Huddersfield Homeowners Are Only Moving Every 19.5 Years (part 2)

Huddersfield Homeowners Are Only Moving Every 19.5 Years (part 2)

In the credit crunch of 2008/9 the rate of home moving plunged to its lowest level ever. In 2009 the rate at which a typical house would change hands slumped to only once every 29 years. The biggest reason being that confidence was low and many homeowners didn’t want to sell their home as Huddersfield property prices plunged after the onset of the financial crisis in 2008. However, since 2009, the rate of home moving has increased (see the table and graph below), meaning today:

The average period of time between home moves in

Huddersfield is now 19.5 years.

This is an increase of 49.01 per cent between the credit crunch fallout year of 2009 and today, but still it is a 35.66 per cent drop in moves by homeowners, compared to 15 years ago (The Noughties).

Average Length of Time (In Years) between Home Moves in Huddersfield and the Kirklees Metropolitan Borough Council Area
1995	1996	1997	1998	1999	2000	2001	2002	2003	2004	2005
20.96	19.15	16.94	17.30	16.09	16.10	13.52	12.49	12.17	12.86	14.66
2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016
11.79	12.22	23.59	28.93	28.35	28.38	27.15	24.60	20.99	20.48	19.42

So why aren’t Huddersfield homeowners moving as much as they did in the Noughties?

The causes of the current state of play are numerous. In last weeks article I talked about how ‘real’ incomes and savings had been dropping. Another issue is the long-term failure in the number of properties being built. Only a few weeks ago in the blog, I was discussing the draconian planning rules meaning house builders struggle to locate building land to actually build on.

Back in the 1960’s and 1970’s, as a country, we were building on average 300,000 and 350,000 households a year. The Barker Review a few years ago said that for the UK to stand still and keep up with housing demand (through immigration, people living longer, a just under 50% increase in the number of households with a single person since the 1980’s and family makeup (i.e. divorce makes one household now two)) we needed to build 240,000 households a year. Over the last few years, we have only been building between 135,000 and 150,000 households a year.

Finally, as the UK Population gets older, there is no getting away from the fact that a maturing population is a less mobile one.

So, what does this mean for Huddersfield homeowners and landlords?

Well, if Huddersfield people are less inclined to move or find it hard to sell a property or acquire a new one, they are probably less likely to move to an improved job or a more prosperous part of the UK.

Many of the older generation in Huddersfield are stuck in property that is simply too big for their needs. The fact is that, in Huddersfield and Kirklees, more than four out of every ten (or 41.9 per cent) owned houses has two or more spare bedrooms; or to be more exact ...

48,962 of the 116,973 owned households in the Kirklees

area have two or more spare bedrooms.

So, as their children and grandchildren struggle to move up the housing ladder, with those young families bursting at the seams in homes too small for them i.e. overcrowding, we have a severe case of under-occupation with the older generation - grandparents staying put in their bigger homes, with a profusion of spare bedrooms.

Regrettably, I cannot see how the rate of properties being sold will rise any time soon. Many commentators have suggested the Government should give tax breaks to allow the older generation to downsize, yet in a recent White Paper on housing published just weeks before the General Election, there was no reference of any thoughtful and detailed policies to inspire or support them to do so.

This means that there could be an opportunity for Huddersfield buy to let landlords to secure larger properties to rent out, as the demand for them will surely grow over the coming years. As for homeowners; well those in the lower and middle Huddersfield market will find it a balanced sellers/buyers market, but will find it slightly more a buyers market in the upper price bands.

Interesting times ahead!

Huddersfield Home Owners Are Only Moving Every 19.5 Years (Part 1)

As I mentioned in a previous article, the average house price in Huddersfield is 5.76 times the average annual Huddersfield salary. This is higher than the last peak of 2008, when the ratio was 5.70. A number of City commentators anticipated that in the ambiguity that trailed the Brexit vote, UK (and hence Huddersfield) property prices might drop like a stone. The point is - they haven’t.

Now it’s true the market for Huddersfield’s swankiest and poshest properties looks a little fragile (although they are selling if they are realistically priced) and overall, Huddersfield property price growth has slowed, but the lower to middle Huddersfield property market appears to be quite strong.

Scratch under the surface though, and a different long-term picture is emerging away from what is happening to property prices. Huddersfield people are moving home less often than they once did. Data from the Office of National Statistics shows that the number of properties sold in 2016 is again much lower than it was in the Noughties. My statistics show…

The Total Number of Property Sales Per Annum in Huddersfield and the Kirklees Metropolitan Borough Council Area Since 1995
1995	1996	1997	1998	1999	2000	2001	2002	2003	2004	2005
5,551	6,076	6,871	6,725	7,265	7,229	8,604	9,314	9,560	9,046	7,936
2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016
9,872	9,526	4,932	4,022	4,105	4,100	4,286	4,731	5,544	5,681	5,993

Even though we are not anywhere near the post credit crunch (2008 and 2009) low levels of property sales, the torpor of the Huddersfield housing market following the 2016 Brexit vote has seen the number of property sales in Huddersfield and the surrounding local authority area level off to what appears to be the start of a new long term trend (compared the Noughties).

