Huddersfield House Prices Up 1.3% in a Year

What does that mean for local Landlords and Homeowners?

The balancing act of being a Huddersfield Buy To Let landlord is something many do well at. Talking to numerous Huddersfield landlords, they are very aware of their tenants’ capability to pay the rent and their own need to raise rents on their rental properties.  Despite the ‘perceived ‘dark clouds of Brexit, evidence suggests many landlords feel more confident than they were in the Summer and Autumn of 2018 about aiming to push rents higher on their Huddersfield Buy To Let properties.

Looking at the data for the last 7 years, this shows that throughout the Summer months, the rents new tenants have had to pay on move in have increased at a higher rate than during the colder months of Winter.  This is because the Summer months are normally a time when renters like to move, meaning demand increases for rental properties yet supply remains pretty ridged.

Yet the Winter stats buck that trend and this is great news.

Rents in Huddersfield on average for new tenants moving in have risen 1.9% for the month, taking overall annual Huddersfield rents 2.1% higher for the year

However, several Huddersfield landlords have expressed their apprehension about a slowing of the housing market in Huddersfield and I believe, based on this new evidence, they may be overstated.  Before we get the bubbly out though, the other part of investing in property is what is happening to capital values (which will also be of interest to all the homeowners in Huddersfield as well as the Huddersfield Buy To let landlords).   I believe the Huddersfield property market has been trying to find some form of balance since the New Year.   According to the Land Registry….

Property Values in Huddersfield are 1.3% higher than they were 12 months ago

Yet, these figures reflect the sales of Huddersfield properties that took place in the early Summer of 2018 and only exchanged and completed during the Autumn / early Winter months of last year.

The reality is the number of properties that are on the market in Huddersfield today has risen by 6% since the Summer

and that will have a dampening effect on the property market.  As tenants have had less choice, buyers now have more choice .. and that will temper Huddersfield property prices as we head into the middle of 2019.

Be you a Huddersfield landlord or Huddersfield homeowner, if you are preparing to sell your Huddersfield property in 2019, it’s important, especially with the rise in the number of properties on the market, that you are pricing your property realistically when you bring it to the market.  With the likes of Rightmove, Zoopla and OnTheMarket on everybody’s mobile phones and laptops, buyers have access to every property on the market and they will compare and contrast your home with other properties like yours – and will more than likely dismiss your property rather than view it.

To all the Huddersfield homeowners that aren’t planning to sell though – this talk of price changes is only on paper profit or loss.  To those that are moving .. most people that sell, are buyers as well, so as you might not get as much for yours, the one you will want to buy won’t be as much.  Look at the deal as a whole, the difference between what you sell yours for and what you buy at.  Finally, all the Huddersfield landlords – keep your eye’s peeled – I have a feeling there may be some decent Huddersfield buy to let deals to be had in the coming months.

New Home Building in Huddersfield and Kirklees 2018 rises to 5.3% above the post Millennium average

Nationally, the number of new homes created in 2018 was 222,194, the highest since 1989. Yet since 2002, the average number of properties built in the UK has only been 146,700 per year. You would think, seeing all the new homes sites around, you could ask are we building too many houses, especially off the back of those impressive 2018 build figures? However, to keep up with the ever-growing population, lifestyles and people living longer, official reports state the Country actually needs 240,000 new homes built every year to just stand still.

It is estimated, by the Chartered Institute of Housing, that the current national backlog of new homes required is in the order of 4.7 million (i.e. because of the bottled-up household formation by younger adults living with parents, shared housing and unaffordability). As a Country, we cannot meet all these needs immediately and it will take time to build up an effectual plan to address these issues.
Looking closer to home, you will also see from the graph below the long-term trend of new homes building (the yellow dotted line) has been going in a downward direction. Although, the 2018 new homes build stats for Kirklees are 5.3% above the post Millennium average.

The cure is simple: we need more homes… yet who is going to build (and pay) for them. Some Huddersfield people will say why can’t the local authority build most of them?

