Post Brexit - Huddersfield Property Prices set to drop £13,700 in the next 12 months?

Even the most sane person in Britain has to admit the Brexit vote will, in one shape or another, affect the UK Property market. Excluding central London which is another world, most commentators are saying prices will be affected by around 10%. So looking at the commentators’ thoughts in more detail, property values in Huddersfield will be 10% lower than they would have been if we hadn’t voted to leave the EU.

As the average value of a property in the Kirklees Council area is £136,700, this means property values are set to drop for the average Huddersfield property by £13,670 … batten down the hatches .. soup kitchens and mega recession here we come ..it’s going to get rough.

.. but before we all go into panic mode in Huddersfield .. the devil is always in the detail

Look at the phrase again, and I have highlighted the relevant part “Property values in Huddersfield will be 10% lower than they would have been if we hadn’t voted to leave the EU”

Property values today, according to the Land Registry are 5.3% higher than a year ago in the Kirklees Council area. The 12 months before that they rose by 4.29% and the 12 months before that, they rose by 4.2%. If we hadn’t voted to leave, I believe on these figures, we could have safely assumed Huddersfield House prices would have been 4.5% higher by the Summer of 2017.

… and that’s the point, we won’t see a house price crash in Huddersfield, it’s just that house prices in a years time will be 5.5% lower than they are now (ie 4.5% less the 10% lower figure because of Brexit). Let’s look at the historic figures and how that compares to today’s figures for the Kirklees Council area and Huddersfield as a whole.

Average Value of a property 20 years ago                              £ 43,700

Average Value of a property 10 years ago                              £129,200

Average Value of a property 2 years ago                                £124,500

Average Value of a property 1 year ago                                 £129,900

Average Value of a property today                                         £136,700

Projected Value of a property in 12 months’ time             £130,550

Therefore, I believe the average value of a Huddersfield property will be £6,150 lower in 12 months’ time than today.

That’s not to say Huddersfield property prices might not dip slightly in the run up to Christmas (in fact they always have done just about every year since the year 2000 and most of those were boom years) .. but in 12 months time this is my considered opinion of where Huddersfield property values will be.. and looking at the historic prices, even if I (and many other property market commentators) are wrong and they drop 10% from TODAY’S figure .. in the whole scheme of things, we have been through a Credit Crunch, Black Monday and 15% interest rates over the last 20 to 30 years .. and still Huddersfield house prices have always bounced back.

Whilst the UK's vote for Brexit has created an uncertainty in the Huddersfield housing market, there is no need to panic and prospective buyers should merely use common sense about their purchases. I always say to people to be prudent and if you are taking out a mortgage, at some stage during the life of that mortgage, circumstances will be difficult. We won’t have a 2008 Credit crunch fire sale of properties because after the Mortgage Market Review which took place in the Spring of 2013, mortgage borrowers are not as highly leveraged this time around.  As a result of this, with any luck there will not be too many distressed sales, which cause widespread price reductions.

.. and Huddersfield landlords? They have recently been thrashed by Osborne’s tax changes, but yields could rise if Huddersfield house prices fall/stablise and rents grow, and this might also make it easier to obtain mortgages, as the income would cover more of the interest cost. If prices were to level or come down that could help Huddersfield landlords add to their portfolio, as rental demand for Huddersfield property is expected to stay strong as more people find it more and more difficult to obtain mortgages.

For more thoughts on the Huddersfield Property market .. visit the Huddersfield Property Blog https://huddersfieldproperty.blogspot.co.uk/

88.8% of Huddersfield Homeowners are over 35 - The affect of their Brexit vote on the Huddersfield Property Market

Well it’s been four weeks since the Referendum vote and we have had a chance to reflect on the momentous decision that the British public took. Many of you read the article I wrote on the morning of the results. I had gone to bed the night before with a draft of my Remain article nicely all but finished, to be presented, at just after 5am, with the declaration by the BBC saying we were leaving the EU. I don’t think any of us were expecting that.

