UK % Monthly House Price Grown - May 2016

10% slump in Quarmby Property Transactions

In this post credit crunch world of sub terrain low interest and annuity rates so low a limbo dancer would smart, the growth of buy to let since 2009 has been phenomenal. So much so, there has been an evolution in purchase of property in the UK from that of just buying the roof over one’s head to that of a buy to let investment where it is seen as a standalone financial asset to fund current and future (ie pensions) investment. So recently, a few days before the release of latest Land Registry data of property transactions, quite a few market commenters were anticipating a huge increase in the number of properties sold in January as the 1^st of April 2016 stamp duty deadline got closer.   

Looking at the most recent set of data from The Land Registry, it seems there has been a rise in the number of completed property sales in the Kirklees Metropolitan Borough Council area. Year on year, completed property sales in January (the latest set of data released) rose by 29.65% to 376 compared with 290 in January 2015. Nationally, the number of completed house sales fell by 5% in January 2016 compared with January 2015. Some might say this bucks the market trend that there was a rush by Huddersfield landlords to buy ‘buy to let’ property ahead of the 1^st April 2016 deadline …

But looking even closer to home, in the HD3 postcode in January 2016, 27 properties changed hands, and 30 properties did so in January 2015. It’s even more interesting when you look at the average price paid, in January 2016, it was £156,109 yet in January 2015, the average price paid was £140,188.

Is the buy to let dream over for Huddersfield landlords?

.. but as ever my Huddersfield Property Blog readers, the devil is in the detail. The 3% stamp duty surcharge for buy to let landlords was announced in the Autumn Statement on the 25^th November 2015. Anyone who has bought a property knows from their offer being accepted to receiving the keys and monies paid is a long drawn out affair, taking on average 8 to 12 weeks, as the Land Registry only get notified upon completion of the sale. We also need to factor in that Solicitors seem to have the last two weeks of December off anyway.

So if there was a rush in the last few days of November/early December in the Huddersfield property market, we would only see the results of that in the February figures (released in June) and more probably March’s (released in July).

So why all the doom and gloom? Simple .. bad news sells newspapers and gets the headlines. Let’s be honest, the headline to this article is designed to be eye catching. However, when we look at both the bigger and smaller picture; nationally, property values dropped (month on month) by 0.5%; in the Yorkshire and Humber region they dropped 2.6%, whilst in Kirkless they dropped by 0.3%. The year on year figures tell a completely different story to that.

It just goes to show you should look deeper into something before making a judgment! For more thought provoking commentary on the Huddersfield property market – please visit the Huddersfield Property Blog http://huddersfieldproperty.blogspot.co.uk/

5,365 Kirklees Properties lie empty– An injustice for the 9,160 people on the Kirklees Council House Waiting List?

 Easy problems should have easy solutions  - shouldn’t they?

Problems like Huddersfield’s housing crisis, where we have a rudimentary numerical problem of too few homes for too many people ... the answer is clearly to build more property in Huddersfield - but that, unfortunately for those desperately seeking to purchase or let a property, takes a lot of time and huge amounts of money. So what of other solutions?

Whilst at a dinner with friends recently, the subject of property was mentioned (as I am sure it does at most dinner parties up and down the country). Normally someone always mentions empty properties as the solution to the problem. On the face of it, it seems so obvious. Now quite interestingly, I had recently done some research on this topic, which I want to share with you (as I did with those at the dinner table).

The most recent set of figures from 2015 state there are 5,365 empty homes in the Kirklees Council area. So it begs the question ... why not put them back onto the system and help ease the Huddersfield housing crisis? Whilst they stand empty, 9,160 Kirklees households (not people – households) are on the Council House Waiting List for council houses. Surely, we can undoubtedly all agree that property left empty for years and years isn’t morally right with the burgeoning Council House Waiting List, not to also mention the issue of homelessness.

But a different story emerges when you look deeper into the numbers. Of those 5,365 homes lying empty, only 2,217 properties were empty for more than six months. The local authority has to report a property being empty, even if it’s for a week. So many of the Huddersfield properties are either awaiting new homeowners or, in the case of rental properties, new tenants. Also most certainly, some properties are being refurbished and renovated, while others properties have homeowners who are anxious to sell but cannot find a buyer.