In 2018, 1,330 new dwellings were created in the Kirklees Council area and of those 1,330; interestingly 75 were Council and Housing Association homes

So, if our local authority had a more ambitious annual target of say an additional 500 homes on top of those figures, where could they be built and how would they be paid for? Of course, there are the normal apprehensions about infrastructure issues such as roads, schools, hospital capacity and doctors’ surgeries but our local authority has a Local Plan and that has the locations of where they envisage the new housing will be built (and the infrastructure that goes with it).

The Tories lifted the cap on what local authorities could borrow to build Council houses in late 2018 meaning Councils could borrow more money to build more Council houses. Let’s say we built those 500 homes a year for the next 5 years in Kirklees, that would cost the local authority £375 million to build, which would produce in total £17.4 million in rent. At current interest rates, the interest would be £9.5m per year leaving a surplus of £7.9m for property maintenance and management – meaning the Council houses pay for themselves!

Therefore, what does all this mean for Huddersfield homeowners and Huddersfield buy-to-let landlords?

Well, the chances of our local authority getting the full funding for an extra 500 homes a year is slim as there is only so much money to borrow. If every UK local authority got funding for 500 additional homes a year for the next 5 years, an impressive 867,500 homes would be built in those 5 years but that would require the councils to borrow £130.1bn – and Central Government doesn’t have that kind of money for Councils to borrow (more like £10bn to £15bn).

The 4.7million long term housing shortage means house prices will remain strong in the long term (despite blips like Brexit etc). Demand for private rental properties will continue to grow and if you read my recent article on Huddersfield rents, this can only be good news for Huddersfield landlords. This attention on the housing crisis by the Government is good news for all Huddersfield homeowners and Huddersfield buy to let landlords, as it will encourage more fluidity in the market in the longer term, sharing the wealth and benefits of homeownership for all. However, in the short term, demand still outstrips supply for homes and that will mean continued upward pressures on rents for tenants and stability on house prices.

Huddersfield Buy To Let Annual Returns Hit 7.24% in Last 10 Years

Many Huddersfield people ponder the best places to invest their hard-earned savings and the best piece of advice I can give you is to do your homework and speak to lots of people. It depends on your attitude to risk versus reward. Normally, the lower the risk, the lower the reward whilst a higher risk is normally associated with the possibility of higher returns, yet nothing is guaranteed. At the same time, higher risk also means higher possible losses on your investment - yet if one looks at the bigger picture, the biggest threat to investing, predominantly when the investment is made in the short term, isn’t risk but actually volatility.

So where should you invest? Building society, the stock market, gold or property are options. This article isn’t designed to give you advice – just show you how different investments have performed over the last decade.

Let me start with the humble semi-detached house in Huddersfield ... which in 2009 was worth £126,000 … so assuming I bought that property for that figure, then I looked at what if I had invested the same amount of money in a building society, into gold and finally the stock market…

	Savings Account	Gold	Stock Market	Huddersfield Semi Detached House
2009 capital	£126,000	£126,000	£126,000	£126,000
2019 capital	£126,000	£159,900	£164,100	£171,700
2019 capital & interest/rent	£156,900	£159,900	£219,200	£253,400

Putting your money into the stock market (FTSE100) would have brought a return of 30.2% on your capital over those 10 years and an average of 3.79% a year in dividends (making an overall increase of 74%).

Gold doesn’t earn interest – yet it has increased in value by 26.9% over the same 10 years whilst putting your money in the building society, the money hasn’t increased in value, but would have earned you interest of 24.46% or the equivalent of 2.21% per year.

Investing in an average semi-detached house in Huddersfield over the last 10 years has seen the capital increase by 36% (an equivalent of 3.12% per annum) and the income (i.e. the rent) has provided a return, based on the original purchase price, of 101.11% or the annual equivalent of 7.24% … meaning the overall return, based on the original purchase price of an average semi-detached property in Huddersfield, is 10.36% per annum.

