1 in 4 Huddersfield Homeowners Unable to Sell

·         The average time to find a buyer for a Huddersfield property reduced from 73 days in 2020 to 43 days in 2021.

 

·         Yet still, just under 1 in 4 Huddersfield homeowners are on the market after 12 weeks.

 

·         Why are so many Huddersfield homes still on the market after all that time, and what does it mean for the Huddersfield property market?

 

You would have needed to have been living in a cave since the end of Lockdown No.1, not to realise the property market has been on fire in Huddersfield (and the UK as a whole) for the last 18/20 months.

 

It has been very much a seller’s market, especially in 2021. Yet as we enter the second quarter of 2022, I have noticed a slight rebalancing of the Huddersfield property market, more towards buyers, something that is good news for everyone (sellers and buyers) locally.

 

In 2020, it took on average 73 days from the average Huddersfield property appearing on the property portals (i.e. Rightmove, Zoopla etc.) to the property going sold (STC).

 

Interesting when compared to the national average of 72 days in 2020. Yet, last year, this was reduced to 43 days in Huddersfield (51 days nationally).

 

So, what's the issue with the Huddersfield property market being on fire?

 

Well, that was last year, and things have changed slightly since.

 

Of the properties for sale in Huddersfield, 24.7% of houses

have been on the market for more than 12 weeks.

 

That doesn't sound a lot, yet that is an eternity in this market!

 

So, why are there so many properties on the market in Huddersfield still for sale after all this time … it usually comes down to one thing … the practice of 'overvaluing'.

So before I explain what overvaluing is, let me give you some background.

 

Many agents (not just ourselves), in 2021, were achieving top prices for Huddersfield property with multiple offers becoming the standard. The property they were selling was only available to buy for days before the owner obtained multiple offers that were not only at a satisfactory level, yet more than they ever dreamed likely.

Although this was great news for Huddersfield homeowners, this caused fewer homes to come on to the market in the last six months in Huddersfield, as people were afraid to put their home on the market without having a property to buy.  

With fewer properties coming onto the market, some estate agents have become more and more desperate to get a larger slice of this smaller property market. It has seen an unwelcome side of the estate agency profession, the estate agency practice of ‘overvaluing’.

While ‘overvaluing’ is nothing new, the custom has been generally limited to a small number of estate agents. Yet now, it's become more prevalent and creates uncountable distress and pressure for some Huddersfield homeowners.

Many Huddersfield homeowners want to sell quickly to get the property of their dreams. Yet, in many cases, when they do put their property on to the market, they don’t sell quickly enough because of this ‘overvaluing’ (even with the fantastic current property market conditions).

To give you an idea of the issue …

72.5% of Huddersfield homes put on the market

in the last 30 days have not sold.

There are hundreds of Huddersfield families having their dreams dashed by 'overvaluing.'

Therefore, let me look at exactly what overvaluing is, why it’s on the rise and most importantly, the harm overvaluing causes to homeowners like yourself.

You would think the most important thing in estate agency is all about finding the best buyer for your home, at the best price, who can make the move with the least amount of hassle.

To us it is, and to many other Huddersfield estate agents, it is as well. Yet, to some agents, sales aren’t the essential objective. Instead, it is having a vigorous catalogue of properties to sell to generate more future leads.

Deprived of an endless number of new properties for sale, the enquiries estate agents receive will significantly drop, leaving them high and dry without any buyer (or seller) leads, the lifeblood of estate agents.

Therefore, some (not all), but some estate agents will feed on a homeowner’s appetite to get the highest possible price for their Huddersfield home by giving them an over-inflated suggested asking price to market their property at (i.e. ‘overvaluing’).

If one estate agent can get you an extra £30,000 for your

Huddersfield home, you will take it, won’t you?

 

The suggestion of pushing the asking price of your Huddersfield home for 10%, 15% even 20% could be seen by many as a temptation too good to miss. Yet once you are on the market, the agent is trained to slowly get you to reduce your asking price over a lengthy sole agency agreement.

The problem is that the home of your dreams might have sold by the time you reduced your price in 3 months. Also, Which reports in 2017 and 2019 proved you ended up getting less for your home when it did eventually sell (which means you lose money) and finally, the agents know homeowners perceive it’s a hassle to swap agents (which it isn’t).

But estate agents only get paid when they sell the house;

why do they overvalue?

Would it surprise you that some estate agency chains pay their staff a commission when they put the property on to the market, not when it sells? So, their team overinflate their suggested asking prices to get that commission.