And this is where its gets even more interesting. Of the 2,217 long-term vacant properties (those empty more than six months), 258 belong to the council. However, before we all go Council-bashing, anecdotal evidence suggests these empty council houses are habitually in need of so much restoration that it’s not worth the Council’s while to do and are in the roughest parts of the council estates, they are properties that even the Council find difficult to fill.

The fact is that the number of genuinely long term empty properties is only a tiny drop in the ocean of the 173,525 properties in the area covered by Kirklees Council and, even if every one of those empty homes were filled with happy cheerful tenants tomorrow, it would only meet a small fraction of Huddersfield housing needs.

So what does this mean for all the homeowners and landlords of Huddersfield? Well it means with demand being so high, especially for rental properties, the certainty of the rental market growing is an inevitability because young people cannot buy and councils don’t have the money to build new council houses. This in turn bolsters property prices as landlords continue to buy at the lower end of the market (starter homes, etc), which in turn sustains the rest of the market as those sellers move up the property ladder, releasing others in turn to buy on again.

These are interesting times in the Huddersfield property market!

£3,200 boost to Huddersfield First time buyers

There’s a whole legion of wannabe Huddersfield first-time buyers keen to get on the property ladder and they now have a 3% price advantage over the previously quicker responding army of Huddersfield landlords with cash at the ready. Since the start of April, buy to let landlords have had to pay an additional 3% stamp duty so whilst demand from some Huddersfield buy to let landlords has dropped away, in the interim, it offers Huddersfield first time buyers (FTB’s) a chance to fill the vacuum with less competition from cash rich landlords (over two thirds of BTL properties were purchased without a mortgage in the last 7 years) who could bid more and complete quicker.

Looking at the average value of a terraced house in Huddersfield currently standing at £109,900, that means if our Huddersfield FTB went up against a Huddersfield landlord, the landlord would have to pay an additional £3,297 in stamp duty. Early antidotal evidence from fellow property professionals in the town is suggesting landlords are reducing their offers slightly on Huddersfield properties to reflect the extra stamp duty.  

Whilst on the face of it, it appears landlords are being punished by No.11 Downing Street, I actually believe this increase in stamp duty for landlords is a good thing for the Huddersfield property market as a whole.

Since 2011/12, the Huddersfield property market has performed very well indeed. Over the last 12 months, £377,762,304 has been spent buying 2,346 Huddersfield properties.  Figures from the Land Registry have just been released and month on month in our council area, property values are 0.3% lower, yet 1.7% higher year on year. These figures are nowhere near the heady days of 2004 (April to be exact), when Huddersfield property prices rose by 29.6% in 12 months.

So as property values in Huddersfield (and the UK as whole) start to stablise and come back to some kind of balance, I am beginning to see savvy landlords view the Huddersfield property market in a different light. Even with the Spring rush, gone are the days where you could make limitless money on anything that had a door, a few windows and roof. This stamp duty change has made more and more landlords, after reading the Huddersfield Property Market Blog http://huddersfieldproperty.blogspot.co.uk/ take advice on what or not to buy and what to pay, meaning Huddersfield landlords are being more calculated with their Huddersfield BTL purchases. I am also seeing a variance between relatively brisk current price momentum and softer expectations in terms of property value growth in Huddersfield, this in part reflects amplified uncertainty about the short term economic outlook (eg Brexit, Issues in the Far East etc).

Now I know a lot of Huddersfield landlords brought forward their BTL purchases to beat the stamp duty deadline. However, it is probable that hunger from Huddersfield investors will return for the right Huddersfield property later in the year, especially if it’s at the right price and offers a decent yield. However, in the meantime, Huddersfield FTB’s could and should, in the short term, make hay whilst the sun shines plug the gap and grab a bargain!

Brexit and Huddersfield Property market – 12% more properties on the market

 April Fools Day was no joke for some landlords, as they rushed their buy to let property purchases throughout late March to beat the extra 3% stamp duty George Osborne imposed on buy to let properties after the 31^st March 2016. Because some investors brought forward their 2016 property purchases to save the extra tax, speaking to fellow property professionals in Huddersfield, all of us have noticed, since the clocks went forward, demand to buy in April and May from these landlords has eased.

