The Huddersfield Post Lockdown Property Market What have we learned in the first month?

From talking to most of the Huddersfield estate and letting agents and our own findings, it might surprise many of you that new enquiries from homebuyers, tenants, landlords and home sellers have been at record levels since lockdown was lifted from the property market in mid-May.

There are a number of reasons for this. Firstly we had the pent-up demand for Huddersfield property from the Boris Bounce in January and February. Next, many Huddersfield people were planning to move this spring yet were prevented doing so because of lockdown, and finally, surprisingly, an advance wave of home movers seeking to bring their Huddersfield moving plans forward because of a fear of a second Covid-19 wave later in the year.

So, what does all that look like and how does it compare to the last 12/18 months?

Data from Yomdel, the live chat and telephone answering service for a quarter of UK estate and letting agents, is able to track objective and more current information from across the UK on what is really happening. Each week, they are dealing with thousands of enquiries including:

·         Seller enquiries (i.e. house sellers looking to put their property on the market)

·         Buyer enquiries (i.e. people looking to view a property on the market with the intention of buying it)

·         Landlords enquiries (i.e. landlords looking for tenants for their rental property)

·         Tenant enquiries (i.e. people looking to view a property on the market with the intention of renting it)

They have created a rolling weekly average of those enquiries for the whole of the UK for the 62 weeks before the country went into lockdown. Then they compared that 62 week average with specific time frames, namely the 10 weeks of the run up to the General Election, the 8 weeks of Post Boris Bounce in January and February 2020, the weeks of lockdown in March, April and early May and then finally, from mid-May, the post lockdown.

You might ask why tracking estate and letting agency enquiries is so important?

Enquiries in letting and estate agencies are the beating heart of the property market – they are the ECG machine of the estate and letting agency. Of course house price data has it’s place and is lauded by the national press as the bellwether of the property market, yet it takes 6 to 9 months for the effects of what is happening today to show in those house price indexes, whilst these enquiries are what is happening now.

Have a look at the data in the graph and table, it can be seen in the 8 weeks up to the General Election, every metric was down. Next, the post Boris Bounce saw house seller and house buyer leads increase yet note how low tenant enquiries were (hardly any change from the run up to the election), everything dipped during lockdown as expected, yet look at all the metrics post lockdown … amazing! (e.g. if a number in the graph/table below is say -25%, that means its 25% below the rolling 62 week average, yet if it were +20%, then that would mean it would be 20% more than the rolling 62 week average)

	General Election Run Up	Post Boris Bounce	Lockdown	Post Lockdown
Seller Enquiries	-27.0%	20.6%	-41.9%	94.3%
Buyer Enquiries	-19.9%	12.9%	-9.3%	163.7%
Landlord Enquiries	-10.9%	1.0%	-27.6%	78.5%
Tenant Enquiries	-34.9%	-27.2%	-23.1%	92.5%

 

The numbers speak for themselves!

So, what is happening in the Huddersfield property market? Well, there is plenty of activity in the Huddersfield property market, yet that doesn’t mean everything is back to normal. Enquiries are an important metric, yet another way to judge the health of the property market is to look at the number of property transactions (i.e. people moving).

Now the Land Registry data isn’t quite as exhilarating, yet it is less volatile. Nationally, it shows that property transactions were at their lowest level since its records began in April 2005. The seasonally adjusted estimate of UK residential property transactions in April and May 2020 was 90,210, 53.4% lower than the 193,500 transactions of April and May 2019. Again though, this was because of the restrictions on moving during Covid-19. The stats for Huddersfield are still to be released yet rest assured I will share them in due course.

Looking again at what is happening now, when I look at the number of properties for sale…

255 Huddersfield properties have come onto the property market in the last 14 days alone, and of those, 37 are already sold subject to contract

So, what of the future of the post-lockdown Huddersfield housing market? While a stern recession seems almost guaranteed, a housing market crash is not. Many newspapers are predicting property values to fall in 2020, then rise reticently from the ashes in 2021. The fact is, nobody knows. The property market is driven a lot by sentiment. Buying a home is not like buying stocks and shares – it’s a home to live in … and those Huddersfield landlords who are looking for an investment opportunity, often let their heart rule the head (again sentiment) when investing in property.

Property always has, and always will be a long-term investment. Many of you Huddersfield people reading this, especially potential Huddersfield first time buyers, have been putting off buying your first home because of Brexit, now its Covid-19, and in a few years, it will be something else. There will always be ‘something else’… and you could get to your 50’s and 60’s, still renting, waiting for the ‘next thing’ to pass before you buy … and end up buying nothing.

