17.41M BRITISH VOTERS VOTED TO LEAVE THE EU – WHAT NOW FOR THE 4.3M BRITISH LANDLORDS AND 16.78M HOMEOWNERS

The Chancellor in the campaign suggested property prices would drop by 18%. Using Treasury estimates, their method of calculating this was tenuous at best, but focused around the abrupt and hasty increase in UK interest rates, which in turn would raise the cost of mortgages, and therefore lower demand for property, causing a drop in property prices.… and I would say, yes .. that will probably happen.

British Property Values 

British property values will probably drop in the coming 12 to 18 months – but by 18% – I am sorry I find that a little pessimistic and believe that figure was rhetoric to get homeowners and landlords to vote in a particular way. But the UK property market is quite a monster.

Since the last In/Out EU Referendum in June 1975, property values in Britiain have risen by 1750.93%

(That isn’t a typo) and whilst property prices did drop nationally by 18.7% between the peak of 2007 and bottom of the market in 2009, when one compares property values today in the country, compared to that all-time high of 2007, (the period before the financial crisis of the Credit Crunch of 2008/9) .. they are still up 10.14% higher.

Another Credit Crunch? 

And so, notwithstanding the Credit Crunch, the worst global economic outlook since the 1930s and the recession it brought us, a matter of a few years later, the Government were panicking in 2012/3/4 that the housing market was a runaway train.

Now the same Credit Crunch doom-mongers and Sooth-Sayers that predicted soup kitchens in 2008/9 are predicting Brexit meltdown. Bad news sells newspapers. Stock markets may rise, stock markets may fall, yet the British public continued to buy property in 2009/10 and beyond. Aspiring first time buyers and buy to let landlords dusted themselves down, took a deep breath and carried on buying… because us Brit’s love our Bricks and Mortar .. we need a roof over our head.

However, as mentioned previously, if the value of the pound drops, in the past UK Interest Rates have risen to reverse that drop. However, whilst a cheaper pound will make your pint of Sangria a little more expensive on your Spanish holiday this year and make your brand new BMW pricer .. it will make British export cheaper! Which is great for the economy.

Interest rates 

… and what of interest rates? Since 2009, interest rates have been at 0.5% and lots of people have become accustomed to those sorts of levels. So what if interest rates rise .. end of the world? Interest rates in the 1986/88 property boom were on average 9.25%, the 1990’s they were on average around 6.5% and uber-boom years (when UK property values were rising by 20% a year for three or four straight years across the UK) .. 4.5%. Many of you reading this who are in their 50’s and older will remember interest rates at 15%.

But I suspect interest rates won’t rise that much anyway, as Mark Carney (Chief of the Bank Of England) knows, raising interest rates causes deflation – which is the last thing the British economy needs at the moment. In fact they have been printing money (aka Quantitative Easing) for the last few years (which causes inflation) to the tune of £375bn a month. A bit of inflation because the pound has slipped on the money markets (not too much mind you) might be a good thing?

.. because whilst property values might drop in the country, they will bounce back. It’s only a paper loss.. because it only becomes real if you sell. And if you have to sell, again as most people move up market when they sell, whilst your property might have dropped by 5% or 10%, the one you want to buy would have dropped by the same 5% to 10% .. and here is the best part – (and work your sums out) you would actually be better off because the more expensive property you would be purchasing would have come down in value (in actual pound notes) than the one you are selling.

The British landlords of the 4.3m British buy to let properties have nothing to fear neither, nor do the 10.11m tenants living in their properties.

Buy to let is a long term investment. I think there might even be some buy to let bargains in the coming months as some people, irrespective of evidence, panic. Even if we pull up the drawbridge at Dover and immigration stopped today, the British population will still increase at a rate that will exceed the current property building level. Britain is building 139,600 properties a year, but needs according to the eminent ‘Barker Review of Housing Supply Report’, the country needs to build about 250,000 properties a year to even stand still, and as the the birth rate is increasing, the population is living longer and just under a quarter of all UK households now are occupied by a single person demand is only going up whilst supply is stifled. Greater demand than supply equals higher prices. That is definitely a fact.