If you want to read a copy of that original Post Brexit blog post, please visit my blog https://huddersfieldproperty.blogspot.co.uk/ and scroll back to late June to find it. In this article I would like to take my thoughts on from that initial article and now start to see the clearer picture as the dust settles on the UK, but more importantly, the Huddersfield Property Market.

In case you weren’t aware, the residents of the Kirklees Council area were not against the National mood and voted as follows ..

Kirklees Council           Remain Votes              98,485             (45.3% of the vote)

Kirklees Council           Leave Votes                 118,755           (54.7% of the vote)

Kirklees Council Turnout         70.7%

I have been reading there is some evidence to indicate younger voters were vastly more likely to vote Remain than their parents and grandparents and, whilst the polling industry's techniques may have been widely criticised, following them getting both the 2010 General Election and the recent Brexit vote wrong, anecdotally, many surveys seem to suggest there was a relationship between age and likelihood to support leaving the EU.

Interestingly, the average age of a Huddersfield resident is 38.1 years old, which is below the national average of 39.3.  What I do know is that putting aside whether you were a remain or leave voter, the vote to leave has, and will, create uncertainty and the last thing the British property market needs is uncertainty (because as with previous episodes of uncertainty in the UK economy – UK house prices have tended to go down).

Interestingly, when we look at the Homeownership rates in the Kirklees Council area, of the 116,969 properties that are owned in the Kirklees Council area (Owned being owned outright, owned with a mortgage or shared ownership), the age range paints a noteworthy picture.

Age 16 to 34 homeowners    13,125    or      11.2%  (Nationally 9.6%)

Age 35 to 49 homeowners    36,786    or      31.4%  (Nationally 29.2%)

Age 50 to 64 homeowners    35,672    or      30.5%  (Nationally 30.7%)

Aged 65+ homeowners          31,386    or      26.9%  (Nationally 30.5%)

So, looking at these figures, and the high proportion of older homeowners, you might think all the Kirklees Council area homeowners would vote Remain to keep house prices stable and younger people would vote out so house prices come down- so they could afford to buy?

But there's a risk in oversimplifying this. The sample of the polling firms are in the thousands whilst the country voted in its millions. Other demographic influences have been at play in the way people voted, as early evidence is starting to suggest that class, level of education, the levels of immigration and ethnic diversity had an influence on the way the various parts of the UK voted.

So what I suggest is this – Don’t assume everyone over the age of 50 voted ‘Leave’ and don’t assume most 20 somethings backed ‘Remain’; because many didn't!

.. and the Huddersfield Property Market – well read my original article in the Huddersfield Property Blog and you can make your own mind up.

Population in the Huddersfield area set to rise to 486,400 by 2036

Huddersfield faces a predicament. The population is growing and the provision of new housing isn’t keeping up. With the average age of a Huddersfield person being 38.1 years (compared to the Yorkshire and Humber average of 39.4 years old and the national average of 39.4 years of age), the population of Huddersfield is growing at an alarming rate. This is due to an amalgamation of longer life expectancy, a fairly high birth rate (compared to previous decades) and high net immigration, all of which contribute to housing shortages and burgeoning house prices.

My colleagues and myself work closely with Durham University and they have kindly produced some statistics specifically for the Kirklees Metropolitan Borough Council area. Known as the UK’s leading authority for such statistics, their population projections make some startling reading…

For the Kirklees Metropolitan Borough Council area ... these are the statistics and future forecasts

2016 population           437,122

2021 population           451,142

2026 population           464,048

2031 population           475,860

2036 population           486,424

The normal ratio of people to property is 2 to 1 in the UK, which therefore means...

We need just under 25,000 additional new properties to be built

in the Kirklees Metropolitan Borough Council area over the next 20 years.

