The Huddersfield Property Market and £1,300,000,000,000,000,000 in loose change

The 5^th of March 2009 was the date Mervyn King, the then Bank of England Governor, slashed UK interest rates to the unparalleled figure of 0.5%. In just under five months, starting on 8^th October 2008, the rate had come down from 4.5% to that low figure, all in an attempt to ensure the British economy survived the worldwide credit crunch. Now as we deck the halls with bows of holly nobody expected that, over six years later, rates would still be at that low level.

In the summer, people were predicting a rise in the New Year, yet now, some forecast it may remain the same for years to come the due to the issues in China. Now, I am not some City Whiz kid with a hotline to Mr Carney at Threadneedle Street, but merely a humble letting agent from Huddersfield, so I can not profess to know what will happen to interest rates. However, what I do know, speaking to my Huddersfield friends and Huddersfield landlords is that these low interest rates have hit savers really hard.

If you added up everyone’s bank and building society savings in the UK, they would add up to £1,300,000,000,000,000,000 (that’s £1.3 trillion), most of which is earning a pittance in interest.  That is why more and more 40 and 50 year old Huddersfield landlords have been investing some of that cash into Huddersfield bricks and mortar, as they search for a low risk investment opportunity.

Buying a Huddersfield buy to let property isn’t risk free, but there are certainly things you can do to mitigate and lower one’s exposure to risk. You see by buying a rental property, it potentially offers an enigmatically decent proposition in terms of being able to obtain attractive returns that beat inflation and savings accounts, yet without taking the levels of risk associated with stock markets.

The UK residential property market has long been the safest form of collateral for lenders of all varieties. Against a backdrop of a greatly changing economic environment, Huddersfield house prices have been extraordinarily robust, increasing by over 1413.7% between 1974 and today. Some will say there have been significant property price falls, namely in 1975, 1988 and 2008, yet each time after this has been followed by an upturn in property values. For the record, the stock markets in the same time frame only rose by 432.5%!

.. and that is the best thing about buy to let property. Unlike the stock market, with its unfathomable equities, shares and bonds, that nobody really understands (as they are controlled by some faceless whizzkid in Canary Wharf!) with a buy to let property, landlords can take control and understand their investment .. in fact you can touch and feel the bricks and mortar investment.

..  but before you go out and buy any old Huddersfield property, plenty of landlords still get it wrong. 

You have to be aware of your legal responsibilities when it comes to tenant safety, tenants deposits, energy certificates and in the new year, landlords will have the added responsibility of checking the immigration status of prospective tenants. Get it wrong and big fines and even prison is an option – but that’s why many agents use a letting agent to manage their property for them.

Next, you have to buy the right property at the right price. Recently I have seen some really heart breaking situations in Huddersfield and the immediate area, of people paying way too much for a property, only to lose out when they came to sell. One example that comes to mind is that of a property owner in a terraced house on Honoria Street, just off Huddersfield’s main A641 .. a decent two bed end terrace, 44 sq metres inside (473 sq ft in old money) sold in November 2005 for £57,500. In the summer, it only obtained £50,000, a drop of 13.04% or 1.41% a year - a very disappointing result.

I cannot stress enough the importance of doing your homework. One source of information and advice is the Huddersfield Property Blog where I have similar articles to this about the Huddersfield property market and what I consider to be the best buy to let deals around at any one time in the town, irrespective of which agent it is on the market with. If you haven’t visited and you are interested in the local property market in Huddersfield .. you are missing out! http://huddersfieldproperty.blogspot.co.uk/

Huddersfield vs Bradford – Clash of the Property Market Titans

Many landlords have been asking me my thoughts on the Huddersfield property market recently, and in particular, what is happening to property values. My calculations show property values in Huddersfield quite interestingly grew in the month of September by 0.1%. When one looks at the annual growth, Huddersfield values are 1.7% higher (when comparing Sept 14 to Sept 15).  However, there are signs that the fundamental growth of property values in Huddersfield has now peaked, despite those average property values being below levels recorded in 2007 (just before the 2008 crash).

Even though prices are higher this month, this impressive rise of Huddersfield property values masks the underlying truth in what is really happening to local property values in the town. Throughout 2015, property values have been yo-yo like on a month by month basis, being quite volatile in nature.  For example,

·         September 2015                  0.1% rise

·         August 2015                        0.1% drop

·         July 2015                             0.4% rise

·         June 2015                            1.0% drop

·         May 2015                             0.4% rise

·         April 2015                            0.2% rise

·         March 2015                          0.5% drop

This is in part due to seasonal factors, as well as mortgage approvals increasing over June and July and then falling by over 15% in August, according to the Council of Mortgage Lenders (CML).