Then we have the Brexit issue, which is also having a tempering effect on the Huddersfield property market – although if you recall I wrote about this a few weeks ago, and whilst an exit will have an effect – it won’t be the end of the world scenario some commentators are suggesting. In another article I wrote previously, I spoke of the growth rate of Huddersfield property values, and whilst the rate of growth is slowing, Huddersfield property values are still 1.3% higher year on year, albeit the growth rate month on month has started to moderate when compared to the heady days of month on month rises of 2014 and 2015. Interestingly though, a very recent members survey of the Royal Institution of Chartered Surveyors states that only 17% of members believed property values would increase over the next Quarter compared to 44% at the end of 2015.

All this had led to increase in the number of properties for sale. For example in the HD2 postcode, which mainly comprises of Birkby, Brackenhall, Bradley, Deighton, Fartown, Fixby and Sheepridge, there were 224 properties for sale in the postcode in December (of which 22 came on to the market for the first time). In January, February and March, 142 properties came onto the market in the postcode district (or an average of 47 per month), meaning by end of the first Quarter, there were 251 properties available for homeowners and landlords alike to buy in HD2 (i.e. a rise of 12% more properties for sale). These figures are mirrored in neighbouring postcodes throughout the Huddersfield area.

Nevertheless, I believe this easing of the Huddersfield property market is a good thing, as investment landlords wont have to pay top dollar to secure a property because of the lower competition. On the face of it, this easing should be bad news for the 107,657 Huddersfield homeowners, but nothing could be further from the truth. The majority of homeowners that move, move up market, (i.e. from a flat to terrace/town house, then a semi and then detached), so whilst last year you would have achieved a top dollar figure for your property, you would would have had to have paid an even higher top dollar to secure the one you wanted to buy. The Swings and Roundabouts of the Huddersfield Property Market!

However, all the signals suggest that whatever the aftermath of the approaching EU referendum, in the long term, the disparity between demand for Huddersfield property and the supply (i.e. the number of actual properties) will still exercise a sturdy and definitive influence on the Huddersfield property market. It would surprise me that if by 2021, whichever way we vote in late June, assuming we don’t have another credit crunch or issues like a major world conflict, property prices will be between 15% to 18% higher than they are today.

Huddersfield Property Market in Crisis : Who is to blame?

‘An Englishman’s Home is his Castle’ is the phrase that was coined in Victorian times as the UK has a reputation for being a country of home owners  .. but the truth could be further from the point, because in a league of the top 46 economic nations of the world, where owning your property is permissible, the UK is only ranked no.37.

As I mentioned a couple of weeks ago, at the end of the First World War, 77% of people rented their home (the vast majority renting from a private landlord as Council Housing was still very much in its infancy). Homeownership rose very slowly in the 1920’s and started to grow as the economy grew after the Great Depression. However, after the Luftwaffe had flattened huge swathes of housing in the early 40’s, the priority was to get people into clean and decent accommodation .. so Local Authority’s (Councils) took up the baton and they built large council estates in the 1950’s and 1960’s.

As the UK economy got back on its feet in the middle part of the 20^th Century and wages rose, people decided they wanted to own their own home instead of renting. Throughout the post war decades, it became easier to secure a mortgage. Interestingly, by 1977, 61.6% of 30 to 34 year olds were owner occupiers with a mortgage compared to 8.7% of 30 to 34 year olds being in private rented accommodation (the remaining either being in council housing or living with friends or family). Ten years later, in 1987, we saw some significant growth in homeownership, as 68.2% of 30 to 34 year olds had a mortgage and only 4.6% of people privately rented. A decade later and there wasn’t much change as, in 1997, the homeownership figure was 68.3% but private renting had jumped to 12.1% in the same 30 to 34 year old age group.

Move on another ten years to the 2007 figures, and this showed a slight drop in homeownership to 65.8% but renting had continued to increase to 18.7% (in the 30 to 34 year old age group). The latest set of figures is for 2014, and only 47.2% of 30 to 34 year olds had a mortgage and an eye watering 33.4% of 30 to 34 year olds privately rent.

