I had an interesting chat with a Farnley Tyas landlord who owns a few properties
in the town. He popped his head in to my office as his wife was shopping in the
area (and let’s be honest talking about the Huddersfield Property Market is a lot
more interesting than clothes shopping!). We had never spoken before (because
he uses another agent in the town to manage his Huddersfield properties) yet
after reading my blog on the Huddersfield Property Market for awhile, the
landlord wanted to know my thoughts on how the recent interest rate cut would
affect the Huddersfield property market and I would also like to share these
thoughts with you……
Well it’s been a few weeks now since interest rates were cut
to 0.25% by the Bank of England as the Bank believed
Brexit could lead to a materially lower path of growth for the UK, especially
for the manufacturing and construction industries. You see for the country as a
whole, the manufacturing and construction industries are still performing well
below the pre credit crunch levels of 2008/09, so the British economy remains
highly susceptible to an economic shock. This is especially important in Huddersfield,
because even though we have had a number of local success stories in
manufacturing and construction, a large number of people are employed in these
sectors. In Huddersfield, of the 73,808 people who have a job, 10,105 are in the
manufacturing industry and 5,311 in Construction meaning
13.7% of Huddersfield
workers are employed in the Manufacturing
sector
and 7.2% of Huddersfield workers are in Construction
The other sector of the economy the Bank
is worried about, and an equally important one to the Huddersfield economy, is
the Financial Services industry. Financial Services in Huddersfield employ 2,710
people, making up 3.7% of the Huddersfield working population.
Together with a cut in interest rates, the Bank also announced an increase in
the quantity of money via a new programme of Quantitative Easing to buy £70bn of Government and Private bonds. Now that won’t do much to the Huddersfield
property market directly, but another measure also included in the recent
announcement was £100bn of new funding to banks. This extra £100bn will help
the High St banks pass on the base rate cut to people and businesses, meaning
the banks will have lots of cheap money to lend for mortgages .. which will
have a huge effect on the Huddersfield property market (as that £100bn would be
enough to buy half a million homes in the UK).
It will take until early in the New Year
to find out the real direction of the Huddersfield property market and the
effects of Brexit on the economy as a whole, the subsequent recent interest
rate cuts and the availability of cheap mortgages. However,
something bigger than Brexit and interest rates is the inherent undersupply of
housing (something I have spoken about many times in my blog and the specific
affect on Huddersfield). The severe undersupply means that Huddersfield property
prices are likely to increase further in the medium to long term, even if there
is a dip in the short term. This only confirms what every homeowner and
landlord has known for decades .. investing in property is a long term project
and as an investment vehicle, it will continue to outstrip other forms of
investment due to the high demand for a roof over people’s heads and the low
supply of new properties being built.
For more thoughts on the Huddersfield
Property Market, please visit the Huddersfield Property Market https://huddersfieldproperty.blogspot.co.uk/
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