The outlook for the Huddersfield property market remains positive against the foundations of low mortgage rates and growing consumer confidence. However, I do have to question the recent CML mortgage data and whether that raises issues over whether the rate of growth since the Tory’s were re-elected in the early summer can continue? However, on a positive note, Huddersfield property values are still running ahead of salaries and average property values are 17.3% below the levels recorded in 2007.

Talking to fellow property professionals in the town, demand for property has been showing signs of moderating in the final few months of 2015, which in turn will lead to a slight slowdown in the pace of house price growth in the run up to the festive season. You see, it is really important not to read too much into one month’s (September’s) headline figures.

Readers might be interested to note that before the 2008 property crash, all the UK region’s housing markets tended to move up and down in tandem like the Huddersfield Synchronised Swimming team at the Kirklees Active Leisure Centre Swimming Pool!  Since then though, the Greater London property market took off like a rocket in 2009/10, whilst the rest of the UK only really started to grow in 2012/13, and even then that growth was a lot more modest than the Capital’s.  Looking closer to home, it can even be different in neighbouring towns, areas and cities, so whilst Huddersfield property values are 1.7% higher than a year ago (as mentioned above), Bradford property values are 1.2% lower than a year ago.

I cannot stress enough the importance of doing your homework.  One source of information and advice is the Huddersfield Property Blog where I have similar articles to this about the Huddersfield property market and what I consider to be the best buy to let deals around at any one time in the town, irrespective of which agent it is on the market with.  If you haven’t visited and you are interested in the local property market in Huddersfield….. you are missing out!  http://huddersfieldproperty.blogspot.co.uk/

Huddersfield Tenants Pay 29.5% of their Salary in rent

I had the most interesting chat with a local Huddersfield landlord the other day about my thoughts on the Huddersfield property market. The subject of the affordability of renting in Huddersfield came up in conversation and how that would affect tenant demand. Everyone wants a roof over their head, and since the Second World War, owning one’s home has been an aspiration of many Brits.  However, with rents at record highs, many are struggling to save enough for a house deposit.

Let’s be honest, it’s easy to get stuck in a cycle of paying the rent and bills and not saving, but even saving just a small amount each month will sooner or later add up.  George Osborne announced such schemes as the upcoming Help to Buy ISA, where the Government will top up a first time buyers deposit.

Therefore, I thought I would do some research into the Huddersfield property market and share with you my findings.  Huddersfield tenants spend on average just under a third of their salary to have a roof over their head.  According to my latest monthly research, the average cost of renting a home in Huddersfield is £603 per month.  When the average annual salary of a Huddersfield worker stands at £24,465 per year, that means the average Huddersfield tenant is paying 29.5% of their salary in rent.  

I doubt there is much left to save for a deposit towards a house after that, and that my Huddersfield Property Blog reading friends is such a shame for the youngsters of Huddersfield.

You see one the reasons for rents being so high is property prices being high.  As I have mentioned before, there is a severe lack of new properties being built in Huddersfield.  It’s the classic demand vs supply scenario, where demand has increased, but the number of houses being built hasn’t increased at the same level.  Also, Huddersfield people aren’t moving home as often as they did in the 80’s and 90’s, meaning there are fewer properties on the market to buy.  If you recall, a few weeks ago I said back in Winter 2007, there were over 1,520 properties for sale in Huddersfield and since then this has steadily declined year on year, so now there are only 887 for sale in the town.

Back in Winter 2007, there were over 1,520 properties for sale in Huddersfield and since then this has steadily declined year on year, so now there are only 887 for sale in the town. 

So, the planners in Huddersfield haven’t allowed enough properties to be built in the town and existing Huddersfield homeowners are not moving home as much as they used to, thus creating a double hit on the number of properties to buy.  This is a long term thing and the continuing diminishing supply of housing has been happening for a number of decades and there simply aren’t enough properties in Huddersfield to match demand, these are the reasons houses prices in Huddersfield have remained quite buoyant, even though economically, over the last 5 years, it was one of the worst on record for the country and the Yorkshire region as a whole.

However, things might not be all doom and gloom as originally thought, as a recent Halifax Survey (their Generation Rent 2015 Survey) suggested more and more people may be long term, if not lifelong tenants. In fact, there is evidence in the report to suggest that the perception of how difficult it is to get on the housing ladder is vastly different between parents and people aged 20 to 45.  It seems from this survey that the state of the UK economy has shifted priorities quite significantly in quite a short space of time.  With fewer people able to save up the deposit required by mortgage lenders, more and more people are continuing to rent.  This delay in moving up the property ladder has driven rents across the UK up as more people were seeking rental properties.

