How is the “Exodus” of Eastern Europeans Affecting the Huddersfield Property Market?

I was having a thought-provoking conversation with a Huddersfield buy-to-let landlord a few weeks ago about everything to do with property, Brexit and how the reported voluntary repatriation of Eastern Europeans had affected the property market in Huddersfield.  It transpired some of his Huddersfield tenants, who had been in his property for over 10 years were returning to Poland.  He was particularly disappointed as he told me they were some of the best, if not the best, tenants he had ever had.

In 2004, eight Eastern European countries joined the European Union and by 2015, EU net migration from those Eastern European Accession states (also known as the EU8), there was a net migration of an additional 42,000 EU8 adults per year coming into the UK, which equated for our local area of Kirklees an additional 173 adults per year coming into the area in 2015 alone.

Yet by 2018, net migration had reversed and that saw 62 more EU8 citizens leave than arrive to live in Kirklees

… and in the last set of figures released for year up to the Summer of 2019, net EU8 migration for Kirklees was a net loss of 29 EU8 people for the year.  These are not huge numbers, considering ..

EU8 citizens only make up 1.09% of the

population in Kirklees

Yes, at the last count there were 4,599 EU8 European citizens living in our local area out of a population of 422,458.

Its fascinating that 35.7% of the EU8 citizens that came across to the UK after 2004 were degree level educated compared to the 3.18% of adult citizens born in the UK, yet of all the EU8 citizens in the country, 65.9% of are in private rented accommodation, 9.6% in social housing and 24.5% are home owners.

It is certain that migration of Eastern Europeans, especially in the early years of 2004 to 2010, made a huge impact on the Huddersfield rental property market – yet as time has gone on, families have started to put roots down and bring children into the world.  Huddersfield landlords buying all the rental properties for this new demand meant house prices for homeowners bounced back particular well after the global financial crisis / credit crunch of 2008/9.

Again, looking at the figures, a good proportion of EU8 citizens have become homeowners and even landlords.

Yes, there is small number of Huddersfield EU8 citizens leaving as they have had the dilemma on whether they should stay or go, and some families, using the wealth that they have built up whilst working in the Country have returned to their home country or other EU member states.  Decisions like that are not easily made and often tainted with dejection and disappointment – yet again, looking at the numbers, this is very much the minority.  As an agent, we are seeing European people (not just EU8 countries) come and European people go, and it was like that before 2016 and to answer the question ... we believe we have a case of ‘bad news’ selling newspapers yet again.
Of course if one of your star tenants leaves your Huddersfield rental property and then you read an article about mass migration in one the red top newspapers or Daily Mail, it is going to worry you (like it did my Huddersfield landlord friend), yet with the information we shared with him – it has put his mind at rest (and the best part – we were able to find him a new tenant within the week – who ironically also came from Europe to live and work in the UK!).

To conclude, hopefully the end is in sight with Brexit, it would be a huge loss for the Country to see its embedded and settled European community depart as it must be quite melancholic for our fellow Europeans to even have to deliberate such a life changing move.  All I can say is I think we are all eagerly anticipating the ‘B-word’ situation becoming stable again so that all of us, wherever we originate from, can reasonably plan our future in our sceptered isle.

The £2.8 billion mortgage debt of Huddersfield homeowners

Irrespective of the shenanigans and political goings on in Westminster recently, the housing market (for the time being anyway) shows a striking resilience, fostered by the on-going wide-ranging monetary policy by the Bank of England. With interest rates and unemployment low, UKplc is heading into 2020 in reasonable condition.  Additionally, despite the UK’s new homes industry improving its year on year new build figures (building 173,660 new homes this year to date - notably 8% more new homes than at the same time last year), there has been an unequal increase in demand for housing, especially in the most thriving areas of the Country.

With the discussion on whether the younger generation can afford to buy, it is true the average cost of a UK property in the early 1970’s was 3.8 times the average salary yet, nationally, it now stands at 8.4 times. On the face of it that doesn’t look good in anyone’s books – yet that isn’t the full story because it doesn’t reflect inflation and interest rates when it comes to the cost of borrowing money in relation to a mortgage for property.

The current level of mortgage interest rates has not been seen for many generations, meaning there are whole cohorts of the Huddersfield home-owning population who have no appreciation of the pandemonium that will eat into their household budgets should we ever return to the average historical cost of borrowing (interest rates jumped to 15% in 1992 – which wasn’t that long ago and between 2003 and 2007 they were on average 4.9%).

Now, once first-time buyers have jumped the hurdle of saving enough for a 5% deposit, which is hard with rents and many carrying loans of personal debt (unsecured loans), first-time buyers are currently spending an average one sixth of their salary on their mortgage, meaning mortgage arrears are at historical lows. However, on the other side of the coin repossessions have started to grow, with 6,180 repossession orders made in the last quarter, a 55% jump from 2017, yet nowhere near the 2009 high of 29,145 in the first quarter of 2009.

Therefore, this week’s discussion on the Huddersfield property market is – where are we with lending (mortgages and unsecured loans) and how is it affecting the Huddersfield, and national, property market?

One vital measure of the property market (and economy) is the mortgage market. If all the mortgages were added up, they would total £968.1bn; a lot when you consider the UK’s GDP is only £2,190.1bn. Mortgages are important as uncertainty causes building societies and banks to curtail lending (remember what happened in the Credit Crunch) and that seriously affects property prices. Then we have unsecured personal loans; interestingly the average Brit owes £991.42 in unsecured loans, a total of £36.1bn.