So, what will happen next? 

Well, there are many challenges ahead. The country has spoken and we are now in unchartered territory – but we have been through a couple of World Wars, an Oil Crisis, Black Monday, Black Wednesday, 15% interest rates and a Credit Crunch … and we survived!

And the value of British property? It might have a short term wobble… but don’t panic because in the long term -it’s safe as houses anyway.

Just my thoughts

The Huddersfield Property Market and The Euro 2016 Football Tournament

With the Referendum on EU membership our households can concentrate on something European that doesn’t involve party political broadcasts or politician’s treating us all like children – the Euro 2016 Football Tournament. Huddersfield is home to all different backgrounds and nationalities so if you're not lucky enough to be jetting off to France for the UEFA Euro 2016 football tournament, have no fear! For a bit of fun (although there is a serious side to this – you know there would be with me!) I have taken a look at which European people live in Huddersfield so I know who to soak up the best atmosphere with!

During my research some interesting numbers appear. Going into the Euro 2016 tournament, France were 3/1 favourite’s, then Germany 7/2, third Spain 11/2, then England 9/1, Italy 16/1, Poland 50/1, Romania and Wales at 100/1, Ireland at 150/1 and Northern Ireland 500/1 (although Leicester were 5000/1 at the start of last season).

Of the 95,296 residents of the Huddersfield Constituency for Westminster, of the Home Nations going into the competition, 77,571 of them are from England, 427 from Wales, 384 from Northern Ireland and 936 from Ireland, although I do feel sorry for the 1,103 Scots who didn’t get into the finals. Now interestingly, looking at the Mainland Europeans residents in the Huddersfield Constituency, it might not surprise you that they make up 3.04% of the population as a whole in the Westminster area.

However, even more fascinating, of those 3.04% European’s residents, 0.94% are from Western Europe because EU residents from Eastern Europe - i.e. the Accession Countries to the EU between 2003 to 2007 (Czech Republic, Estonia, Latvia, Lithuania, Hungary, Poland, Slovakia, Slovenia, Bulgaria and Romania) - only make up 2.1% of the population of the Huddersfield Constituency.

Broken down into the relevant football teams, there are in the Huddersfield Constituency …  

108 French people

308 Germans

203 Italians

48 Spanish

1,444 Poles

55 Romanians

… I feel sorry for the Spanish and Romanian football supporters in Huddersfield!

But what does this have to do with the Huddersfield property market? Quite a lot in fact. Many of these European people were economic migrants, especially those from Eastern Europe. A lot of people’s concerns over migration are exaggerated as this EU migration has acted to fill gaps in skills and labour supply during growth periods of the mid 2000’s and subsequently over the last five years in Huddersfield, EU migrants have done little to displace native workers but do the jobs us Brits don’t often want to do. There is no preferential treatment for council housing in Huddersfield, so EU migrants have in fact increased demand for privately rented accommodation in Huddersfield. 
This has meant, as demand for housing in Huddersfield has remained strong, Huddersfield landlords have continued to buy properties to rent out to keep up with this demand. Therefore, the value of every homeowner’s property in Huddersfield has been kept high because of the demand from these Huddersfield landlords buying starter homes to rent out, releasing existing homeowners to go up the property ladder – benefiting everyone in the chain.
However, rents have remained relatively subdued, in Huddersfield rents are only 18.6% higher than they were in 2005, not bad when you consider we have had 38.52% inflation in the UK economy as a whole over the same 11 years.
EU migration has meant existing homeowners, landlords and the economy as a whole in Huddersfield (and the UK) have benefitted from better economic conditions, property prices not slumping whilst rents have been kept in check by wage inflation. Now I wonder who will win the footy? Back to the TV!