Whilst focusing on population growth does not tackle the housing crisis in the short term in Huddersfield, it has a fundamental role to play in long-term housing development and strategy in the town. The rise of Huddersfield property values over the last six years since the credit crunch are primarily a result of a lack of properties coming onto the market, a lack of new properties being built in the town and rising demand (especially from landlords looking to buy property to rent them out to the growing number of people wanting to live in Huddersfield but can’t buy or rent from the Council).

Although many are talking about the need to improve supply (i.e. the building of new properties), the issue of accumulative demand from population growth is often overlooked. Nationally, the proportion of 25-34 year olds who own their own home has dropped dramatically from 66.7% in 1987 to 43.8% in 2014, whilst 78.2% of over 65s own their own home. Longer life expectancies mean houses remain in the same hands for longer.

The swift population growth over the last thirty years provides more competition for the young than for mature population.  It might surprise some people that 98% of all the land in the UK is either industrial, commercial or agricultural, with only two percent being used for housing, which means one could propose expanding supply to meet a expanding population by building on green belt – that most Politian’s haven’t got the stomach to tackle, especially in the Tory’ strongholds of the South of England, where the demand is the greatest. People mention brownfield sites, but recent research suggests there aren’t as many sites to build on, especially in Huddersfield that could accommodate 25,000 properties in the next 20 years.

In the short to medium term, demand for a roof over of one’s head will continue to grow in Huddersfield (and the country as a whole). In the short term, that demand can only be met from the private rental sector (which is good news for homeowners and landlords alike as that keeps house prices higher).

In the long term though, local and national Government and the UK population as a whole, need to realise these additional millions of people over the next 20 years need to live somewhere. Only once this issue starts to get addressed, in terms of extra properties being built in a sustainable and environmentally friendly way, can we all help create a socially ecological prosperous future for everyone. For more thoughts on the Huddersfield Property market, please visit the Huddersfield Property Market Blog https://huddersfieldproperty.blogspot.co.uk/

175 days to find a buyer for your Huddersfield Property

I had a homeowner from Bradley email me the other day. She said she had been following my blog (the Huddersfield Property Market Blog) for a while and wanted to pick my brain on when is the best time of the year to sell a property. Trying to calculate the best time to put your Huddersfield property on the market can often seem something akin to witchcraft and, whilst I would agree that there are particular times of the year that can prove more productive than others, there are plenty of factors that need to be taken into consideration.

Even if you are putting your property on the market, you don’t know how long it will take to find a buyer - no crystal ball to help with that one. At the moment, the latest set of figures for all 30 estate agents in Huddersfield, show the average length of time it takes to find a buyer for any Huddersfield property is as follows ..

Detached                    171 days

Semi                            165 days

Terraced                     189 days

Flat                              166 days

Overall average          175 days

If we roll the clock back to January 2016, the overall average time it took to find a buyer (again using data from all of the 30 Huddersfield Estate Agents) was 226 days.

So, on the face of it, things have vastly improved over the last six months or so. Well, when I looked at the data going back to 2009, and every Spring since then, the average length of time it takes to sell a property drops between January and the Summer months, for it to rise on the run up to Christmas. For example ..

Winter 2009 - 263 days           Summer 2009  - 252 days

and in more recent times …

Winter 2013 - 279 days           Summer 2013  - 239 days

Winter 2014 - 243 days           Summer 2014  - 231 days

Winter 2015 - 231 days           Summer 2015  - 214 days

           

Coming back to the present, even if you placed your property on the market today in Huddersfield, if it takes you on average twenty five weeks to find a buyer, then you can expect solicitors and the chain to take an additional eight and twelve weeks after that, before you move. It comes down to personal choice as to when you place your property on the market. Children often affect the decision. On one side you might delay putting that for sale board in your front garden so you can move in the summer school holidays, but on the other side, you might want to move sooner to be in the catchment area of a preferred school, in plenty of time for the next academic year?

