What is really happening in the Huddersfield Property Market?

Well its been a few months since Brexit and as we settle into the Autumn with Great British Bake Off, Strictly and the Football season ... the newspapers are returning to their mixed messages of good news, bad news and indifferent news about the Brit’s favourite subject after the weather ... the property market.

The thing is the UK does not have one housing market. Instead, it is a patchwork of mini property markets all performing in a different way. At one end of scale is Kensington and Chelsea, which has seen average prices drop in the last twelve months by 6.2% whilst in our Yorkshire and Humber region, house prices are 5.5% higher. But what about Huddersfield?

Property prices in Huddersfield are 4% higher than a year ago

and 0.8% higher than last month.

So what does this mean for Huddersfield landlords and homeowners? Not that much unless you are buying or selling in reality. Most sellers are buyers anyway, so if the one you are buying has gone up, yours has gone up.  Everything is relative and what I would say is, if you look hard enough, there are even in this market, there are still some bargains to be had in Huddersfield.

However, the most important question you should be asking though is not only is what happening to property prices, but exactly which price band is selling? I like to keep an eye on the property market in Huddersfield on a daily basis because it enables me to give the best advice and opinion on what (or not) to buy in Huddersfield.

If you look at Huddersfield and split the property market into four equalled sized price bands. Each price band would have around 25% of the property in Huddersfield, from the lowest in value band (the bottom 25%) all the way through to the highest 25% band (in terms of value).

• Nil to £100k                        462 properties for sale and 190 sold (stc) i.e. 29% sold
• £100k to £150k                  404 properties for sale and 227 sold (stc) i.e. 35% sold
• £150k to £260k                  409 properties for sale and 218 sold (stc) i.e. 34% sold   
• £260k +                                377 properties for sale and 125 sold (stc) i.e. 24% sold

Fascinating don’t you think that it is the middle Huddersfield market that is doing the best?

The next nine months’ activity will be crucial in understanding which way the market will go this year after Brexit ... but, Brexit or no Brexit, people will always need a roof over their head and that is why the property market has ridden the storms of oil crisis’ in the 1970’s, the 1980’s depression, Black Monday in the 1990’s, and latterly the credit crunch together with the various house price crashes of 1973, 1987 and 2008.

And why? Because of Britain’s chronic lack of housing will prop up house prices and prevent a post spike crash. ... there is always a silver lining when it comes to the property market!

The 15,448 Huddersfield Savers batten down the hatches with low interest rates set to continue into the 2020’s

The 15,448 Huddersfield Savers batten down the hatches with low interest rates set to continue into the 2020’s

 

For those who have saved throughout their working lives and are looking for ways to maximise their savings, tying their money into property could prove advantageous. You see as a saver, I did a search of the internet and the best savings rate I could find was a 5 year fixed rate at 2.5% a year with Weatherbys Bank. Your £200,000 nest egg would earn you £5,000 a year – not much. However, on the other side of the fence, growth in Huddersfield house prices and princely buy to let yields have made property investment in Huddersfield an appealing option for many. According to my research.

 

You might ask, what has the predicament of the Huddersfield savers to do with the Huddersfield Property Market … everything in fact.  Read the newspapers, and every financial wizard is stating that with the decision of the Bank of England’s Monetary Policy Committee in early August to cut the Bank of England base rate to an all time low of 0.25 per cent, savers should prepare themselves for interest rates to stay low well into the early 2020’s.

 

... And this isn’t some made up story to capture the headlines of newspaper editors. The interest rate or return (on 10-year Government bonds is currently 0.61 per cent. This indicates that the money markets believe that the Bank of England’s base rate will, on average over the next ten years, be below the 0.61% rate they are buying the 10 year bonds at (because they would loose money if the average was over 0.61%). UK Interest rates are going to be low for a long time.

 

 

The average Yield for the last five years for

Huddersfield Buy to let property has been 4.6% a year

 

… and average Property Values in over the same period have risen by 12.2%.