Interestingly, it was the 1980’s that saw the highest levels of people moving home. Nationally, everyone was moving on average every decade. Even though it was during the Labour administration of the late 1970’s where the right to buy one’s council house started, it was the Housing Act of 1980 that that really got council tenants moving, as Thatcher’s Tory government financially encouraged council tenants to buy their council-rented homes - for which countless then sold them on for a profit and moved elsewhere. The housing market was awash with money as banks were allowed to offer mortgages as well as the existing building societies, meaning it made it simpler for Brits to borrow even more money on mortgages and to climb up the housing ladder.

But coming back to today, looking at the property sales figures in the Huddersfield area since 2010/11, a new trend of number of property sales appears to have started. Interestingly, this has been mirrored nationally. The reasons behind this are complex, but a good place to start is the growth rate of real UK household disposable income, which has fallen from 5.01% a year in 2000 to 1.68% in 2016. Also, things have deteriorated since the country voted to leave the EU as consumer price inflation has risen to 2.7% per annum, meaning inflation has eaten away at the real value of wages (as they have only grown by 1.1% in the same time frame).

With meagre real income growth, it has become more difficult for homeowners to accumulate the savings needed to climb up the housing ladder as the level of saving has also dropped from 4.26% of household income to -1.11% (i.e. people are eating into their savings).

Next week I will be discussing how these (and other issues) has meant the level of Huddersfield people moving home has slumped to once every 19.5 years.

Huddersfield Wages Outstrip House Price Growth by 6.67% since 2007

I recently read a report by the Yorkshire Building Society that 54% of the country has seen wages (salaries) rise faster than property prices in the last 10 years. The report said that in the Midlands and North, salaries had outperformed property prices since 2007, whilst in other parts of the UK, especially in the South, the opposite has happened and property prices have outperformed salaries quite noticeably.

As regular readers of my blog know, I always like to find out what has actually happened locally in Huddersfield. To talk of North and South is not specific enough for me. Therefore, to start, I looked at what has happened to salaries locally since 2007. Looking at the Office of National Statistics (ONS) data for Kirklees Metropolitan Borough Council, some interesting figures came out...

	Kirklees	Yorkshire & Humber	Nationally
2007	£23,540	£22,131	£23,920
2008	£24,118	£23,104	£24,960
2009	£23,639	£23,535	£25,506
2010	£24,684	£24,050	£26,088
2011	£24,123	£24,008	£26,010
2012	£24,882	£24,190	£26,432
2013	£25,386	£24,913	£26,931
2014	£24,944	£24,908	£27,097
2015	£25,002	£24,991	£27,508
2016	£25,735	£25,912	£28,132

Salaries in Kirklees have risen by 9.32% since 2007 (although it’s been a bit of a rollercoaster ride to get there!) - interesting when you compare that with what has happened to salaries regionally (an increase of 17.08%) and nationally, an increase of 17.61%.

Next, I needed to find what had happened to property prices locally over the same time frame of 2007 and today. Net property values in Kirklees are 2.65% higher than they were in Spring 2007 (not forgetting they did dip in 2008 and 2009). Therefore...

Wages in the Huddersfield area have increased at a higher rate than property values to the tune of 6.67% ... meaning, Huddersfield is in line with the regional trend

All this is important, as the relationship between salaries and property values is the basis on how affordable property is to first (and second, third etc.) time buyers. It is also vitally relevant for Huddersfield landlords, as they need to be aware of this when making their buy-to-let plans for the future. If more Huddersfield people are buying, then demand for Huddersfield rental properties will drop (and vice versa).

As I have discussed in a few articles in my blog recently, this issue of ‘property-affordability’ is a great bellwether to the future direction of the Huddersfield property market. Now of course, it isn’t as simple as comparing salaries and property prices, as that measurement disregards issues such as low mortgage rates and the diminishing proportion of disposable income that is spent on mortgage repayments.

On the face of it, the change between 2007 and 2017 in terms of the ‘property-affordability’ hasn’t been that great. However, look back another 10 years to 1997, and that tells a completely different story. Nationally, the affordability of property more than halved between 1997 and today. In 1997, house prices were on average 3.5 times workers’ annual wages, whereas in 2016 workers could typically expect to spend around 7.7 times annual wages on purchasing a home.

The issue of a lack of homeownership has its roots in the 1980’s and 1990’s. It’s quite hard as a tenant to pay your rent and save money for a deposit at the same time, meaning for many Huddersfield people, home ownership isn't a realistic goal. Earlier in the year, the Tories released proposals to combat the country’s 'broken' housing market, setting out plans to make renting more affordable, while increasing the security of rental deals and threatening to bring tougher legal action to cases involving bad landlords.

This is all great news for Huddersfield tenants and decent law-abiding Huddersfield landlords (and indirectly owner occupier homeowners). Whatever has happened to salaries or property prices in Huddersfield in the last 10 (or 20) years ... the demand for decent high-quality rental property keeps growing. If you want a chat about where the Huddersfield property market is going – please read my other blog posts on https://huddersfieldproperty.blogspot.co.uk/  or drop me note via email, like many Huddersfield landlords are doing.