Notwithstanding No.11 Downing Street’s grab at the profits of buy to let landlords by hitting the buy to let sector with several fiscal punishments with a 3% stamp duty level, a decrease in high rate tax relief for landlords and an increase in rate of CGT on residential property profits, the facts remain that ‘bricks and mortar’ is still one of the preeminent and most constant investments available.

The bottom line is, the buy to let investment remains the mainstay of the British property market, serving to support aspiring homeowners as they work to conquer the, sometimes difficult, financial obstacles of home ownership. With Central Government over the last 30 years only paying lip service to address the lack of new homes being built or tackling the affordability on a consequential scale, it is highly probable this will continue for the next 5/10/15 years as there will always be a call for a respectable, and above all, honest buy to let landlords delivering decent housing to those that need it.

Which Huddersfield Properties are Selling the Best?

Moving home is said to be the third most stressful life event, following a member of your family dying or getting divorced. So it is always best to keep your stress levels down by investigating and doing your homework on both the particular area of Huddersfield (or nearby conurbations) where you live (i.e. where you are selling) and where you want to search for your next Huddersfield home. Being mindful of how fast (or slow) the different aspects of the Huddersfield property market is moving is key.. because it could save you much heartache and many thousands of pounds.

You see, if you know you are selling a property in a sluggish price range and buying in a faster moving price range in Huddersfield then putting your property on the market first is vital, otherwise you will always find the one you want to buy tends to sell before your property sells - there is nothing worse than pondering over a property only to find that someone else has bought it. Being primed with all the knowledge is key. On the other side of the coin, if you are selling in a fast moving market and buying in a sluggish market .. you can probably get a better deal on the one you are buying.

For buy to let landlords in Huddersfield, this evidence is particularly critical as purchasing a high-demand property in a well-liked area of Huddersfield will safeguard a surfeit of availability of tenants, as well as respectable house price growth. 

Being an agent in Huddersfield, I like to keep an eye on the Huddersfield property market on a daily basis because it enables me to give the best advice and opinion on what (or not) to buy in Huddersfield; be that a buy to let property for a landlord or an owner occupier house.  So, I thought, how could I scientifically split the Huddersfield housing market into sections, so I could analyse which part of the Huddersfield property market was doing the best (or the worst).

I took the decision that the preeminent way was to fragment the Huddersfield property market into roughly four uniform size price bands (in terms of properties for sale). Each price band would have roughly around 25% of the property in Huddersfield available for sale .. then add up all the sold (stc) properties and see which sector of the Huddersfield property market was performing best? … And these were the results ..

	# Properties For Sale	# Properties Sold (stc)
up to £110,000	344	200
£110,000 to £150,000	328	210
£150,000 to £240,000	343	219
£240,000 upwards	354	131

The best performing price ranges in Huddersfield are the lower to middle market £110,000 to £150,000 and the middle to upper market £150,000 to £240,000 where 39.0% of all property in those price ranges has a buyer and is sold stc.

It’s not unexpected that the upper end of the property market (the top 25%) in Huddersfield is finding things a little tougher compared to the others. Remarkably for Huddersfield landlords, the lower market is doing reasonably well, but it’s not the best, so maybe there could be some property deals out there for buy to let investment? Even though the number of first time buyers in 2018 did increase over the 2017 levels, it was from a low starting point and the large majority of 20 to 30yo’s don’t want to or can’t buy their first home and the local authority has no money to build Council houses meaning an increase in demand as private landlords take up the slack – because everyone needs a roof over their head!

If you would like to pick my brains on the Huddersfield Property Market – pop in for a coffee or drop me a line on social media or email.

What Has Happened to the Huddersfield Property Market Since the Last Property Market Crash?

A handful of Huddersfield landlords and homeowners have been asking me what would happen if we had another property crash like we did in 2008/9?

The UK property crash in 2008/9 caused property prices in the UK to drop by an average of 18.37% in a period of 16 months.

