Why are less Huddersfield people moving house?

During my school years, my parents seemed to move every other year (or it seemed that way). In reality, looking back at the house moves, we actually moved three times before I left home. However, whilst my parents kept the removal van people in business whilst I was at school, from research I have carried out it shows things have changed considerably in Huddersfield over the last few decades, and interestingly, the trend is getting worse ... for the removal van people at any rate!

In Huddersfield, there are 69,144 properties. However, after we remove the 10,932 council houses, 12,973 privately rented houses and 1,226 houses where the occupants live rent free, that leaves us with 44,013 owned properties (be that 100% outright, with a mortgage or shared ownership). This means 63.7% of the properties in Huddersfield are occupied by the owner (the national average is interestingly 64.2%) but the number of people who have sold and moved house in Huddersfield, over the last 12 months, has only been 2,195. This means on these figures, the homeowners of Huddersfield are only moving on average every 20.05 years.

These are the reasons. Firstly, the cost of moving house has risen over the last twenty years. Secondly, with many remortgaging their properties in the mid 2000’s before the price crash of 2008, there is a reluctance or inability in a small minority of homeowners to finance a home sale/purchase, due to lack of equity. These are both factors driving fewer moves by existing homeowners.

 However, the big effect has been the change in house price inflation. Back in the 1970’s and 1980’s, house prices were doubling every 5 to 7 years. Even in Greater London, with its stratospheric property price increases over the last few years, it has taken 13 years (August 2002 to be exact) for property values to double to today’s levels.

This change to a relatively low inflation Huddersfield property market (i.e. Huddersfield property values not rising quickly) is significant because the long term consequences of sustained low house price growth is that it eats into mortgage debt more slowly than when property price inflation is higher. Huddersfield homeowners cannot rely on inflation to shrink their debt in real terms as much as they did in say the 1970’s and 1980’s.

So what does this all mean for Huddersfield buy to let landlords? Well for the same reasons existing Huddersfield homeowners aren’t moving, less ‘twenty something’s’ are buying their first home as well. Huddersfield youngsters may aspire to own their own home, but without the social pressure from their peers and parents to buy their first property as soon people reach their early 20’s, the memory of the 2008 housing crisis and the belief the hard times either aren't over or the worst is yet to come, current and would-be homeowners are warming to the idea of renting. I also believe UK society has changed, with the youngster’s wanting prosperity and happiness; but wanting it all now... instantly... today... without the sacrifice, work and patience that these things take. As a society, we expect things instantly, and if it doesn’t come easy, doesn’t come quick, some youngsters ask if it is really worth the effort to save for the deposit? Why go without holidays, the newest iPhone, socialising four times a week and the fancy satellite package for a couple of years, to save for that 5% deposit if there is no longer a social stigma in renting or pressure to buy as there was... say... a generation ago?

Even though, in real terms, property prices are 5% cheaper than they were ten years ago (when adjusted by inflation), 18.8% of Huddersfield properties are privately rented (nearly double it was twenty years ago). As a result, the demand for rental properties continues to grow from tenants, meaning those wishing to invest in the buy to let market, over the long term, might be on to a good thing? For advice and opinion on the Huddersfield Buy To let property market, one source of information is The Huddersfield Property Blog http://huddersfieldproperty.blogspot.co.uk/

Affordability of housing in Huddersfield

Talking to an elderly relative recently, he reminded me that in his day, you could have bought a property for the same price of what a decent second hand car would sell for today and that his father was buying property for the same price as a decent 50 inch LCD TV!  Now of course, these are only headline prices and we have had wage growth and inflation.  Interestingly, since the Second World War, property values in Huddersfield doubled in 1961, 1971, 1975, 1980, 1988, 2000 and 2006.

Looking at more recent times, since the start of the Millennium, these increases in property values have generated large increases in equity for many homeowners but on the other side of the coin also making housing unaffordable for other people.  It might interest readers to note that most of Europe experienced sharp increases in property values in the early years of 2000’s, with only Spain beating  us (although we know what has happened to the Spanish property market over the last few years!).  In the 2000’s, the British situation was different in two regards.  First the property value boom started earlier and saw more sustained increases, second, the regional pattern was fairly uniform.

However, since 2010, the regional pattern has been completely different in the UK.  Compared with  2007 (the last property boom), average property values today in England and Wales are 1.2% higher, whilst in Greater London, they are 35.7% higher, whereas in Huddersfield they are 17.36% lower. The London property market has been like a different country.  Looking specifically at Huddersfield though, it has continued for first time buyers to get on the housing ladder.  The best measure of the affordability of housing is the ratio of Huddersfield Property Prices to Huddersfield Average Wages, (the higher the ratio, the less affordable properties are).  