 

Using these averages, the Huddersfield landlord’s property would be worth £224,400 and they would have received a total of £46,000 in rent – making the total return £270,400. Temporarily, whilst our 15,448 Huddersfield Saver’s, using the average savings rates for the last 5 years, even if they had reinvested the interest, their £200,000 would only be £221,184.

 

There are risks as well as benefits to buy to let though. As my blog readers know, I tell it like it is and investing in buy to let means locking up capital in a property that may fall in value. Another option would be stock market income based investment funds, which are paying around 5%, especially if put your nest egg into a tax free Stocks and Shares ISA.

 

The other side of the coin is that you cannot buy an unloved ‘stock market income based investment fund’ and set about renovating it and adding value yourself. It isn’t bricks and mortar ... and that is why my fellow Huddersfield homeowners and Huddersfield landlords why the love affair of the British and Property will continue.

 

https://huddersfieldproperty.blogspot.co.uk/

525% - Rise in Huddersfield Property Prices since 1981

525% - Rise in Huddersfield Property Prices since 1981

 

Roll the clock back 35 years to 1981, and Mrs. T was in power, we had a Royal Wedding, Britain won the Ashes and Bucks Fizz won Eurovision with ‘Making your Mind up’.   Haven’t things changed.  The number of homeowners and property investors who said they wish they had hindsight and bought up every house in Huddersfield all those years ago, especially when you consider what has happened to Huddersfield property values, as…

 

Huddersfield Property Values since 1981 have risen by 525%.

 

Not bad when you consider inflation over the same time period has been 271.9%, meaning in real terms (i.e. after inflation), property values in Huddersfield are 253.1% higher.   It’s no wonder people can’t afford to buy property anymore and landlords are attracted by bricks and mortar. Yet the changes to the Huddersfield Property market run much deeper than property value changes as no one could have predicted how the property market has changed in Huddersfield over the last 30 years.

 

Looking at the Local Authority data for Kirklees Council in 1981, 27.1% of Huddersfield people lived in a Council House, whilst today its 15.3% ... a massive drop which can mostly be attributed to Margaret Thatcher allowing Council tenants the right to buy their Council House.  The private rental sector since 1981 has, as one would have expected, also changed.  The proportion of properties privately rented in the Huddersfield area (i.e. through a private landlord or a letting agency) have almost doubled, rising from 8.8% to 15.5% of property.

 

So, let us consider those people who own their own home, surely that has had a massive drop?  In 1981, the proportion of people who lived in the Kirklees Council area who owned their own home was 63.9% … and today its … 67.1%. Not the seismic change most of you were expecting (including myself!).

 

Homeownership in the 1980’s and 1990’s in Huddersfield did in fact rise, but as I have discussed in previous articles in the ‘Huddersfield Property Market Blog’, that was because nearly every Council tenant was buying their council house. Now there are hardly any Council houses for the younger generation to move into (because of the right to buy scheme) so they have no choice but to privately rent.

 

.. and this is why the buy to let market in Huddersfield is an investment sector that will continue to grow as councils aren’t building council houses in their thousands each year (like they were in the 1950’s/60’s and 70’s).  The Huddersfield property market is constantly changing and buy to let for too long has been heavily dependent on house price growth, where yield has been almost forgotten.  I see the changes in tax and landlord and tenant law in a different perspective to the sooth-sayers and see it as bringing many opportunities where yield will become more important.  You might need to change your buy to let targets, your methodology to financing or even consider places other than Huddersfield in which to invest your money, but this will shine a light on investing in properties with healthier yields and create more realistic long term buy to let opportunities, instead of short term growth bets and wagers.

 

Like Bucks Fizz said in their song, it’s time to make your mind up. The advice I give to my landlords, and also to you my blog reading friends is this; these changes will make some landlords panic, meaning competition for decent Huddersfield buy to let bargains will reduce as fear of change kicks in and amateur investors flee the market.  These opportunities will provide a more stable platform for knowledgeable and wise Huddersfield buy to let landlords to thrive in.  If you want to learn more about the Huddersfield Property Market, feel free to pop in for a coffee at our office for a chat with me, or failing that, visit the Huddersfield Property Blog, where you will find many more articles like this solely on the one topic of the Property Market in Huddersfield