There are times of the year when it's better to sell, and times when waiting a little longer can pay off in the long run. In a nutshell, I would say this is the way of the seasons ..

WHEN THE MARKET?

Spring: Customarily there are more house-buyers as the Daffodils show themselves

Summer: Sellers may miss out on house-buyers being on holiday

Autumn: The enthusiasm for buying homes returns

Winter: Interest diminishes as festive period looms 

What this means to buyers and landlord investors is that they often pick up a bargain in later months of the year, as there is less competition from owner occupiers. So, whilst there are better months to achieve a quicker sale, the only piece of advice I can give to every home  owner and landlord in Huddersfield, is do the right thing for yourself, do your homework and buy (and sell) with both your head as well as your heart

For more thoughts on the Huddersfield Property Market – visit the Huddersfield Property Market Blog 

 https://huddersfieldproperty.blogspot.co.uk/ 

17.41M BRITISH VOTERS VOTED TO LEAVE THE EU – WHAT NOW FOR THE 4.3M BRITISH LANDLORDS AND 16.78M HOMEOWNERS

The Chancellor in the campaign suggested property prices would drop by 18%. Using Treasury estimates, their method of calculating this was tenuous at best, but focused around the abrupt and hasty increase in UK interest rates, which in turn would raise the cost of mortgages, and therefore lower demand for property, causing a drop in property prices.… and I would say, yes .. that will probably happen.

British Property Values 

British property values will probably drop in the coming 12 to 18 months – but by 18% – I am sorry I find that a little pessimistic and believe that figure was rhetoric to get homeowners and landlords to vote in a particular way. But the UK property market is quite a monster.

Since the last In/Out EU Referendum in June 1975, property values in Britiain have risen by 1750.93%

(That isn’t a typo) and whilst property prices did drop nationally by 18.7% between the peak of 2007 and bottom of the market in 2009, when one compares property values today in the country, compared to that all-time high of 2007, (the period before the financial crisis of the Credit Crunch of 2008/9) .. they are still up 10.14% higher.

Another Credit Crunch? 

And so, notwithstanding the Credit Crunch, the worst global economic outlook since the 1930s and the recession it brought us, a matter of a few years later, the Government were panicking in 2012/3/4 that the housing market was a runaway train.

Now the same Credit Crunch doom-mongers and Sooth-Sayers that predicted soup kitchens in 2008/9 are predicting Brexit meltdown. Bad news sells newspapers. Stock markets may rise, stock markets may fall, yet the British public continued to buy property in 2009/10 and beyond. Aspiring first time buyers and buy to let landlords dusted themselves down, took a deep breath and carried on buying… because us Brit’s love our Bricks and Mortar .. we need a roof over our head.

However, as mentioned previously, if the value of the pound drops, in the past UK Interest Rates have risen to reverse that drop. However, whilst a cheaper pound will make your pint of Sangria a little more expensive on your Spanish holiday this year and make your brand new BMW pricer .. it will make British export cheaper! Which is great for the economy.

Interest rates 

… and what of interest rates? Since 2009, interest rates have been at 0.5% and lots of people have become accustomed to those sorts of levels. So what if interest rates rise .. end of the world? Interest rates in the 1986/88 property boom were on average 9.25%, the 1990’s they were on average around 6.5% and uber-boom years (when UK property values were rising by 20% a year for three or four straight years across the UK) .. 4.5%. Many of you reading this who are in their 50’s and older will remember interest rates at 15%.

But I suspect interest rates won’t rise that much anyway, as Mark Carney (Chief of the Bank Of England) knows, raising interest rates causes deflation – which is the last thing the British economy needs at the moment. In fact they have been printing money (aka Quantitative Easing) for the last few years (which causes inflation) to the tune of £375bn a month. A bit of inflation because the pound has slipped on the money markets (not too much mind you) might be a good thing?

