In recent articles on the Huddersfield property market, I have been talking a lot about house prices over the last 12 months and 5 years in Huddersfield.
When it comes to newspapers talking about the property market, the
headline most people look at is what is happening to house prices.
However, as 2 in 3 (65.1%) of Huddersfield home sellers are also home
buyers, the price is almost irrelevant. Let me explain.
If your property has gone down in value – the one you want to buy has also
gone down in value – so you are no better or worse off (and if you are moving
up market – which most people do when they move home – in a suppressed property
market the gap between what yours is worth and what you will buy gets lower …
meaning you will be better off).
Many property commentators (including myself) consider a better measure
of the health of the property market is the transaction numbers (i.e. the number of people selling and buying).
Let’s take a look at the numbers for Kirklees as a whole (including Huddersfield).
The average number of properties sold in Q1 (Jan/Feb/March) between 2008
and 2020 was 379 properties per month, whilst Q1 in 2021 saw 532 properties
sell on average per month (boosted by the March stats where an eye watering 668
homes sold). This meant …
40.5% more
houses sold in the Huddersfield area in Q1 2021
than the
14-year average
The average number of properties in Q2 (April/May/June) between 2008 and
2020 was 415 properties per month, whilst Q2 in 2021 saw only 338 properties
sell on average per month, meaning …
18.6% less
houses sold in the Huddersfield area in Q2 2021
than the
14-year average
Finally, whilst the exact stats for Q3 2021 for our local authority
won’t be published by the Land Registry for a couple of months, I can make
certain calculated assumptions from the national data published by HMRC. The
number of property sales for our local authority area in Q3
(July/August/September) between 2008 and 2020 was on average 466 properties per
month. However, using the HMRC data, I calculate there will only be 368
properties sold on average per month in Q3 2021. This means …
20.9% less
houses sold in the Huddersfield area in Q3 2021
than the
14-year average
One of the
two main drivers of activity in the housing market in the latter half of 2020
(meaning Q1 figures were better than the long-term average) was the battle for
space, with many Huddersfield buyers seeking larger properties to work from
home. The second was the short-lived tax relief measures such as the cut to
Stamp Duty Tax meaning property prices were at an all-time high.
But
what also might surprise you is the number of people buying for the first time.
1 in 4
mortgages since lockdown have been
for first-time
buyers (25.12%)
Huddersfield
first-time buyers, buoyed by parental help with their deposits, the Government’s
5% deposit mortgage and ultra-low borrowing costs, have also helped to push
house price growth since the start of 2021. In fact, if you split down house
price growth between second time (third time etc) buyers and first-time buyers,
the national annual house price inflation for first-time buyers is 9.2%
compared to 8.1% for the second or third etc buyers.
Yet,
the Q2 and Q3 2021 Huddersfield property market was worse than the long-term Huddersfield
average (in terms of property transactions)
The question is – should we be worried?
The UK economy continues to deliver a benevolent framework to the British
housing market.
The labour market has outstripped expectations with the millions
expected to join the dole queue at the end of furlough failing to materialise
and with the number of job vacancies on the rise.
Of
course (and I mentioned a lot in my recent posts), the Bank of England is
projected to increase interest rates to dampen inflation in the coming months,
with further small rises predicted over 2022, so I do expect the demand for
property to cool off as mortgage borrowing costs increase.
Normally such rises in mortgage
costs would mean less property would sell, yet nothing over the last couple of
years has been normal.
Many
Huddersfield property homeowners have held back putting their property on the
market in the last 6 months because they were afraid, they would sell their own
home but not find another to buy – thus making them homeless (nothing could be
further from the truth – yet that is what a lot of people incorrectly believe).
If
the Huddersfield property market slows and interest rates rise, mortgage costs
will still be very low by historical standards.
Also, if the obstacle of
raising the 5% deposit can be overcome by first-time buyers plus a confidence
that existing homeowners won’t be made homeless because of a cooling property
market, many more people could be tempted to enter the property market by
placing their property for sale first …
… thus opening up the
market to more buyers – which in turn will drive up transaction numbers back to
their normal 14-year average. However, raising a deposit is likely to remain
the primary obstacle for many.
If you are a Huddersfield
homeowner or first-time buyer and want my thoughts on the future, then please
do drop me a line.
2022 is going to be an
interesting year ahead for the Huddersfield property market – only time will
tell if this will be a brief respite or is it running out of steam?
Please tell me your
thoughts on what you think will happen.
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