Nobody knows what the months or years ahead will bring ... yet what I do know is, people will always need a place to live. Please let me know your thoughts in the comments. Tell us what your experiences are as a Huddersfield landlord or homeowner, tenant or buyer so we can all learn from each other.

Buy to Let in Huddersfield

In 2019, the private rented sector accounted for just over four and a half million households or 19.9% of UK households, no change from the year before. Interesting, when compared to the proportion of private rented households in the 1980’s and 1990’s, when the proportion of private rented households was stable at around 9.5% to 10.8%.

Most of that growth in the private rented sector came in three main spurts. The first growth spurt was between 1999 and 2003 and that was caused when property values were increasing at 20% per annum, the second came from the migration of 1.69m people from the EU8 countries after 2004 and the final growth spurt came about because of the property crash of 2008/9. When I look at the local stats…

8% of Huddersfield properties in 1991 were privately rented,

whilst the most recent stats stand at 18.8%

Apart from social housing, the other pillar of home tenure is owner occupation. Owner occupation is made up of two separate groups: outright owners and those who own their home yet are buying the property with a mortgage.

In 1991, 26.8% of Huddersfield households owned their property outright and 43.7% of Huddersfield households were buying with a mortgage, whilst current stats show 30.3% of Huddersfield households are outright owners and only 33% are buying their Huddersfield home with a mortgage

Looking at these numbers, two things are clear-

1.    The increase in the proportion and number of Huddersfield outright owners is at least somewhat caused by Huddersfield’s baby-boomer population retiring, being able to pay off their mortgages and thus going into outright homeownership.

2.    Overall homeownership is down. These figures will be of no surprise to many readers with heightened barriers to home ownership, as saving for the deposit became the prevailing hurdle to getting on the housing ladder together with a substantial increase in the amount of private rented accommodation, provided by an ostensibly ever-growing cohort of buy to let investors.

So, on the face of it, everything looks rosy for Huddersfield buy to let landlords with the private rented sector growing ever upwards.
This is not the case though, because these stats on private rented and homeownership on Huddersfield are from the last census. However, the Government have a number of in-depth annual surveys on the property market and since 2016, the proportion of privately rented properties has remained stagnant at between 19% and 20%. Also, over the same time frame, the proportion of homebuyers with a mortgage has increased quite considerably from 30.7% of all households nationally to 35.5% last year. This increase is mainly attributed to an increase in first time buyers.

So, why have we seen an increase in the number of first time buyers?

Firstly, the government introduced their Help to Buy Scheme in 2013 helping first time buyers get on the property ladder with interest free loans and mortgage guarantees. Secondly, the wide availability of 95% mortgages since the mid 2010’s (meaning first time buyers only need to find a 5% deposit), and finally the continued increasing reliance of deposits from the ‘Bank of Mum and Dad’ have helped to support this growth.

Interestingly, age is an important factor in these stats, as it’s the 25 to 35-year olds that have seen the biggest increase in home ownership, yet it’s decreased for those in the 35 to 45-year old bracket.

So, what does all this mean for Huddersfield landlords and Huddersfield homeowners?

In the next six months, I believe the growth in first time buyer numbers will ease slightly. The pent-up demand of the Boris Bounce in January and February has now been released, and whilst the early signs are very good, we are still to see the effects of the curtailing of the furlough scheme on the people’s ability to move home.

Many doom-mongers were predicting the banks would remove 95% mortgages after Covid-19, yet looking on a well-known comparison website, at the time of writing, there were 183 ‘95% mortgages’ available to first time buyers, with eye watering low rates of 1.53% with the Halifax on a 2 year fixed rate and 5 year fixed rate with the Skipton at 1.83%. The Bank of Mum and Dad might be a tougher nut to crack for first time buyers’ deposits - the fall in the FTSE and the repercussions this will certainly have on older households’ pensions income may restrict its availability.

This means even though the Huddersfield property market is doing reasonably well, Huddersfield homeowners wanting to sell shouldn’t get carried away and ‘over-egg’ their asking prices. The information available today at all buyers’ fingertips means your property can so easily be overlooked as being overpriced, and thus become ignored.

My advice to Huddersfield landlords is, even though the proportion of private rented properties isn’t growing, in real numbers it is, as we created 230,000 residential homes in the country last year alone, so we aren’t seeing a mass exodus out of private renting.

Yet, now might be the time to consider spending money on upgrading what you already own instead of buying another property. Depending on the type and location of your Huddersfield rental property, the return on investment of certain upgrades can be in the order of 20% to 30% per annum. Don’t fall for the trap many Huddersfield landlords fall into and upgrade without speaking to a property professional. Whether you are a client or not, I am always here at the end of the phone to give you my advice and opinion.

Please do let me have your thoughts on the matter – thank you in advance.