·         1997       3.30 to 1  (i.e. the average value of a Huddersfield property was 3.30 times higher than the average annual wage in Huddersfield)

·         2000       3.35 to 1

·         2002       4.05 to 1

·         2003       4.72 to 1

·         2007       9.93 to 1

·         2009       8.22 to 1

·         2012       8.66 to 1

·         Today     9.67 to 1

You  can see quite clearly, even though we had an improvement just after the 2007 property crash (i.e. the ratio dropped), in following subsequent years with Huddersfield house price’s rising but wages not keeping up with them,  the ratio started rise.  This has meant there has been a deterioration in affordability of property in Huddersfield over the last couple of years.  This is one of the (many) reasons why the younger generation is deciding more and more to rent instead of buy their own house.  The local Council sold off council houses in the Thatcher years and for many on 

low incomes or with little capital, owning a home has simply never been an option.

With fewer people able to save up the deposit required by mortgage lenders, more and more people are looking to rent, this has also resulted in a change in attitudes towards renting over the last decade.  This delay in moving up the property ladder has driven rents up in Huddersfield over the last few years, as more people are seeking properties to rent.  All these things have combined to make the demand for rental property in Huddersfield rise.  If you are an existing landlord or someone thinking of become a first time landlord looking for advice and opinion and what (or not to buy in Huddersfield), one source of information is the Huddersfield Property Blog http://huddersfieldproperty.blogspot.co.uk/

Huddersfield Buy To let – Bedrooms?

Last week, a landlord from Huddersfield emailed me to ask, after reading the Huddersfield Property Blog, if he should extend his terraced house making an extra bedroom in the loft. He had a builder friend who owed him a favour, and thought a good way would be get an ‘inexpensive’ extension.

Having more useable space is generally thought to be consistent with better quality accommodation and homeowners and tenants are prepared to pay for it. If you added a bedroom to a two bed terraced to make a three bed terraced, it will add 10% to the value of the property.  Turn a three bed terraced into a four bed terraced and 9% will be added to the value. Looking at semi detached properties, and turn a two into a three bed and 12% will be added to the value, whilst making a three bed semi into four bed will add 9% in value.

However, before you rush off to the planning department there are some important considerations, whether you are a homeowner or landlord.  What would be the cost of making that extra bedroom? 

The average value of a terraced house in Huddersfield is currently £108,500 whilst the average value of a semi detached house is £142,900, meaning to make money the cost of the extension would need to be less than £10,307 on the terraced property and £15,004 on the semi detached house. Talking to a number of trades people in the town, most are booking up into the New Year. Also, no matter how good a friend he was, I know of no builders that would charge as little as that. Maybe the builder was just thinking of a bit of pointing work on the chimney!

Well, that got me thinking about how bedrooms affected rental prices and rent-ability as well.   

Interestingly below, you will see that whilst bedrooms do have an effect on the rent that can be achieved and the rent-ability of the property – the difference does not warrant the expense, hassle and trouble of extending.

·         – 12.7% of the one bed properties on the market to rent in Huddersfield have a tenant with an average rent of £448 per month

·         

      – 26.9% of the two bed properties on the market to rent in Huddersfield have a tenant with an average rent of £492 per month

·         –24.5% of the three bed properties on the market to rent in Huddersfield have a tenant with an average rent of £555 per month

·        –13.6% of the four bed properties on the market to rent in Huddersfield have a tenant with an average rent of £737 per month

No, if you want to increase the value of your property, be you a Huddersfield landlord or homeowner, there are things that cost a lot less than building extra bedrooms. Spruce up the exterior, emulsion all the rooms, install fresh carpets and curtains. For homeowners, a matter of a few hundred pounds will add thousands whilst for landlords, these things can add an extra 10% to the rent that you can achieve. For more advice and opinion on the Huddersfield Property Market, visit the Huddersfield Property Blog http://huddersfieldproperty.blogspot.co.uk/

Huddersfield Buy To Let – Demand and Supply

Following on from my recent article about the state of the Huddersfield property market and in particular what had happened to the rents Huddersfield tenants have had to pay since the Credit Crunch, if you recall, I said rents in Huddersfield are 3.07% higher than they were in 2008. A Huddersfield landlord has since rung me after reading the Huddersfield Property Blog, wanting to know more of the story of what was happening to current rents in the town. The reason he asked was that his current agent hadn’t increased his rent for a number of years and was concerned if he was getting the best return from his buy to let investment.

The Huddersfield rental market is all about supply and demand (isn’t it so in all parts of the economy?). On the supply side, 416 rental properties have come up for let in the last 31 days in Huddersfield. It sounds a lot until you consider there are 12,973 rental properties in Huddersfield, that means only 3.2% of the rental stock of properties in Huddersfield are coming onto the market each month (it is normally around 5%).  One reason for this lack of new rental properties coming on the market is the fact that tenants seem to be staying in properties longer.

