Huddersfield Property Market … the Rollercoaster of the last Decade

Ah the 2010’s, the tens, the teens - I am not sure what we are supposed to call the decade that has just gone. No matter what it was called, the last decade was a tough one, so does it really matter that we never really got around to giving it a name? Some might say, whatever one calls it, coming to an end is the most fundamental job any teen (and I refer to all humans) could possibly do!

The last two decades have certainly been tumultuous. At least for this decade we have just started we can say, in a few decades time, things like “That style is so ’20s” and fellow humans will essentially know what you are talking about. If you come of age in this decade, you will be a ’20s child and we will discuss ’20s politics and ’20s style and all the things that hadn’t been created on the 31st December 2019; the time that two nameless decades ended and how finally there was something everyone in the UK could agree on: the name of the decade. Hey - it’s a start!

So, what has happened to the local Huddersfield property market in the last nameless decade?

The average Huddersfield property has risen in

value from £156,800 to £188,000 in the last 10 years

… meaning each Huddersfield homeowner has seen a profit of £60.00 per week for those last ten years. Rolling the clock back to the start of the last decade January 2010, and the economy (and housing market) were recovering from the Credit Crunch and the worldwide financial crisis. A decade on and things feel a little different. If you bought a Huddersfield home over the past 10 years, things have certainly changed.

Huddersfield property values rose 19.8% on

average over the last decade

yet taking inflation into account, they fell in real terms by 13.2 per cent.

Compare that to a 42.5% rise in the ‘80s, a 13.2% drop in the ‘90s and rise of 62.8% in the 2000s in real terms. So, in real terms after inflation, there has been a decrease in house prices in Huddersfield in the past decade making homes today more affordable than a decade ago.

On average, 1.12 million homes were sold each year last decade, although that was 26.4% less than the decade before (the noughties) when an average of 1.52 million properties were sold annually.

So, what are the underlying issues in the Huddersfield (and wider UK) property market when, in real terms, property is essentially cheaper than a decade ago?  Whilst the newspapers tell us first time buyers can’t get on the housing ladder and the housing market is in gridlock - what is the problem? Well I am a firm believer in the adage ‘bad news sells newspapers’ because the truth is something completely different as 32.7% of homes last year were bought by first time buyers compared with only 22.8% in 2009.

Yet, there are still issues; mainly a persistent lack of not building enough new homes which curtails the supply and choice of property; but stagnated wages, stiffer mortgage rules and homeowners not moving as much as previous generations are all contributing to the problem. In the UK, the number of homeowners who moved in 2019 was around 14% higher than in 2009, yet this was still just under 50% lower than the average for the noughties. It’s all up and down like a rollercoaster!

My thoughts for the future are based primarily on what will happen to interest rates. Throughout the last decade, the Bank of England base rate was 0.5% at the start and was cut to 0.25% in the Summer of 2016. Even with the increase to its current level of 0.75% in the Summer of 2019, it has made borrowing money on a mortgage very cheap indeed. Nonetheless, bank/mortgage rates will rise again and I am concerned about the effect upon the housing market. Now it won’t be as bad as previous times when mortgage rates went up in the 1970’s and 1980’s (with mass repossession) because the tougher mortgage rules introduced in April 2014 will have ensured borrowers were stress tested on their affordability if interest rates shot up.  Most borrowers have been stress tested on their affordability to mortgage rates of up to 6% - 6.5%, which would obviously squeeze household disposable incomes yet stop people losing their homes due to repossession. Whilst I am not giving advice, just personal opinion, if you are one of the 29.3% of homeowners who isn’t on a fixed rate – maybe you should seriously consider doing so?

The 2020’s will be an interesting decade – and if you want to be kept up to date with what is happening in the Huddersfield (and wider UK) housing market – follow me and this blog to read similar articles to this one.

Will There Be a ‘Boris Bounce' For the Huddersfield Property Market?

The Halifax announced in early January that there was a Boris Bounce in the national property market as they stated national property values soared 1.7% in December 2019 - the biggest rise since the 1.9% month on month rise in February 2007 (a few months before the Global Financial Crisis aka the Credit Crunch).

Get the flags out - all hail Boris as the Conservatives gain their landslide general election triumph - the Boris Bounce is here … or is it?

The Halifax (as well as the Land Registry and other house price indexes) use data of property that has sold and completed (completion being when monies and keys of homes sold are transferred). The Halifax data was based on properties that completed in December 2019, and as anyone who has sold or bought a Huddersfield property in the last 10 years knows, the time it takes from agreeing a buying price to handing over the money is many weeks. In fact, the average length of time between sale agreed and completion in the country is running at 19 weeks, meaning the figures mentioned by the Halifax are for sales agreed in July / August 2019. This growth relates to what was happening to the property market in Summer 2019.