 It is often said that more people in central Europe rent for longer or never own their own property. 

The last two census in 2001 and 2011 show that proportionally the percentage of people who own their own home in Britain is slowly reducing and, as a country, we are becoming more and more like Germany.   That isn’t a bad thing as Germany is considered to have a more successful economy, one of the main stays, often quoted, is because they have a much more flexible and mobile workforce, (which renting certainly gives) and from that, they have a higher personal income than in the UK.      

Therefore, if we are turning into a more European model and the youngsters of Huddersfield and the Country have changed their attitudes, demand for rental properties will only and can only go from strength to strength, good news for Huddersfield tenants as wages will start to rise and good news for Huddersfield landlords, especially as property values in Huddersfield are now 2.2% higher than year ago!

How EU Migration has changed the Huddersfield Property Market

The argument of migration and what it does, or doesn’t do, for the country’s economic wellbeing is something that has been hotly contested over the last few years. In my article today, I want to talk about what it has done for the Huddersfield Property market.

Before we look at Huddersfield though, let us look at some interesting figures for the country as a whole. Between 2001 and 2011, 971,144 EU citizens came to the UK to live and of those, 171,164 of them (17.68%) have bought their own home. It might surprise people that only 5.07% of EU migrants managed to secure a council house. However, 676,091 (69.62%) of them went into the private rental sector.  This increase in population from the EU has, no doubt, added great stress to the UK housing market.

Looking at the figures, the housing market as a whole is undoubtedly affected by migration but it has been the private rented housing sector, especially in those areas where migrants come together, that is affected the most.  Indeed, I have seen that many EU migrants often compete for such housing not with UK tenants but with other EU migrants. In 2001, 3.68 million rented a property from a landlord in the UK.  Ten years later in 2011, whilst EU migration added an additional 676,091 people renting a property from a landlord, there were actually an additional 4.14 million people who became tenants and were not EU migrants, but predominately British!

As a landlord, it is really important to gauge the potential demand for your rental property, especially if you are a landlord who buys property in areas popular with the Eastern European EU migrants.  To gauge the level of EU migration (and thus demand), one of the best ways to calculate the growth of migrants is to calculate the number of people who ask for a National Insurance number (which EU members are able to obtain).

Interestingly, in Kirklees, migration has fallen over the last few years. For example, in 2007 there were 2,901 migrant National Insurance Cards (NIC) issued and the year after, in 2008, 2,464 NIC cards were issued. However, in 2014, this had slipped to 2,288 NIC’s. However, if the pattern of other migrations since WW2 continues, over time there will be an increasing demand for owner occupied property, which may affect the market in certain areas of high migrant concentration. On the other hand, over time some households move into the larger housing market, reducing concentrations and pressures.

In essence, migration has affected the Huddersfield property market; it couldn’t fail to because of the additional 22,233 working age migrants that have moved into the Huddersfield area since 2005. 

However, it has not been the main influence on the market. Property values in Huddersfield today are 6.89% lower than they were in 2005. According to the Office of National Statistics, rents for tenants in Yorkshire have only grown on average by 0.95% a year since 2005 .... I would say if it wasn’t for the migrants, we would be in a far worse position when it came to the Huddersfield property market. 

This was backed up by the then Home Secretary Theresa May back in 2012 - more than a third of all new housing demand in Britain is caused by inward migration and there is evidence that without the demand caused by such immigration, house prices would be 10% lower over a 20 year period.

If you want to know more about the Huddersfield property market, then for more articles like this, please visit the Huddersfield Property Blog http://huddersfieldproperty.blogspot.co.uk/

Huddersfield Property Market Crisis as New House Building slumps by 61.19%

One of the key factors that determine the price of anything is the demand and supply of the item that is being bought and sold. When it comes to property, demand can change overnight, but it takes years and years to build new properties, thus increasing the supply.

The Conservatives have pledged to build over 1 million homes by 2020. I am of the opinion that as a country, irrespective of which party, we have not built enough homes for decades, and if the gap between the number of households forming and the number of new homes being built continues to grow, we are in danger of not being able to house our children or grand children. I believe the country is past the time for another grand statement of ambition by another Housing Minister. Surely it’s right to give normal Huddersfield families back the hope of a secure home, be that rented or owned? As a town, we need to exert pressure on our local MP Barry Sheerman, so they can make sure Westminster is held accountable, to ensure there is a comprehensive plan, with enough investment, that can actually get these homes built.