Lending is the lifeblood of our economy. Go back to 2007, and the phrase ‘Credit Crunch’ hadn’t been invented, yet now the term has entered our everyday language. In the autumn of 2007 it took a couple months before the crunch began to affect the Huddersfield property market, but in early 2008, and for the following year and half, Huddersfield property values dropped each month like a stone.

Mercifully, after a phase of sluggishness, in 2011 the Huddersfield property market started to recover slowly as certitude returned to the economy as a whole and in 2013 Huddersfield property values started to rise as the economy sped upwards. Happily, the Bank of England recognised the start of another boom and bust cycle, so in Spring of 2015, new rules for mortgage lending were introduced and for the following few years we have seen a reappearance to more credible and steady medium-term property price growth.

Huddersfield Property Values are 21.2% higher since the Credit Crunch

And what of the other side of the coin in terms of excess lending in Huddersfield?

Since 1977, the average Bank of England interest rate has been 6.65%, making the current low rate of 0.75% very low indeed. Yet the issue isn’t the amount of lending, as much as the persons ability to pay. Therefore, whether a person’s mortgage is fixed or not is more important than the amount owed.

Thankfully, the proportion of borrowers fixing their mortgage rate has gone from 31.5% in the autumn of 2012 to the current 70.2%. If you haven’t fixed your mortgage – maybe you should follow the majority?

The total cost of mortgages owed by people in Huddersfield is £2,795,962,162

(Based on the HD 1 to HD9 postcodes)

In my modest opinion, if things do get a little rocky and uncertainty seeps back in the coming years (and nobody knows what will happen on that front), interest rates can only go one way from their current ultra low level of 0.75% ….and that is why I consider it important to highlight this to all the homeowners and landlords of Huddersfield. Maybe, just maybe, you might want to consider taking some advice from one of the many qualified mortgage advisors in Huddersfield?

If you are interested in the Huddersfield Property Market the https://huddersfieldproperty.blogspot.com/ is worth a visit.

49,997 People Live in Rented Accommodation in Huddersfield

That number surprised you didn’t it? With the General Election done, I thought it time to reflect on renting in the manifestos and party-political broadcasts and ask why?

As the best way to tell the future is to look at to the past, so we decided to look at the number of people who rented a century ago (1920’s), and surprisingly 76% of people rented their home in the UK (as renting then was considered the norm). Yet in the latter part of the 1920’s, builders of the suburban housing estates with their bay fronted semis started to sell the dream of home ownership to smart renters.

Up until the mid 1920’s, the mortgage had been seen as a millstone around your neck. Now, due to some clever marketing by those same builders, it was started to be seen as a shrewd long-term investment to buy your own home with a mortgage. It fuelled the ambitions and goals of the up and coming well-to-do working class who reclassed themselves as lower-middle class. Meanwhile, the Government encouraged (through tax breaks) people to save in Building Societies whom in turn lent the money to these up and coming new homeowners thorough mortgages.

Roll the clock forward to the decade of the young Elvis, Chuck Berry, and Bill Haley (1950’s) and still 72% of Brits rented their home. Homeownership had boomed in the preceding 30 years, yet so had council house building. Then, as we entered the 1960’s and 1970’s homeownership started to grow at a higher rate than council housing.

The rate of homeownership started to drop substantially after the mid 1990’s, and now we roll the clock forward to today, there is no stigma at all to renting ... everyone is doing it. In fact, of the…

160,399 residents of Huddersfield, 49,997 of you rent your house

from either the council, housing association or private landlords - meaning 31.2% of Huddersfield people are tenants. Yet read the Daily Mail, and you would think the idea of homeownership is deeply embedded in the British soul?

107,657 Huddersfield people live in an owner-occupied property

(or 67.1%)

So, we have a paradox - homeowners or renters? The reason I suggest this, is, I noticed on the run up to the Election that housing was used at the General Election as way to get votes. This is nothing new, as all parties have always used housing to get votes, although previously it was about which party would build more council houses in the 1950’s through to council Right to Buy with Thatcher (and everyone since) - running election campaigns promising everybody their own home in one way or another.

Yet, did you notice at this election something changed? The parties weren’t talking so much about increasing homeownership but about protecting the tenant. It seems the link between homeownership as the main goal of British life is starting to change as we are slowly turning to a more European way of living. Renting is here to stay in Huddersfield and incrementally growing year on year. You see, in Britain there is no property tax based on ownership, which many other western countries have. Instead Council Tax is paid by the occupier of the home (meaning the tenant pays - not necessarily the owner).

Both parties wanted to end no-fault evictions (which is a good thing), yet Labour went further and mentioned rent controls in their manifesto. As I have mentioned before in other articles on the Huddersfield property market, rents since 2008 (even in central London) have not kept up with inflation - so again was that another headline to grab votes/election bribe? The fact is the majority of new British households formed since the Millennium can now expect to rent from a private landlord for life - therefore the parties focus on this important demographic.

Yet even with the new mortgage relief tax rules for landlords and the 200+ of legislation that govern the private rental sector, buy to let is still a viable investment option for most investors in Huddersfield. There has never been a better time to purchase buy to let property in Huddersfield … but buy wisely. Gone are the days when you would make a profit on anything with four walls and a roof. Most importantly do your homework, take advice and consider your options.