One of the most important things for the property market is confidence. Interestingly, Rightmove reported a 28% surge in buyer enquiries between the 13th December and 18th December. After a couple of years of Parliamentary hold-up, the confidence following this general election is unquestionably a much needed boost for the economy (and ultimately confidence), so much so, shares in the new homes builders Barratt jumped 14% and Persimmon 12% the day after the election, showing a property sector anticipation that the property market is about to move forward as suppressed demand for people moving home is liberated. 

Looking at the previous elections, I decided to look at what happened to property values in Huddersfield in the 12 months after each election, with some interesting results.

General Election Year	% Change in Huddersfield House Prices 12 Months After the Election
2001	17.7%
2005	9.0%
2010	-0.7%
2015	4.9%
2017	2.9%

So, with past experience, a general election generally has a good effect rather than a worse effect on the Huddersfield property market.

Looking at the rest of 2020, my intuition tells me in the better areas of Huddersfield, it will likely be a seller’s market, as they will have more influence to ask for higher asking prices from Huddersfield property buyers that have placed plans to move on hold for far too long - and this could push up Huddersfield property values more promptly in the short term.

Yet, as more Huddersfield properties come on to the market in the usual spring rush, we could see Huddersfield home buyers having more choice and thus, as supply increases yet demand remains the same, buyers will get more power to negotiate a better deal. Irrespective of that, there is still the all-encompassing issue that I have spoken about many times in my blog of not enough homes being built to keep up with the number required, meaning negotiating power and prices being inflated.

The bottom line is, the Huddersfield housing market will get a slight boost from the general election. The threat of a Jeremy Corbyn government obstructed some Huddersfield landlords to build their buy to let portfolio in the later parts of 2019, so as long as sellers remain realistic with their pricing and present their properties in the best light, 2020 in the Huddersfield property market should be a year of ‘steady as she goes’.

P.S .One final thought - remember what I said about the Halifax price Index being 5/6 months behind the times - don’t be alarmed when they announce in the March/April/May a reduction in property values - like I said before - this will be the prices achieved in the later parts of 2019 i.e. not what is happening right now.

165 Huddersfield Landlords each risk a £5,000 fine in Spring 2020

Washing Machine Energy Ratings for Houses was the phrase one Huddersfield landlord told me a few years ago when we were talking about the colour bar chart graphs that every property has had for over 10 years now. Now these weren’t brought in to use the whole palate of ink in people’s printers, but to increase the energy efficiency of the UK’s housing stock.  The vast majority of Huddersfield landlords are, by now, acquainted with the legislation that came into force on the 1^st of April 2018, that means all new and renewed private tenancy agreements must have an Energy Performance Certificate (EPC) rating of E or above, otherwise it would be illegal to rent the property out (EPC ratings go A to G – A being the best and G the worst).

Yet, from 1^st April 2020, those rules will be extended to also cover existing Huddersfield tenancies, meaning that under the new legislation, properties with an EPC rating of F or G will be classed as unrentable – meaning it will be illegal to rent the property and the landlord will be liable for a fine of £5,000.

It will be illegal for any landlord to let any Huddersfield Rental property with an EPC rating of F & G from April 2020

Back in 2018, there was a loophole for Huddersfield landlords of F & G rated rental homes on new tenancies, where they did not need to upgrade the property for five years if it cost them money (called the ‘no cost to landlord’ exemption rule) – yet back in April 2019 this exemption to improve rental properties was removed – so they too are included in these new rules.

Therefore, this means that Huddersfield landlords must use their own cash to cover the cost of improving their Huddersfield property to at least an EPC band E, and we aren’t talking about an insignificant number here….

165 Huddersfield (HD1) properties will be illegal

to rent out from the 1st April 2020

.. as they have energy ratings of F and G.

Now this requirement to upgrade the property is subject to a spending cap of £3,500 (including VAT) for each rental property, as landlords only need to spend what they need to, to improve their Huddersfield property to EPC rating E.

In cases where a Huddersfield landlord is unable to improve their Huddersfield property to EPC rating E within the £3,500 cap, then they still need to spend their hard earned cash and carry out the most appropriate measures which can be installed up to the £3,500 cap, and then register an exemption (with 3 quotes from 3 contractors) for their property on the basis that all relevant improvements have been installed and the property remains below an E.

Huddersfield homes such as some G rated flats on St Johns Road or some G rated terraced houses on Beech Street, Larch Road and Spring St will all be illegal to rent out by April

If you are a self-managing Huddersfield landlord or a landlord with another Huddersfield agent, then feel free to pick up the phone and chat through any concerns with regard to these new regulations, how to read a EPC graph, how to find the EPC rating of your home, in fact anything – call me. The last thing you need is a £5,000 fine on top of the £3,500 improvement bill.