When we look at the Huddersfield figures of homeownership, looking back to 1991, 58.94% of Huddersfield households were owned by the homeowner, whilst 7.95% of Huddersfield households were privately rented, whilst the 2011 census showed home ownership in Huddersfield had dropped to 58.22% and private rented had increased to 19.57%. Much of the recent rise in the occurrence of private renting in Huddersfield since the turn of the Millennium is not because property has become more expensive, but the fact these 30 somethings haven’t got a council house to move into (because they were all sold off) – so they have to rent. The selling of council housing in the 1980’s (a subject I have talked about in a previous article in the Huddersfield Property Market Blog) artificially grew homeownership in the 1980’s, but as these people have got older, the younger generation didn’t have the same opportunity to buy their council house in the 1990’s, 2000’s or 2010’s. That is why, unless the council start building council houses by the acre, and hundreds of acres, private renting will continue to grow in Huddersfield.

So if you want blame anyone .. blame the Grocer’s daughter from Grantham – Mrs T …. but before you do – do remember in the 1970s, the UK was called the "sick man of Europe" by critics of the UK government, because of industrial strife and poor economic performance compared to other European countries culminating with the Winter of Discontent of 1978/9 and if it hadn’t been for her we wouldn’t be where we are today.

Rents in Huddersfield rise by 1.3% in the last year

I was reading the Sunday Papers, as is my want and, when reading the financial pages, it was announced UK inflation had increased to its highest level in a year. Inflation, as calculated by the Government’s Consumer Prices Index, rose by 0.3% over the last 12 months.  The report said it had risen to the those ‘heady’ levels by smaller falls in supermarket and petrol prices than a year ago. If you recall, in early 2015, we had deflation where prices were dropping!

So what does this mean for the Huddersfield property market ... especially the tenants?

Back in November, the Office of National Statistics stated average wages only rose by 1.8% year on year, so when adjusted for inflation, Huddersfield people are 1.5% better off in ‘real’ terms.   Great news for homeowners, as their mortgage rates are at their lowest ever levels and their spending power is increasing, but the news is not so good for tenants.

The average rent that Huddersfield tenants have to pay for their Private Rental Properties in Huddersfield (i.e. not housing association or council tenants) rose by 1.3% throughout 2015, eating into most of the growth.  2015 wasn’t a one off either.  In 2014, rents in Huddersfield rose by 0.4% (where salaries only rose by only 0.2%) However, it’s not all bad news for Huddersfield tenants, because in 2013 rents rose by 0.6%, (but salaries rose by 2.2%).

… and it must be noted that the private rents Huddersfield tenants have had to pay for Huddersfield property since 2005 are only 18.6% higher, not even keeping up with inflation, which over the same time frame, rose at 27.8% (although salaries were only 22.3% higher over the same time period)

More and more, talking to 20 and 30 somethings who rent – it’s a choice.  Gone are the days where owning your own property was a guaranteed path to wealth, affluence and prosperity.    I know keep mentioning Europe, but some of the highest levels of home ownership are in Romania at 96.1%, Hungary at 88.2% and Latvia at 80.9% (none of them European economic dynamos) and even West European countries like Spain at 78.8% and Greece at 74% (and we know both of those countries are on their knees, riddled with national debt and massive youth unemployment).

At the other end of the scale, whilst we in the UK stand at 64.8% homeownership, in Europe’s powerhouses, only 52.5% of Germans own a home and only 44% of Swiss people are homeowners.  Looks like eating chocolate, sauerkraut, renting and good economic performance go hand in hand.  Yet, joking aside, home ownership has not always been the rule in the UK.   In 1918, only 23% of people were homeowners, with no council housing, meaning in fact, 77% were tenants.

Tenants have choice, flexibility to move, they don’t have massive bills when the boiler blows up, it’s a choice.  Huddersfield rents are growing, but not as much as incomes. To buy or not to buy is an enormously difficult decision.   For while buying a Huddersfield home is a dream for the majority of the 20 and 30 something’s of Huddersfield have, it might not leave them better off in the long run and it isn’t necessarily the best option for everyone.  That is why, demand for renting is only going in one direction – upwards.