increasing their rents, as most landlords prefer to keep their existing tenant paying the same rent and have the peace of mind that their tenant remains, paying the rent (thus reducing the risk of a void period).

It must be remembered rents only rose by 0.5% over 2008 and 2009, due to oversupply in the rental market). A lot of the people who couldn’t sell their property in Huddersfield in 2008/9 when the Credit Crunch hit in 2008, decided to let their house out instead of selling at a loss. In fact, the number of houses on the market in Huddersfield dropped by 29.7% between February 2008 and April 2009, a lot of which came on to the rental market in Huddersfield. However, looking at the longer term though, tenants have had it good  because since the turn of the Millennium, average wages have grown by 46%, but rents have only grown by 36% over this period.

I told the landlord that there is a lack of new rental properties in Huddersfield coming on the market, in fact according to the Office of National Statistics, there are only 30 new rental properties are coming to the market each month in Huddersfield but the population of Huddersfield is rising by 81 people a month – something will have to give soon! This is compounded by the fact a number of landlords are looking to sell their rental properties in the coming months, as the property market in Huddersfield has improved. This further compounded as tenants in existing rental properties appear to be staying in properties for longer periods of time.

Looking at the rents charged in Huddersfield, historic evidence in the UK suggests private market rents have moved in line with general inflation. Government figures only go back as far as the year 2000, but looking at other countries with similar housing markets (America, Australia, Ireland and Holland) the fact is rents paid by tenants tend to rise in line or just ahead of inflation.

As short term wage growth in Huddersfield has eased off recently, rising by only 1.3% in the last 12 months, taking average salaries in Huddersfield to £21,816pa, with the tax breaks announced by The Chancellor in the Budget, I believe, even though rents have kept pace with inflation in the past, renting as an option has become more affordable, and is increasingly seen as a lifestyle choice. With returning economic growth and expected increases in the rate of growth of wages, above inflation rental growth could rise.

If you want a chat about the local Huddersfield property market, pop in for a coffee or email me on chan.khangura@whitegates.co.uk 

Property values rise by £126 per week in Huddersfield

Last week, a landlord who lives in Brighouse came in to our office to discuss the property values in the West Yorkshire area. He owns a varied portfolio of rental properties, primarily in Huddersfield and Halifax with one in Bradford, so it is interesting to compare the increase in property values around the area.

Over the last 12 months in Huddersfield average property values have risen from £148,400 to £155,000, a rise of £6,600 or £126 per week. When I looked at some of the surrounding areas, Halifax has had a slightly lower average increase in property values, at around £92 per week (as the average value of a Halifax property has risen from £136,000 to £140,800, whilst Bradford has seen prices only moderately rise by around £48 per week (taking an average property in Bradford from £116,600 to £119,100).

When one looks at the percentages, Huddersfield has performed the best, rising by 4.4% in the last 12 months, compared to Halifax at 4.3% and only increasing in Bradford by 2.1%! It is, nonetheless, a rise in all the town’s average property values which suggests the market is increasing steadily in our area, but especially Huddersfield– good news for home owners and landlords alike. 

However, back to Huddersfield, long term property values which track peaks and troughs are more helpful to landlord investors. The questions I seem to be asked on an almost daily basis by landlords are:-

·        “Should I sell my property in Huddersfield, or even buy another?”

·        “Is the time right to buy another buy to let property in Huddersfield and if not Huddersfield, where?”

·        “Are there any property bargains out there in Huddersfield?”

When considering this landlord’s buy to let portfolio, yields can be in the order of an average 4%-7% per year, depending where you buy, so combine that with steady rental growth, excellent increases in capital values of the properties themselves and it could be a good time to invest in the property market in Huddersfield as property values start to rise.

If you would like some advice about buying to let, be you a landlord with a portfolio or someone thinking of investing in the rental market, do what a number of other Huddersfield landlords do and visit the Huddersfield Property Blog where I discuss the Huddersfield property market, how Huddersfield compares with its neighbouring towns/ rivals, and at the same time, I can hopefully answer the three questions above. I don’t bite, I don’t do hard sell, I will just give you my honest and straight talking opinion. If you ever passing, do pop in and see me at our office on Market Street, Huddersfield, HD1 2ET or visit the Huddersfield Property Blog  http://huddersfieldproperty.blogspot.co.uk/