Over the last 18 months, with the rising property market, there has undoubtedly been a valid reason for pushing the envelope on the asking price. Yet, if every house like yours is on the market or sold subject to contract at £300,000 to £320,000, yours isn’t going to achieve £355,000, let alone £375,000 – even in this market.

With 72.5% of Huddersfield homes still for sale after a month, the market is starting to level out and if you are keen to sell, then let me give you some advice.

Research has shown that if the asking price is initially set too high, it will be ignored by people surfing Rightmove and Zoopla.

 

(Come on, be honest – you have done that yourself haven’t you?)

 

When the property is eventually reduced because it has the stigma of being on the property market too long (begging the question from potential buyers that there may be a problem with the property itself hence no interest?), often when it does eventually sell, it will sell for less than what it would have done if it were priced correctly from day one (as per the two reports from Which in 2017 and 2019).

 

Of course, on the other hand, setting the asking price below its market value means potentially leaving money on the table needlessly – hence the need for a good agent.

 

Putting your Huddersfield home or buy-to-let investment up for sale at the right price from the beginning is the key to selling within the best time frame and for the best price to a serious and motivated buyer.

Ask a handful of estate agents to value your home, ask them to back up any valuation of your Huddersfield home with cold hard comparables of similar properties to yours.

 

Find your comparables by searching ALL the property portals (i.e. Rightmove, Zoopla, Boomin, OnTheMarket).

 

If you only take away one thing from this article, when you search the portals for comparables, make sure you include under offer/sold STC properties, as that will triple the comparable evidence. 

 

Thus, by doing your homework and then working with a dependable, trustworthy and experienced Huddersfield estate agent, who will help to ensure that your Huddersfield property is put on the market to get you, the homeowner, the best price from day one without over cooking it so you don’t lose out, you will be just fine.

 

These are my thoughts, let me know if you have any yourself.

 

How Will Rising Inflation Affect the Huddersfield Property Market in 2022?

 

The UK is currently experiencing its highest inflation rate since the early 1990s. This increase in prices has primally come about by the combination of an increase in demand for goods and services from consumers following lockdown last year together with global supply chain disruptions.

 

Most economists weren't too concerned about this increase in the inflation rate as the very same thing happened in the early 1990s following the Credit Crunch with a similar rise in demand and supply chain issues. Thankfully, back in the early 1990s, inflation returned to lower levels quite quickly. However, the situation in Eastern Europe now could change matters.

 

So, let me look at all the factors and what it means for the Huddersfield property market.

 

The crisis in Eastern Europe has sparked even further rises in crude oil (which diesel and petrol are made from), gas and grain prices as pressure on supply chains around the world increases.

 

In my previous articles, I suggested UK inflation would rise to around 7% in the spring and drop back to 5% in the autumn and as we entered 2023, be approximately 3% to 4%.

 

Yet, with these issues, inflation could rise to 8% to 9% by late spring and still be around 6% to 7% in autumn, well above the Bank of England's target of 2%.

 

With Huddersfield wages rising at only 3% to 4% and inflation at 7%+, Huddersfield household incomes, in real terms, will fall.

 

This is because ‘real’ UK household incomes characteristically have been the most consistent lead indicator of growth (or a drop) in house prices. This is because growing inflation erodes the value of money you earn, which reduces its buying power. When the cash in your pocket has a lower spending power, people tend to spend less when they buy (and rent) a home (and vice versa).

 

Next month, Income Tax thresholds will be frozen, and National Insurance contributions are increasing. Collectively, all these issues will create a drop of around 2% to 2.5% in the real disposable income of Britain's households in 2022 (real disposable income - somebody's take-home wages after tax and then the effects of inflation are considered).

 

Will Huddersfield people be more anxious to spend their money?

With less money in people's pockets, people's inclination to spend the money they do have could also be curtailed. People's savings are at an all-time high, yet many will decide to sit on the cash, instead of spending it, especially as consumer confidence has dropped to minus 26 on the GfK index (whatever that means – but in all seriousness though - more on that below).

 

All this can only mean there is going to be a house price crash.

 

It’s all doom and gloom! …Or is it?

 

My heart goes out to people caught up in the awful humanitarian crisis in Eastern Europe. Yet, I respectfully need to put that to one side for just a moment for the purpose of this article.

 

This blog is about the Huddersfield property market, and Huddersfield people want to know what will happen to the Huddersfield property market.