For more thoughts on the Huddersfield property market like this – visit the Huddersfield Property Blog https://huddersfieldproperty.blogspot.co.uk/

115% increase in Property Values in Huddersfield since the Millennium

Huddersfield house prices since the Millennium have risen by 115.69%, whilst average salaries in Huddersfield have only grown by 51.27% over the same time frame. This has served to push homeownership further out of reach for many Huddersfield people as they have to battle against raising considerable deposits and meet sterner lending criteria, as a result of new mortgage regulations introduced in 2014/5.  The private rental market in Huddersfield has grown throughout the last twenty years with buy-to-let investors purchasing a high proportion of newly built residential properties that were built and designed for the owner occupier sales markets.  For example, in the Huddersfield Constituency, roll the clock back 20 years and there were 36,985 properties in the Constituency, whilst the most recent set of figures show there are 40,502 properties - a growth of 3,517 properties.

However, anecdotal evidence suggests that a large majority of those 3,517 were bought by Huddersfield buy-to-let landlords, as over the same 20-year time frame, the number of rental properties has grown from 2,942 to 7,926 in the Constituency - a rise of 4,984 properties.

Nevertheless, some say this historic growth of the Huddersfield rental market might start to change with the new tax rules for landlords introduced by Mr. Osborne over the last seven or eight months. Yet the numbers tell another story. Across the board, mortgage borrowing climbed to a 9 year zenith in March this year as the British property markets traditional Easter rush corresponded with landlords hurrying to beat George Osborne’s new stamp duty changes – buy-to-let landlords borrowed £7.1bn in March 2016 (the latest set of figures released) which was 163% up on the £2.7bn borrowed in the previous March.

You see, from my point of view, I don’t think things will get worse in the buy-to-let market in Huddersfield and these are the reasons why I believe that:

Firstly, what else are Huddersfield landlords going to invest in if it isn’t property - the stock market? Since the Millennium, the stock market has risen by an unimpressive total of 5.54%, quite different to the 115.69% rise in Huddersfield property prices?

Secondly, its true the 3% stamp duty is the first blow on top of a number of other tax changes to be phased in between 2017 and 2021, such as landlords facing a constraint in their ability to offset mortgage interest and, if sizeable numbers of landlords do take the decision to sell their portfolios, this will lead to a substantial amount of second hand properties being put up for sale. Yet that might not be a bad thing, as I have mentioned in previous articles there is a serous shortage of properties to buy at the moment in Huddersfield: the stock of property for sale being at a six year all time low.

.. Thirdly, if there are fewer rental properties in Huddersfield, as supply drops and demand remains the same (although ask any letting agent in Huddersfield and they will say demand is constantly rising) this will create a squeeze in the Huddersfield rental market and as a result rents will rise. In fact, I predict even if landlords don’t sell up, Huddersfield rents will rise as Huddersfield landlords seek to compensate for increased costs, which means more landlords will be attracted back.

For more thoughts on the Huddersfield Property market to read articles like this, you might find the Huddersfield Property Market blog of interest https://huddersfieldproperty.blogspot.co.uk/

44.7% of Huddersfield Tenants are White Collar Middle Class

 With Huddersfield youngsters not able to buy their own property, my research would suggests the progressively important role the private rented sector has been playing in housing people in need of a roof over their head, especially at a time of increasing affordability problems for first time buyers and growing difficulties faced by social housing providers (local authorities and housing associations) in their ability to secure funding from Westminster and then compete against the likes of the Bovis’s and David Wilson’s of this world to buy highly priced building land.

Renting isn’t like it was in the 1960’s and 70’s, where tenants couldn’t wait to leave their rack-rent landlords, charging sky-high rents for properties with Second World War wood chip wallpaper, no central heating and drafty windows. Since 1997 with the introduction of buy to let mortgages and a new breed of Huddersfield landlord, the private rented sector in Huddersfield has offered increasingly high quality accommodation for younger Huddersfield households.

So whilst I knew in my own mind that the type and class of tenant has improved over the last 20 years, I had nothing to back that up ... until now. According to some detailed statistics from Durham University just released, for the Kirklees Council area, the current situation regarding social status of tenants shows some very interesting points. Using the well known Demographic ABC1 grade classifications which refers to the social grade definitions (which describe, measure and classify people of different social grade and income and earnings levels, for market research, social commentary, lifestyle statistics, and statistical research and analysis) this is what I found out.

