The stamp duty holiday is over, furlough finished at the end of September, unemployment is due to rise and inflation is rife … is this the end of the post lockdown Huddersfield property boom?
Surely, we are heading for house price correction?
Forecasting what will happen in the Huddersfield property market this autumn
may not be as simple as it first appears.
It’s true the Huddersfield property market is starting to
settle down after an all-time number of property deals were completed in June.
More Huddersfield
people will have moved home in 2021 than in any year since 2007, with an
estimated 1.5 million home buyers nationally having bought a property.
Roll the clock back to
last Christmas, and the Government’s Office for
Budget Responsibility, projected that national house prices would drop between
6% and 8%.
By Christmas, the price of an average home
in Huddersfield will be about £199,300,
up 4.9% on last Christmas.
Let us not forget there
were so many ambiguities at the start of 2021. We were about to start a 5-month
lockdown, hospitals were bursting at the seams with patients, the vaccines hadn’t started, 4 in 10 employers had furloughed
their staff and we had just had Brexit ... things didn’t look good.
Yet, nothing could be
further from the truth 10 months later – the Huddersfield property market has
been on fire. But after a heated summer in the Huddersfield property market,
things certainly can’t carry on as
they have been since the end of lockdown.
So, where are we with
the Huddersfield property market as it stands? Taking reference from historical
data on the website The Advisory (I would certainly recommend you check it out)
…
68% of properties on the market today in Huddersfield
are sold subject to contract (stc).
How does this compare
to October 2019 and October 2017?
In October 2017, 36% of Huddersfield properties were
sold stc,
whilst in
October 2019, 35% of properties were sold stc.
Yet how does that
compare to the national picture?
In 2017, 39.72% of the
country’s properties
for sale were sold stc whilst in 2019, that figure was 38.11%.
Now I love a good
league table, so then decided to compare our locality to the rest of the country.
So, I chose to look at
the HD7 postcode specifically. For information, there are 2,234 postcode
districts in the country.
The 2021 sold stats put HD7 in at 365th
place in
the country, 986th in 2017 and 1,346th
in 2019
… meaning we have improved from the 2017 and 2019 figures.
As we enter the last 3
months of the year, there are not so many uncertainties as there were at the
start of 2021. On the good news front, 49 million Brits have had at least one
jab (45m two jabs) and the UK will be the world’s fastest growing advanced economy this year according
to the IMF.
Conversely, the
furlough scheme ended at the end of September and with energy prices going
through the roof, a real shortage of homes for sale (as I have discussed a
number of times in recent blogs) and rising inflation on the back of a
shortage of raw materials and trained staff, forecasting this and what will
happen to Huddersfield house prices might not be as easy as it seems.
Post stamp duty
holiday, it is now
recognised that the majority of the demand for people moving home is focused by
a profound unhappiness and frustration with the homes we live in, revealed
during the first lockdown in 2020.
Buyers (and tenants
– so take note Huddersfield buy-to-let landlords) want space ... in fact,
three types of space … and they will pay handsomely for them!
·
Office
space (be that bedroom or study)
·
Outside
space (gardens or proximity to green areas)
·
Broadband
with ‘outa-space’ download speeds
And whilst there is a
shortage of properties coming on to the market, demand and supply economics
mean …
Huddersfield house prices should remain relatively
stable going into 2022.
The number of properties
coming onto the market in Huddersfield is slowly improving, yet not enough to
diminish house values.
Also, don’t forget Huddersfield first-time buyers still
have stamp duty relief all to themselves again and mortgages are cheap. At the
beginning of the 2020 lockdown (Spring 2020), mortgage providers removed their
higher risk 5% deposit mortgages for fear of a housing market crash. Currently,
the vast majority of these low 5% deposit mortgages are back, together with the
Governments own 5% deposit mortgages.
Yet many Huddersfield homeowners are concerned about
inflation
and its effect on their mortgage payments.
Inflation is important
because if inflation gets too high, the Bank of England will need to raise
interest rates to reduce inflation. Because mortgage payments are based on the Bank
of England interest rate, higher mortgage payments will affect what people can
afford. Normally the higher the mortgage rate, the less likely house prices are
to increase (and in fact if interest rates are too high, house prices will
fall).
Whilst I can’t give you advice, with the Bank of England
base rate at a 300-year historic low of 0.1%, I’m still surprised that nearly 3 in 10 Huddersfield
homeowners with mortgages are not on a fixed rate mortgage. There has never
been a better time to get a fixed rate mortgage, as there are deals out there
with interest rates as low as 1%. This means even if interest rates do go up in
the short term, you will be protected from higher mortgage costs. Anyway, back
to inflation.
Inflation did rise quite quickly and steeply in 2008/9
but came back down within a year.
This was because of a
shortage of staff and raw materials during the Credit Crunch of 2008/9, the
very same issues we are experiencing at the moment in Q4 2021. The type of
inflation (yes, there are types of inflation!) in 2008/9 was called ‘push inflation’. Whilst inflation is not great, ‘push inflation’ could be described the better type of
inflation (as long as is it doesn’t go on for
too long).
The economic crippling
hyper-inflation seen in the 1970s was ‘pull inflation’. The circumstances that create ‘pull inflation’ are not being
experienced at the moment buy in the UK. This is good news because ‘pull
inflation’ is bad inflation, which in turn would create massive problems to the
UK economy as a whole.
Therefore, whilst
inflation will probably rise to 4% - 5% by Christmas, I don’t believe the Bank of England will raise
interest rates substantially as the message we are hearing from them is they
see this as a short-term blip.
Opportunities for Huddersfield buy-to-let landlords?
Ultra-low mortgage
rates and a booming rental market is encouraging more Huddersfield buy-to-let
landlords to expand their rental portfolios, yet their strategy is changing.
Yields are increasing as there is a shortage of rental properties, driving up
rents. Also, there are Huddersfield landlords looking to exit the rental
market, often because they want to liquidate their portfolio for retirement.
These portfolios don’t make it onto
Rightmove and get sold ‘off market’.
Therefore, if you are a
serious Huddersfield buy-to-let landlord and you’re looking to expand your own portfolio, it’s really important to put yourselves on the
mailing list of estate agents and also build up great one-to-one relationships
with the same agents to ensure that you’re at the front of the queue for these off market
rental portfolios and not at the back.
To conclude, nobody
knows the answer to what will happen to the property market in Huddersfield as
we go into 2022. There are many factors that could affect the market in a
positive and negative way, yet buying property is always a long-term investment
(be it for yourself or to rent), so if you need any advice or opinion on what
you should do, drop me a line or pop into the office and we can discuss the
options you have over a cup of coffee.