 

In the first half of the article, I looked at the impending fall in real disposable incomes of 2% to 2.5% in 2022. I appreciate it's going to be tough for many families in Huddersfield. Yet, it is always important to consider what has happened in previous times.

 

1982 – a drop of 2.3% in real disposable income

1992 – a drop of 3.7% in real disposable income

2008 – a drop of 5.8% in real disposable income

 

Yes, it's going to be tough, yet we got through 1982, 1992 and 2008 – and so we shall in 2022/23.

 

Next, the price of petrol is very high compared to a year ago.

 

The average price of unleaded petrol is £1.51/litre today, quite a jump from the £1.21/litre a year ago. But here is an interesting fact, petrol was a lot more expensive (in real terms) in 2011 than today. In TODAY's money, a litre of unleaded petrol in 2011 would be the equivalent of £1.79/litre. We have some way to go before we get to those levels – and again, the Huddersfield economy (and property market) kicked on quite nicely after 2011.

 

What are Huddersfield people spending

on their rent and mortgages?

 

Housing costs - owner occupiers were spending on average 17.3% of their household income on mortgages in 2015, yet in 2021 this had risen, albeit to 17.7% - not a huge increase.

 

Council house (social) tenants have seen a drop in their rent from 29.2% in 2015 to 26.7% in 2021, whilst private tenants from 36.4% in 2015 to 31.2% in 2021.

 

Interesting that private tenants are proportionally 14.29% better off in 2021 than in 2015.

 

How we spend our money - the average UK home spent 4.2% of their household income on energy in 2021, and that is due to rise to 6.3% after April (and probably 7% in October). Yet, as a country, we spend 9% of our income on restaurants and hotels and 8% on recreation and culture. As with all aspects of life, it will mean choices, and maybe we will have to forego some luxuries?

 

Just before I move on from this aspect of the article, again I appreciate I am talking in averages. Many people with low incomes suffer from fuel poverty and they will find the increases in energy prices hard - my thoughts go out to you.

 

Interest rates - higher inflation is generally brought under control using higher interest rates, meaning mortgage payments will

be higher.

 

First, 79% of homeowners with a mortgage are on a fixed rate, so any rise won't be instantaneous. Yet, there will be a bizarre side effect from the issues in Eastern Europe. Surprisingly, though the current situation in Eastern Europe, by its very nature, will bring greater UK inflation, it will also probably defer the Bank of England raising interest rates. This means mortgage rates won't increase as much as the bank won't want to exacerbate any pressures to the UK economy in 2023/24 caused by the conflict.

 

The stock market had priced an interest rate rise to 2% by the end of 2022. I suspect this will now be no more than 1% to 1.25% by Christmas, slowly going up in quarters of one per cent every few months. The crisis in Eastern Europe might even come to be seen as a defence for higher inflation throughout 2022, all meaning everyone's mortgage will be less.

 

Next, looking at Consumer Confidence Indexes - these indexes are fickle things. I prefer to look at the Organisation for Economic Co-operation and Development Consumer Confidence Index as it has a larger sample range and a longer time frame to compare against. Looking at the data from the mid 1970s, the drop in consumer confidence is big, yet nothing like the drops seen in the Oil Crisis of the mid 1970s, Recession of the early 1980s, ERM crisis of 1992 and the Global Financial Crisis of 2008/09. Also, when compared to the other main economies of the world (G7), the UK has always bounced back much more quickly from recessions when it comes to consumer confidence.

 

What about house prices in Huddersfield in 2022/23?

 

Increasing energy prices, rising inflation, an increase of sanctions, and a probable drop in consumer confidence and spending in the aftermath of the conflict will knock the post-pandemic recovery globally, which will lead to a recession around the world, including the UK.

 

A recession is when a country’s GDP drops in two consecutive quarters. For the last 300 years, there has been a direct link between British house prices and GDP - (i.e. when GDP drops, UK house prices fall). Yet in 2020, the British GDP dropped by nearly 12%, yet house prices went the other way. 

 

But let’s look at what would happen if Huddersfield house prices did drop by the same extent they did in the Global Financial Crisis of 2008/09.

 

House prices in Huddersfield dropped by 17.5% in the Global Financial Crisis, the biggest drop in house prices over 16 months ever recorded in the UK.

 

The average value of a property in Kirklees

today is £177,532.