Of the 38,579 tenants who live in a private rented property in the Kirklees Council area, 11.76% (or 4,557) of those tenants are classified in the AB category (AB Category being Higher and intermediate managerial / administrative / professional occupations), compared to 21.07% owner occupiers who own their property without a mortgage or 3.0% who rent their property from the local authority. Fascinating don’t you think?

Looking at the C1’s (C1’s being the Supervisory, clerical and junior managerial / administrative / professional occupations), of the already mentioned 38,579 tenants in the area, an impressive 12,801 of them are considered to be in the C1 category (or 33.03%). Again, when compared with the owner occupiers who own their property without a mortgage, that figure stands at 26.94%   and 15.29% who rent their property from the local authority.  So, if we use the conventional measurements recorded by the white-collar “ABC1” i.e. middle class ….

This means 44.78% of tenants are considered middle class in Huddersfield

I could go through all of the social categories through to ‘E’, but I humbly don’t want to bore you with too many numbers. The fact is that private tenants are moving up the social ladder and whilst back in the 1960’s and 70’s, the private rented sector in Huddersfield (and the rest of the UK) has customarily been viewed as a temporary tenure for 20 somethings before they bought a property, the increase in renting in Huddersfield, which I have talked about many times in the Huddersfield Property Market Blog may be a reflection of increasing difficulty for this group in accessing other tenures, but may also be a reflection that people nowadays choose to rent long term instead?

Huddersfield Landlords need to be aware that tenants now demand more from their properties, the agent and their landlord and whilst affordability for first-time buyers and tighter controls on lending may mean that potential first-time buyers are in the private rented sector for longer, they will still pay ‘top dollar’ rent for a ‘top dollar’ property.

For more articles like this ...please visit the Huddersfield Property Market Blog INSERT https://huddersfieldproperty.blogspot.co.uk/




Asking Prices of Huddersfield Property down 7% in the last year

Asking Prices of Huddersfield Property down 7% in the last year

I had an interesting question the other day from a homeowner in Birkby who asked me the difference between asking prices and values and why it mattered. When it comes to selling property, there must be agreement between the purchaser (buyer) and seller (vendor) for a property sale to take place. The value a buyer applies to a property can massively differ from the value a seller or mortgage company places upon it. The seller, the buyer and the mortgage company must find an agreeable value to assign to a property so the sale can proceed.

In many of my articles about the Huddersfield property market, I talk about values, i.e. what property in Huddersfield actually sells for, but I haven’t spoken about asking prices for while. Now asking prices are important as they are one of the four key matters a potential buyer will judge your property on (the others being location, bedrooms and type). Price yourself too high and you will put off buyers. So let’s take a look at the Huddersfield numbers.

Over the last 12 months asking prices (i.e. the price advertised in the paper and on Rightmove) in Huddersfield have decreased by 7%, taking the average asking price in Huddersfield to £154,200 (down from £166,600 twelve months ago).

Interestingly though, when we look at, say detached property and flats, a slightly different picture appears. Twelve months ago, the average asking price for a detached house in Huddersfield was £305,500 and today its £308,800 (a rise of 1%); whilst over the same 12-month period, the average asking price of a flat was £119,900 a year ago, and today its £114,700 (a drop of 4%).

In December 2015, there were 788 on the market in Huddersfield today there are 736 properties on the market (down 7%). This will mean homeowners looking to sell will need to be conscious of how their property compares against others on the Huddersfield property market. The Huddersfield property market still has substantial momentum and sufficient demand remains. This noteworthy decrease in supply since Christmas is currently providing less choice for buyers and is tempering asking prices.

… And here is the second point to make. Asking prices are one thing, but what a property sells for (i.e. value) is a completely different matter. These are the average prices achieved (i.e. what they sold for or the average value) for property in Huddersfield over the last 12 months...

·         Overall Average          £160,500

·         Detached                     £264,600

·         Flat                              £109,100

You can quite clearly see, there is a difference between what people are asking for property and what it is selling for. The underlying fundamentals of low interest mortgages and tight supply remain prevalent in the Huddersfield property market however, the number one lesson has to be this ... if you want to sell, be realistic with your pricing.

UK % Monthly House Price Grown - May 2016