With this lack of supply, newer tenants have to pay more to secure the property they want. And this is the crux of the matter ...properties they want. Older properties in Huddersfield, that haven’t been maintained, still retain their wood chip wallpaper from the 1970’s and thread bare carpets have seen their rents drop. Tenants want either modern properties with all the mod cons or older style properties that have been presented to an exceptional standard – and they are prepared to pay for the privilege. Rents for top quality properties in Huddersfield have risen by 2.2% in the last year. Any properties, old or modern, put on the market in good or excellent condition will rent in a matter of days.

   

Interestingly, looking at Huddersfield property values, the Land Registry have just released their latest set of data on property values. Throughout April 2015 (the latest set of data), property values fell in Huddersfield by 0.1%, however, they are still 3.1% higher than they were a year ago.  When one looks at the regional picture, the Yorkshire and Humber average property values rose by 2.7% in the last month. The difference doesn’t concern me, as the regional and local property values always even themselves out over the months. 

Looking forward, after considering all the statistics and talking to other property professionals, I expect property values in Huddersfield to rise by 3% to 5% over the coming 12 months, following the Conservative victory.  In a forthcoming article, I will discuss how the number of properties changing hands each month has dropped considerably in the last 10 to 15 years in the town. 

...And so back to our landlord. Each property is unique and so as his tenancy agreement allows him to inspect the property with notice to the tenant, we will be visiting the property next week.  For more in depth thoughts and opinions like this on the Huddersfield Property market ...visit the Huddersfield Property Blog http://huddersfieldproperty.blogspot.co.uk/

Fewer people are moving house in Huddersfield

Well the dust has settled and the General Election seems a distant memory, we can get back to a more normal property market, or that is what the London based ‘Fleet Street’ journalists would lead you to believe.  You see I have been talking to many fellow property professionals in Huddersfield (solicitors, conveyancers and one the best sources of info – the chap who puts all the estate agent and letting boards up in Huddersfield, and all of them, every last one of them told me they didn’t see any change over April in business, compared to any other month on the lead up to the Election itself.

 I am now of the opinion that maybe in the upmarket areas of Mayfair and Chelsea, the market went into spasm with the prospect of a Labour/SNP pact with their Mansion Tax for properties over £2,000,000, but in little old Huddersfield and the surrounding villages, there haven’t been any properties sold above £2,000,000 mark in the last 7 years.   

In a nutshell, the General Election in Huddersfield didn’t really have any impact on people’s confidence to buy property.  As I write this article, of 850 properties that have come on to the market in Huddersfield  since the 2^nd of April, 151 of them have a buyer and are sold subject to contract, that’s over one in six (17.76% to be precise).

I think that things are starting to change in the way people in Huddersfield (in fact the whole of the country as I talk to other agents around the UK) buy and sell property.  Back in the 1970’s, 80’s and 90’s, the norm was to buy a terraced house as soon as you left home and do it up.  Meanwhile, property prices had gone up, so you traded up to a 2 bed semi, then a 3 bed semi and repeated the process, until you found yourself in a large 4 bed detached house with a large mortgage. 

Looking into this a little deeper like I have said in previous articles Huddersfield people’s attitude to homeownership itself has changed over the last ten years.  The pressure for youngsters to buy when young has gone as renting, not buying, is considered the norm for 20 something’s. This isn’t just a Huddersfield thing, but a national thing, as I have noticed that people buy property by trading up (or down) because they need to, not because ‘it’s what people do’.  This does means there are a lot less properties on the market compared to the last decade.

A by-product of less people moving is less people selling their property. My research shows there are a lot fewer properties each month selling in Huddersfield compared to the last decade.  For example, in February 2015, only 83 properties were sold in Huddersfield. Compare this to February 2002, and 152 properties sold and the same month in 2003, 157 properties.  I repeated the exercise on different sets of years, (comparing the same month to allow for seasonal variations) and the results were identical if not greater.  So what does this all mean?  Demand for Huddersfield property isn’t flying away, but with fewer properties for sale, it means property prices are proving reasonably stable too. Stable, consistent and steady growth of property values in Huddersfield, year on year, without the massive peaks and troughs we saw in the late 1980’s and mid/late2000’s might just be the thing that the Huddersfield property market needs in the long term.

Fewer people are moving house in Huddersfield

Well the dust has settled and the General Election seems a distant memory, we can get back to a more normal property market, or that is what the London based ‘Fleet Street’ journalists would lead you to believe.  You see I have been talking to many fellow property professionals in Huddersfield (solicitors, conveyancers and one the best sources of info – the chap who puts all the estate agent and letting boards up in Huddersfield, and all of them, every last one of them told me they didn’t see any change over April in business, compared to any other month on the lead up to the Election itself.