.. because whilst property values might drop in the country, they will bounce back. It’s only a paper loss.. because it only becomes real if you sell. And if you have to sell, again as most people move up market when they sell, whilst your property might have dropped by 5% or 10%, the one you want to buy would have dropped by the same 5% to 10% .. and here is the best part – (and work your sums out) you would actually be better off because the more expensive property you would be purchasing would have come down in value (in actual pound notes) than the one you are selling.

The British landlords of the 4.3m British buy to let properties have nothing to fear neither, nor do the 10.11m tenants living in their properties.

Buy to let is a long term investment. I think there might even be some buy to let bargains in the coming months as some people, irrespective of evidence, panic. Even if we pull up the drawbridge at Dover and immigration stopped today, the British population will still increase at a rate that will exceed the current property building level. Britain is building 139,600 properties a year, but needs according to the eminent ‘Barker Review of Housing Supply Report’, the country needs to build about 250,000 properties a year to even stand still, and as the the birth rate is increasing, the population is living longer and just under a quarter of all UK households now are occupied by a single person demand is only going up whilst supply is stifled. Greater demand than supply equals higher prices. That is definitely a fact.

So, what will happen next? 

Well, there are many challenges ahead. The country has spoken and we are now in unchartered territory – but we have been through a couple of World Wars, an Oil Crisis, Black Monday, Black Wednesday, 15% interest rates and a Credit Crunch … and we survived!

And the value of British property? It might have a short term wobble… but don’t panic because in the long term -it’s safe as houses anyway.

Just my thoughts

The Huddersfield Property Market and The Euro 2016 Football Tournament

With the Referendum on EU membership our households can concentrate on something European that doesn’t involve party political broadcasts or politician’s treating us all like children – the Euro 2016 Football Tournament. Huddersfield is home to all different backgrounds and nationalities so if you're not lucky enough to be jetting off to France for the UEFA Euro 2016 football tournament, have no fear! For a bit of fun (although there is a serious side to this – you know there would be with me!) I have taken a look at which European people live in Huddersfield so I know who to soak up the best atmosphere with!

During my research some interesting numbers appear. Going into the Euro 2016 tournament, France were 3/1 favourite’s, then Germany 7/2, third Spain 11/2, then England 9/1, Italy 16/1, Poland 50/1, Romania and Wales at 100/1, Ireland at 150/1 and Northern Ireland 500/1 (although Leicester were 5000/1 at the start of last season).

Of the 95,296 residents of the Huddersfield Constituency for Westminster, of the Home Nations going into the competition, 77,571 of them are from England, 427 from Wales, 384 from Northern Ireland and 936 from Ireland, although I do feel sorry for the 1,103 Scots who didn’t get into the finals. Now interestingly, looking at the Mainland Europeans residents in the Huddersfield Constituency, it might not surprise you that they make up 3.04% of the population as a whole in the Westminster area.

However, even more fascinating, of those 3.04% European’s residents, 0.94% are from Western Europe because EU residents from Eastern Europe - i.e. the Accession Countries to the EU between 2003 to 2007 (Czech Republic, Estonia, Latvia, Lithuania, Hungary, Poland, Slovakia, Slovenia, Bulgaria and Romania) - only make up 2.1% of the population of the Huddersfield Constituency.

Broken down into the relevant football teams, there are in the Huddersfield Constituency …  

108 French people

308 Germans

203 Italians

48 Spanish

1,444 Poles

55 Romanians

… I feel sorry for the Spanish and Romanian football supporters in Huddersfield!

