There is no doubt that Coronavirus will affect the Huddersfield property
market, but just how?
The ensuing economic challenges are going to impact the Huddersfield
(and UK) property market, yet no one knows the real answer. The newspapers
eulogise different opinions, but that's all they are – opinions and everybody's
got a different opinion. The truth of the matter is we don't know and won’t know
for another few months at least, if not more?
There have been some outstanding Government supportive measures both for
tenants, landlords, home buyers and sellers (including a pause on evictions
for tenants, and for landlords and homeowners, mortgage payment deferments and
stamp duty reductions to make buying a home cheaper), and whilst these are only
temporary, they have done their job, meaning there is a good level of activity in
the Huddersfield property market.
A lot of that is pent-up demand from a couple of years of uncertainty
because of Brexit. Also, we had the General Election in late 2019, so there have
been so many reasons for people to sit on their hands. At the beginning of 2020,
it was like a water hose ready to burst with the Boris Bounce in January and
February. Then, just as things were beginning to get going in the Huddersfield
property market, we had everything freeze up for months during lockdown. Since
lockdown has been lifted …
the Huddersfield
property market is open once again for business
and there
is unquestionably some impressive activity both in
the sales
and rental market
So, back to the original question and where are we going? I think what
we will see is a subtle change to where people want to live because of the
pandemic. People working from home has shown that the need to be in the big
cities has reduced and as employees have realised, they can work very
efficiently from home, plus they are happier and have a better work/life
balance. Their employers are also happy as they get more work out of their
staff and can reduce their costly office footprint in the cities. The same goes
for Huddersfield tenants as they are wanting more from their rental homes.
Three trends we have noticed is there is greater demand for properties with
gardens, greater demand for Huddersfield landlords who will accept pets (as
they now can have them as they work from home) and finally, tenants willingness
to pay top dollar for ‘top of the range’ properties, whilst more basic and
uncared for properties without all the ‘bells and whistles’ need to go for a
discount. There certainly has been a flight to quality.
Yet, what worries me is the fundamental future uncertainty in 2021 and
beyond. What will things look like, say in spring 2021, when the Stamp Duty
reductions are phased out? Any property sold needs to have completed by the end
of March 2021 to take advantage of the tax holiday, meaning you need to have
sold your Huddersfield property by November 2020 at the very latest to ensure
your property purchase and sale deal goes through in time (as it is taking
on average up to 17 weeks between sale agreed and completion). This is
where the difference between a great solicitor, brilliant estate agent and
awesome mortgage broker compared to average ones will show. Good ones, when all
three are working together for you, can get the sale through in 6 to 8 weeks,
not the national average of 17 weeks, meaning if you are cutting it fine, you
might not be able to take advantage of the tax savings in the spring. Give me a
call if you want to know who the best of the best in Huddersfield are to ensure
you don’t lose out on those tax savings.
The value
of the average Huddersfield home
currently
stands at £165,900
So, what is going to happen to the Huddersfield property market? It
really depends on the economy as a whole and of course the property market is a
large part of that. I know one thing that buy to let landlords and home buyers
don't like is ambiguity and the British housing market has always lived and
breathed on emotion and sentiment. People will only buy and sell property (and
borrow the money to make those transactions happen) when they feel good. Are
all these things like Stamp Duty holidays just putting off the inevitable? Are
we heading for the mother of all property crashes?
Well, let me put sentiment and opinion aside for a second and look at
the simple facts.
We have an increasing population,
yet we don't build enough houses
Since 1995, we have built on average 150,200 properties per year. The Barker Report said 2004 the country needed 240,000
per year to satisfy annual demand for new homes and whilst the number of new
homes built in the UK last year rose 1% to a 13-year high, only 161,000 homes
were built. That means over the last 25 years with the difference between
actual homes built and the targets set out in the Barker Report, we have
an inbuilt shortage of 2,245,000 homes, meaning …
since the Millennium, property values in
Huddersfield have increased by 166.9%
Other factors have contributed to that. The average age of a
person leaving their parents’ home in the UK is 24.4 years and that has been
dropping for a few years meaning more homes are required. People are also living
longer (in 2000 the average person lived until 77.7 years and now it’s 81.1
years – doesn’t sound a lot until one considers for each additional year the
average person lives in the UK, we need an additional 356,500 homes). Finally, we
have got immigration. In the year ending March 2019, 612,000 people moved
to the UK (immigration) and 385,000 people left
the UK (emigration) – meaning a net increase of 227,000 people (or a
requirement of c.100,000 homes to house them in one year alone). All those
factors in themselves mean…
we have more demand for Huddersfield property than we
have
supply and that's not going to change any time soon
Property markets are driven (like all markets) by supply and
demand so I believe Huddersfield property values can only rise in the long
term. The question is whether Huddersfield people will have the sentiment
and confidence to borrow money on a mortgage and invest in Huddersfield
property, yet at the moment with ultra-low interest rates, borrowing money to
buy a home has never been so cheap and if you are in it for the long-term (which
you should be with property) then I think it's good news.
One piece of good news is that mortgage lenders are willing to lend up
to 90 per cent loan to value mortgages for first time buyers (and in some rare
cases 95 per cent), albeit with a lot of strings attached ... yet this is a
good sign as the banks and building societies wouldn’t be lending at these
levels if they were too scared.
Investing in property, be it for yourself to live in or buy to let is a
long-term game. We might see an uplift in prices in the short term because of
the demand mentioned above, then again, we might see a dip in 2021 - yet again
for the reasons mentioned above - until we start to build new homes to the
scale of 300,000+ a year (something that has never been achieved since 1969),
the long-term picture appears to be good. Be you a Huddersfield landlord, Huddersfield
house seller or Huddersfield buyer, you have to be a lot more strategic and
thoughtful about what you are going to do. If you would like to pick my brains,
drop me a message on social media or pick up the phone.
So, those are my thoughts, tell me your thoughts for the future of the Huddersfield
property market?
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