 I am now of the opinion that maybe in the upmarket areas of Mayfair and Chelsea, the market went into spasm with the prospect of a Labour/SNP pact with their Mansion Tax for properties over £2,000,000, but in little old Huddersfield and the surrounding villages, there haven’t been any properties sold above £2,000,000 mark in the last 7 years. 

  

In a nutshell, the General Election in Huddersfield didn’t really have any impact on people’s confidence to buy property.  As I write this article, of 850 properties that have come on to the market in Huddersfield  since the 2^nd of April, 151 of them have a buyer and are sold subject to contract, that’s over one in six (17.76% to be precise).

I think that things are starting to change in the way people in Huddersfield (in fact the whole of the country as I talk to other agents around the UK) buy and sell property.  Back in the 1970’s, 80’s and 90’s, the norm was to buy a terraced house as soon as you left home and do it up.  Meanwhile, property prices had gone up, so you traded up to a 2 bed semi, then a 3 bed semi and repeated the process, until you found yourself in a large 4 bed detached house with a large mortgage. 

Looking into this a little deeper like I have said in previous articles Huddersfield people’s attitude to homeownership itself has changed over the last ten years.  The pressure for youngsters to buy when young has gone as renting, not buying, is considered the norm for 20 something’s. This isn’t just a Huddersfield thing, but a national thing, as I have noticed that people buy property by trading up (or down) because they need to, not because ‘it’s what people do’.  This does means there are a lot less properties on the market compared to the last decade.

A by-product of less people moving is less people selling their property. My research shows there are a lot fewer properties each month selling in Huddersfield compared to the last decade.  For example, in February 2015, only 83 properties were sold in Huddersfield. Compare this to February 2002, and 152 properties sold and the same month in 2003, 157 properties.  I repeated the exercise on different sets of years, (comparing the same month to allow for seasonal variations) and the results were identical if not greater.  So what does this all mean?  Demand for Huddersfield property isn’t flying away, but with fewer properties for sale, it means property prices are proving reasonably stable too. Stable, consistent and steady growth of property values in Huddersfield, year on year, without the massive peaks and troughs we saw in the late 1980’s and mid/late2000’s might just be the thing that the Huddersfield property market needs in the long term.

Huddersfield Property Market – Post Election Blues?

With the election now over and the stability of Downing Street secure, with David Cameron and his Blue Tories as the largest party in Westminster, in Huddersfield (as in the rest of the UK) average wages are beginning to grow faster than inflation. This is good news for the Huddersfield housing market, as some buyers may be willing or able to pay higher prices given the more certain political outlook and attractive inexpensive mortgage rates. However, sellers who think they have the upper hand due to the lack of property for sale should be aware that we should start to see an increase in the number of people putting their properties on to the market in Huddersfield giving buyers some extra negotiating power.

At the last election in May 2010, there were 944 properties for sale in Huddersfield and by October 2010, this had risen to 1,155, an impressive rise of 22% in five months. An increase in the supply of properties coming on to the market could tip the balance in the demand and supply economics seesaw, thus potentially denting prices. However, as most sellers are buyers and confidence is high, this means there will be good levels of property and buyers, well into the summer, as demand will continue to slightly outstrip supply.

Just before we leave the run up to the election, it is important to consider what the uncertainty in April did to the Huddersfield property market. I mentioned a few weeks ago that property values (ie what properties were actually selling for) had risen by 0.6% in March 2015. Now new data has been released from Rightmove about April’s asking prices of property in Huddersfield. It shows that pre-election nerves finally came home to roost in the final weeks of electioneering, with the average price of property coming to market decreasing by 0.1% (April is normally one of the best months of the year for house price growth).

I am sure our local MP, Barry Sheerman, would agree that the biggest issue is the lack of new properties being built in Huddersfield. The Conservative manifesto pledged to build 200,000 discounted starter homes for first-time buyers in the next five years. For Huddersfield to gets its share, that would mean only 125 such properties being built in Huddersfield each year for the next five years, not much when you consider there are 69,144 properties in Huddersfield.

Housing is not a big issue for Conservative voters and because London is an increasingly Labour city where the biggest housing issues are found by a country mile, so will it remain on the ‘to do list’ but won’t get recognition it deserves. Until another political party gets back into power, nothing will seismically change in the property market, thus demand for housing will continue to outstrip supply, meaning property values will increase (good news for landlords). However, as rents tend to go up and down with tenant wages, in the long term, rents are still only 3.07% higher than they were in 2008 (good news for tenants)... with renting everyone wins!