 

Meaning if Huddersfield's house prices dropped by the same percentage in the next 16 months, an average home locally would only be worth £146,463.

 

On the face of it, not good - until you realise that it would only take us back to Huddersfield house prices being achieved in May 2020 - and nobody was complaining about those.

 

Yes, that will mean if they do drop in price, the 5.3% of Huddersfield homeowners who have moved home since May 2020 would lose out if they sold after that price crash. But how many people move home after only being in their home for a couple of years? Not many!

 

The simple fact is that 94.7% of Huddersfield homeowners will be better off when they move if house prices crash.

 

And all this assumes there will be a crash.

 

The simple fact is, the circumstances of 2009 that caused the property crash are entirely different to 2022 (no lending by the banks, higher interest rates and increasing unemployment compared to today’s increased lending, ultra-low interest rates and low unemployment environment).

 

I do believe with all that's happening in the world we might see a rebalancing of the Huddersfield property market later in 2022 and could see the odd month with little negative growth in house prices, yet it will be nothing like 2009.

 

The expected fall in household spending could be counterbalanced by UK businesses’ plans to invest more in their businesses (with last year’s tax breaks on investing), which will create even more jobs.

 

Who knows what the future holds? These are just my opinions - what are yours?

1 in 45 homes are sitting empty in the Huddersfield area

·         4,174 homes in the Kirklees area are empty, which represents 1 in 45 homes.

 

·         2,426 of those have been empty for more than six months and are worth £431million.

 

·         Why are those properties standing empty and deteriorating and why could that become an issue for the whole of Huddersfield?

 

A couple of weeks ago was National Empty Homes Week, so I thought I would find out how many homes are empty in the Huddersfield area – the numbers surprised me, so I wanted to share my thoughts about them with you.

The latest Government statistics show that 2,426 properties

in Kirklees have been empty for more than six months.

 

Homes that are left empty for an extended period can affect our locality and occasionally invite anti-social behaviour.

With a shortage of housing in the Huddersfield area, these empty homes must be brought back into use to generate much-needed housing for local people.

As you can see in the first bullet point, some homes are only empty for a short period of time. Yet, those local properties that stand empty for more than six months and then deteriorate become a problem for our local community.

I appreciate there can be many genuine explanations why a property may be left empty for a long time. However, with council house waiting lists at high levels and the shortage of both properties to buy and rent in Huddersfield, we must ask what is being done about this at Government level and how this could affect the Huddersfield property market?

The collective value of these 2,426 long-term (6 months or more)

empty houses in Kirklees are worth £431million.

This impacts the Huddersfield housing market with a lack of properties coming onto the market for sale and rent. This results in house prices being pushed up, making it less affordable for first-time buyers to get on the first step of the housing ladder.

It’s a real shame that many local properties are empty for over six months when there is an increasing demand for accommodation, at a time when there’s such a competitive housing market.

So, one might ask if this issue of long-term empty properties is a new problem? Well, not really.

There were 3,696 homes long-term empty in Kirklees in 2010.

 

I know our local authority likes to work with property owners of empty homes to bring them back into housing stock as it helps with the housing shortage, even with the help of grants if improvement work is needed for the empty home. Yet, they could use enforcement action where a homeowner is incapable or unwilling to bring their property back into use.

 

So, what is the Government doing nationally? Homeowners are charged a 50% premium on top of their Council Tax if their home has been empty for two years or more. This can rise to a 300% premium if the property has been empty for ten years or more.

 

However, the bigger question is, why are all these homes in the Huddersfield and Kirklees area being left empty?

 

The real answer is - they are not.

 

A handful of the properties belong to the local authority and are in poor condition because the tenant trashed the property. 

 

Probate (where the person's estate is put in order and passed onto the beneficiaries of the will) takes between six and twelve months. Most of these long-term properties are being modernised and renovated, whilst other Huddersfield properties are part of a deceased estate. In other circumstances, some Huddersfield homes have been left empty after the owner has been placed into a care home, yet there is no Power of Attorney to put the home onto the market. 

 

There is no 'one fix all' to the empty home syndrome in Huddersfield.

 

Empty properties in Huddersfield is not an issue that will sort the housing crisis we are suffering from.

 

The simple fact is the population is growing faster than the number of houses being built. We need to build more homes.

 

Whether that means council properties, housing association homes, private landlords or even owner-occupation housing the masses - that's a massive question we could all talk about, day in day out until the cows come home.

 

So, tell me, what are your thoughts on the matter?