On the run up to the Parliamentary vote on Brexit scheduled for March, a number of people asked what a no-deal Brexit would do to the property market and if there would be a crash as a result. I have discussed in a previous article on the chances of that (slim but always a possibility) … but assuming it happens, it is my opinion the outcome of a no-deal Brexit would be no worse than the country’s 2008/9 credit crunch property crash, the late 1988 property crash, the 1974 property crash, 1951 property crash … I could go on. The British economy would bounce back from the shock of a no-deal Brexit with lower property values and a continued low interest rate environment (together with an additional round of Quantitative Easing) and that would mean we would see a similar bounce back as savvy buyers saw it as a fantastic buying opportunity.

So, let me explain the reasons I believe this...

Many said after the Brexit vote in June 2016, we were due a property crash - but we all know what happened afterwards.

Initially, let’s see what would happen if we did have a crash, how quickly it would bounce back and then finally discuss how the chances of a crash are actually quite minimal.

Therefore, to start, I have initially split down the types of property in Huddersfield (Det/Semi etc.) and in the red column put the average value of that Huddersfield property type in 2009. Next in the orange column what those average values are today in 2019.

Huddersfield Property Market The likely effects of a Property Crash and Recovery
	Average Value in 2009	Average Value in 2019	Assumed Average Value by Q2 2020  (if Property Crash)	Assumed Value in 2024/5
Detached	£213,800	£315,700	£257,700	£319,100
Semi Detached	£126,000	£171,700	£140,200	£165,600
Terraced	£92,700	£125,500	£102,400	£120,500
Apartment	£100,800	£132,900	£108,500	£125,800

Now, assuming we had a property crash like we did in 2008, when average property values dropped nationally by 18.37%, I applied a similar drop to the current 2019 Huddersfield figures (i.e. the green column) to see what would happen to property values by the middle 2020 (because the last crash only took 13/14 months).

…and finally, what would subsequently happen to those same property prices if we had a repeat of the 2009 to 2014 property market bounce back.

Of course, these are all assumptions and we can’t factor in such things as China going pop on all its debt ... yet either way, the chance of such a crash coming from internal UK factors are much slimmer than in another of the four property crashes we have experienced in the last 80 years. Why, you might ask?

The seven reasons I believe are these …

1.      The new Bank of England mortgage rules on lending 2014 to stop reckless lending that fuelled that last crash.

2.      Low inflation.

3.      Low mortgage rates (the average Brit’s fixed rate mortgage is currently 2.26% and the variable rate mortgage of 3.07%).

4.      Wage rises are forecast to continue to outgrow inflation.

5.      Unemployment figures dropping to 4% (down from 8.4% in 2011).

6.      The high percentage (67.7%) of all British mortgages being on a fixed rate.

7.      And notwithstanding the distractions of Brexit over the last few years, it cannot be denied that the British economy has slowly and steadily been heading in the right direction for a number of years, built on some decent foundations of a steady housing market (unlike the 1988 and 2008 crashes when the housing market got overheated very quickly on the run up to the crashes).

So as the circumstances are much different to the last two crashes, the chances of a crash are much slimmer. Yet if we do have a crash, for the very same 7 reasons above why the chances of a crash are unlikely, those 7 reasons would definitely contribute to making the ensuing recession neither too long nor substantial in scale.

One final thought for the homeowners of Huddersfield. Most people when they move home, move up market, meaning in a decreasing market you will actually be the winner, as a 10% drop on yours would be much smaller in £notes than a 10% drop on a bigger property ... think about it.

One final thought for the new and existing buy to let landlords of Huddersfield. Well, the questions I seem to be asked on an almost daily basis by landlords are: -

·         “Should I sell my property in Huddersfield?”

·         “Is the time right to buy another buy to let property in Huddersfield and if not Huddersfield, where?”

·         “Are there any property bargains out there in Huddersfield to be had?”

Many other Huddersfield landlords, who are with us and many who are with other Huddersfield letting agents, all like to pop in for a coffee, pick up the phone or email us to discuss the Huddersfield property market, how Huddersfield compares with its closest rivals (Elland, Holmfirth and Mirfield), and hopefully answer the three questions above. I don’t bite, I don’t do hard sell, I will just give you my honest and straight-talking opinion. I look forward to hearing from you.