To give you an idea of the sorts of numbers we are talking about, in the Kirklees Council area in 2007, 2,660 properties were built. In 2008 that number peaked at 2,680. By 2014, that figure had dropped by a massive 61.19% to 1,040 properties built.

The outcome of too few homes being built in Huddersfield means the working people of the town are being priced out of buying their first home and renters are not getting the quality they deserve for their money. The local authority isn’t building the estates they were after the war and housing associations are having their budgets tightened year on year, meaning they have less money to spend on building new properties. I know of many Huddersfield youngsters, who are living with their parents for longer because they cannot afford to get onto the housing ladder and growing families are unable to buy the bigger homes they need.

I talk to many Huddersfield business people and they tell me they need a flexible and mobile workforce, but the high cost of moving home and lack of decent and affordable housing are barriers to attracting and retaining employees. Furthermore, building new homes is a powerful source of growth, creating jobs across the county and supporting hundreds of Huddersfield businesses. It is true that landlords have taken up the mantle and over the last 15 years have bought a large number of properties. The Government need to be thankful to all those Huddersfield landlords, who own the 12,973 rental properties in the town. Most local landlords only have a handful of rented properties (to aid their retirement), and without them, I honestly don’t know who would house all the extra people in Huddersfield!

Moving forward, those Huddersfield landlords have many pitfalls, both in the short term and medium term. For instance, were you aware that the rules of changes for new tenancies from the 1^st October 2015 (with some imposing penalties including loosing the right to require the tenant to vacate, if they are done incorrectly) or in the medium term, the planned change in the way buy to let’s are taxed?

More than ever, the days of buying any old property in Huddersfield and you would be set for life are gone. Now, it’s all about ensuring you stay the right side of the law, buying the right property (and that might mean even selling some to buy others), so you build the right portfolio for you as a landlord. One source of info on all of these issues, where you will find other articles similar to this on the Huddersfield property market, is the Huddersfield Property Blog http://huddersfieldproperty.blogspot.co.uk/ 

Huddersfield House owners desert the housing market with an 8 year low

Even though the housing market is in an upbeat state in many parts of the UK, getting on the property ladder is still challenging for many and regarded as unattainable by some.  However, that goal has become even worse recently in Huddersfield as the number of houses available to buy is at an 8 year all time low.

Back in Winter 2007, there were over 1,520 properties for sale in Huddersfield and since then this has steadily declined year on year, so now there are only 887 for sale in the town.  This continuing diminishing supply of housing has been happening over those years for a while and there simply aren’t enough properties in Huddersfield to match demand.

According to a recent report by the National Association of Estate Agents, that said, “There are now 11 house hunters fighting after every available house which isn’t sustainable.”   What that means is Huddersfield youngsters, who are looking to buy their first home, are finding themselves being squeezed out by the competition.  However, in the meantime, nobody wants to live with parents until they are in their 30’s, so that in turn creates demand for more rental properties, which means landlords have a greater demand for more rental properties so are buying more, resulting in even less smaller properties for the youngsters to buy, it’s a vicious circle.   

Talking to fellow agents, mortgage arrangers, surveyors and solicitors in the town, all of whom have extensive dealings in the Huddersfield property market like myself, most of us agree the movement in the Huddersfield market is taking place in the middle to upper market, higher up the property ladder and it’s second and third steppers pushing through the properties that are being bought and sold.

That has meant as people tend to move less in the middle to upper market, the number of the properties actually selling has drastically reduced over the last couple of years.

When we look at the individual areas of the town, it paints an interesting picture.

• HD1 - Huddersfield Town Centre, Hillhouse, Lockwood, Marsh, Paddock 12 properties sold in May 2015 (the most recent set of figures from the HM Land Registry), whilst over the Autumn months of 2014, the number of properties selling in this postcode was always between 21 and 25 per month. (Interestingly the average value of those properties was £76,620).
• HD2 - Birkby, Brackenhall, Bradley, Deighton, Fartown, Fixby, Sheepridge  29 properties sold in May 2015 (with an average value of £157,601), whilst over the Summer months of 2014, the number of properties selling in this postcode reached into the mid/late 30’s.
• HD3 - Lindley, Milnsbridge, Oakes, Outlane, Quarmby, Paddock, Salendine Nook, Scammonden, Longwood 32 properties sold in May 2015 (with an average value of £158,445), whilst over the Summer months of 2014, the number of properties selling in this postcode reached into the late 50’s.
• HD4 - Berry Brow, Crosland Moor, Farnley Tyas, Netherton, Newsome, Lowerhouses, Stocksmoor, Cowlersley  31 properties sold in May 2015 (with an average value of £ 161,040), whilst over the Winter months of 2014, the number of properties selling in this postcode remained in the late 40’s.
• HD8 - Clayton West, Denby Dale, Emley, Fenay Bridge, Kirkburton, Lepton, Scissett, Shelley, Shepley, Skelmanthorpe 48 properties sold in May 2015 (the most recent set of figures from the HM Land Registry), whilst over the Winter months of 2014, the number of properties selling in this reached into the 60’s. (Interestingly the average value of those properties was £190,340).