But what does this have to do with the Huddersfield property market? Quite a lot in fact. Many of these European people were economic migrants, especially those from Eastern Europe. A lot of people’s concerns over migration are exaggerated as this EU migration has acted to fill gaps in skills and labour supply during growth periods of the mid 2000’s and subsequently over the last five years in Huddersfield, EU migrants have done little to displace native workers but do the jobs us Brits don’t often want to do. There is no preferential treatment for council housing in Huddersfield, so EU migrants have in fact increased demand for privately rented accommodation in Huddersfield. 
This has meant, as demand for housing in Huddersfield has remained strong, Huddersfield landlords have continued to buy properties to rent out to keep up with this demand. Therefore, the value of every homeowner’s property in Huddersfield has been kept high because of the demand from these Huddersfield landlords buying starter homes to rent out, releasing existing homeowners to go up the property ladder – benefiting everyone in the chain.
However, rents have remained relatively subdued, in Huddersfield rents are only 18.6% higher than they were in 2005, not bad when you consider we have had 38.52% inflation in the UK economy as a whole over the same 11 years.
EU migration has meant existing homeowners, landlords and the economy as a whole in Huddersfield (and the UK) have benefitted from better economic conditions, property prices not slumping whilst rents have been kept in check by wage inflation. Now I wonder who will win the footy? Back to the TV!

For more thoughts on the Huddersfield property market like this – visit the Huddersfield Property Blog https://huddersfieldproperty.blogspot.co.uk/

115% increase in Property Values in Huddersfield since the Millennium

Huddersfield house prices since the Millennium have risen by 115.69%, whilst average salaries in Huddersfield have only grown by 51.27% over the same time frame. This has served to push homeownership further out of reach for many Huddersfield people as they have to battle against raising considerable deposits and meet sterner lending criteria, as a result of new mortgage regulations introduced in 2014/5.  The private rental market in Huddersfield has grown throughout the last twenty years with buy-to-let investors purchasing a high proportion of newly built residential properties that were built and designed for the owner occupier sales markets.  For example, in the Huddersfield Constituency, roll the clock back 20 years and there were 36,985 properties in the Constituency, whilst the most recent set of figures show there are 40,502 properties - a growth of 3,517 properties.

However, anecdotal evidence suggests that a large majority of those 3,517 were bought by Huddersfield buy-to-let landlords, as over the same 20-year time frame, the number of rental properties has grown from 2,942 to 7,926 in the Constituency - a rise of 4,984 properties.

Nevertheless, some say this historic growth of the Huddersfield rental market might start to change with the new tax rules for landlords introduced by Mr. Osborne over the last seven or eight months. Yet the numbers tell another story. Across the board, mortgage borrowing climbed to a 9 year zenith in March this year as the British property markets traditional Easter rush corresponded with landlords hurrying to beat George Osborne’s new stamp duty changes – buy-to-let landlords borrowed £7.1bn in March 2016 (the latest set of figures released) which was 163% up on the £2.7bn borrowed in the previous March.

You see, from my point of view, I don’t think things will get worse in the buy-to-let market in Huddersfield and these are the reasons why I believe that:

Firstly, what else are Huddersfield landlords going to invest in if it isn’t property - the stock market? Since the Millennium, the stock market has risen by an unimpressive total of 5.54%, quite different to the 115.69% rise in Huddersfield property prices?

Secondly, its true the 3% stamp duty is the first blow on top of a number of other tax changes to be phased in between 2017 and 2021, such as landlords facing a constraint in their ability to offset mortgage interest and, if sizeable numbers of landlords do take the decision to sell their portfolios, this will lead to a substantial amount of second hand properties being put up for sale. Yet that might not be a bad thing, as I have mentioned in previous articles there is a serous shortage of properties to buy at the moment in Huddersfield: the stock of property for sale being at a six year all time low.

.. Thirdly, if there are fewer rental properties in Huddersfield, as supply drops and demand remains the same (although ask any letting agent in Huddersfield and they will say demand is constantly rising) this will create a squeeze in the Huddersfield rental market and as a result rents will rise. In fact, I predict even if landlords don’t sell up, Huddersfield rents will rise as Huddersfield landlords seek to compensate for increased costs, which means more landlords will be attracted back.

For more thoughts on the Huddersfield Property market to read articles like this, you might find the Huddersfield Property Market blog of interest https://huddersfieldproperty.blogspot.co.uk/