One final thought though – it might be wise for Huddersfield landlords who have had their rental properties for a while now to get a new EPC carried out on their property (something we can help with irrespective of whether you are a landlord of ours or not) as recent research has also acknowledged that some early EPC’s understated the thermal efficiency of solid walls.  As countless Huddersfield rental properties are pre 1925, which is when most (not all) new properties were built with cavity walls, the Dept for Business, Energy and Business Strategy have now recalibrated EPC’s to give a truer result. This probably means that some solid wall properties, Victorian and Edwardian terraced houses and converted flats, presently rated F under an EPC will no longer demand any improvement works and certainly less building work may be required in the case of a G rated rental property.

OK ‘Huddersfield’ Boomer Huddersfield House Prices Have Risen by 156% as a Proportion of Household Income Since 1980

Have the Baby Boomers (people between the ages of 55yo to 75yo) messed things up for the Millennials in terms of getting on the Huddersfield property ladder? They bought their own council houses in the 80’s and 90’s, meaning there are no affordable homes for today’s youngsters, thus driving up the demand for rental homes and the price of homes (making them unaffordable). So, I decided to look at the figures, which do not make for good reading.

In 1980, the average Huddersfield household income was just under £6,000 per annum and the average Huddersfield house price was £15,030; whilst today, the average Huddersfield household income is £28,023 per annum, yet the average household value is £188,500, meaning...

the average value of a Huddersfield home was 2.5 times more than the average household income in 1980 compared to today, where it is 6.73 times a Huddersfield household income

 … it’s no wonder then that Millennials are pointing the finger at Baby Boomers!

And the problems don’t just stop there. Not only do the newspapers state there is a housing crisis of affordability, but also a crisis of the availability of homes for people to live in. The political parties using housing as a ‘vote getter’ mentioned stats such as in 1981 there were 5.1 million council houses and today that stands at 1.6 million. This is important because, as a substantial number of people will never be able to afford to buy, social housing plays a significant role in homing them.

It all looks rather damning and the phrase ‘OK Boomer’ looks quite apt.

(The phrase ‘OK Boomer’ become fashionable as it started as a way of showing Baby Boomers that things were "easier in the past", yet now it has become just a way for younger people to discredit the views of older people).

Well, checking the stats, the political parties seemed to forget the number of housing associations homes (which are also social housing) has risen from 0.4m to 2.6m homes in that time, therefore, whilst there is a drop in social housing, it’s a net figure of 2.3m fewer social-rented houses, instead of the 3.5m in the paragraph above.

Baby Boomers simply did the best they could with the circumstances given - it's not like that these older generations have been conspiring in the food aisles of Waitrose or M&S on how to mess things up for the next generation. There are fundamental underlying problems in British society that means things are difficult for our younger people - it's everyone’s responsibility to solve those underlying problems - we can't just blame the Baby Boomers. Millennials aren't morally superior to Baby Boomers just because they didn't grow up in the same era of economic growth and house price inflation.

What some people seem to forget is whilst Huddersfield property values were lower, so were salaries. The true cost of affordability is the mortgage payments. Assuming someone bought an average property in 1980 and again in 2019, using a 95% mortgage at the prevailing mortgage rate of 17.8% in 1980 and the current 1.65%, today in Huddersfield the mortgage accounts for 31.1% of the household income compared to 42.9% in 1980.

Things were much tougher for homeowners in 1980….

	Mortgage Monthly Payments in That Year’s Prices	Mortgage Monthly Payments in Today's Prices	% of Monthly Salary
1980	£214.58	£1,055.02	42.92%
2019	£728.05	£728.05	31.18%

The issue here is something much deeper. Baby Boomers say it is the Millennials' own fault they can't afford to buy their own home because they spend all their money on three holidays, avocado on toast, going out down the pub 3 times a week and buying the latest iPhone or suchlike whilst Millennials accuse the Baby Boomer generation for ruining the housing market ‘per se’ by being selfish. Both are right and both are wrong.

In my own involvement with friends and family, many Huddersfield Baby Boomers are trying their best to help out their now grown up children with a deposit. They are fully aware of current Huddersfield house prices compared to when they bought their own homes.

I am not a fan of attaching labels, be it Millennials, Baby Boomer or Gen-X.  It’s really a point of attitude and behaviour and circumstance rather than the date of your birth. Every generation has had its fair share of feast and famine and whilst I appreciate the irony of the title of this article, let’s stop labelling people and making assumptions, everyone needs to understand each generation’s issues and be more ungrudging to each other.