So what does this all mean for homeowners and landlords alike in Huddersfield?  Demand for Huddersfield property is good, especially at the lower end of the market.  However, with fewer properties coming up for sale, it means property prices are proving reasonably stable too.

You see I believe a more stable, consistent Huddersfield property market, with less people seeing property as an easy way to make a quick buck (as many did in the early 2000’s when prices were rising at nearly 20% a year so people were buying and selling every other minute), but a property market that has a steady growth of property values in Huddersfield, year on year, without the massive peaks and troughs we saw in the late 1980’s and mid/late 2000’s might just be the thing that the Huddersfield property market needs in the long term.

For more insights, comments and facts on the Huddersfield Property market please visit the Huddersfield Property Blog INSERT URL where you will find many similar articles to this.

Could your Huddersfield property save you from Pension oblivion?

If you were born in the early 1970’s or late 1960’s, if you haven’t started to think about it yet, retirement is closer than you think. In fact the number of years you have left to work is less than the number of years you have worked. The basic state pension is worth £115.95 a week for a single person in 2015/16 (or £6,029 a year) and £231.90 a week for a couple (£12,118 a year) as long as your partner has paid their stamp (although there are certain get of jail cards if they haven’t). 

As a household, could you live on just over £12k a year?

However, could the property you are living in in Huddersfield save you from poverty when you reach retirement? You see, a regular income is vital in retirement, and the bricks and mortar you own in Huddersfield could provide a way for you to finance life when you retire.

If you are in your 30’s, instead of saddling yourself with bigger and bigger mortgages, going from your first time buyer flat, to a terraced, to the semi and then the large detached house, you could instead keep your terraced or small semi, turning it into buy a buy to let property, let the rent pay the mortgage and then rely on capital growth to provide you with a lump sum when you sell the property and retire.  One of the biggest plus points of buy to let is what is known as leverage. Let me explain ... say you have a deposit of 25% and the value of the property rises by 3% a year, your gains in fact multiply to 12%.  However, if property prices drop, 'leverage' can be catastrophic, as losses will also be multiplied. Property values have dropped a number of times in the last 50 years, but they always seem to bounce back ... property must be seen as a long term investment.

Let me explain how leverage could work for you. If you had bought a Huddersfield house in Spring of 1983 for £25,000, using a 75% mortgage and 25% deposit, (meaning your deposit would be £6,250). Today, that Huddersfield property would have risen in value to £155,538, a rise of 522.2%. 

However, when you look at the growth on just your deposit, the rise is even better ... instead of 522.2%, we see a rise of 2389% (remembering that the mortgage would have been paid off).

However, buy to let is not all about capital growth and in retirement, income is more important than capital growth, as rent is the key to a steady income.

So surely the best strategy is to buy those Huddersfield properties with the high rents (when compared to the value of the property). These are called high yield properties in the buy to let world because the monthly return is so much greater. So surely they are the best in Huddersfield? Possibly, but the properties that offer these higher yields (in the order of 6% to 9% per year) tend to be in such areas as Crosland Moor in Huddersfield, historically they haven’t offered such good capital growth when compared to the town average, have a higher tendency for void periods and such properties tend to attract tenants that have a greater propensity to be high maintenance.

Therefore, if a high maintenance rental portfolio wasn’t for you, another strategy could be buy a property with relatively smaller rental returns of 4% to 5% per year (i.e. lower yields), but in a more up market area such as Lindley. Properties such as these tend to suffer from less void periods (i.e. when there is no tenant in the property paying you rent) and they historically have had better long term capital growth when compared to the town average.

Every landlord is different and every property is different. All I suggest to you is do your homework.

As regular readers will know, I am happy to share my knowledge and experience of the Huddersfield property market, high yields, high capital growth, what to buy, what not to buy and where to buy in the Huddersfield Property market can always be found on the Huddersfield Property Blog http://huddersfieldproperty.blogspot.co.uk/