Huddersfield Home Owners Are Only Moving Every 19.5 Years (Part 1)

As I mentioned in a previous article, the average house price in Huddersfield is 5.76 times the average annual Huddersfield salary. This is higher than the last peak of 2008, when the ratio was 5.70. A number of City commentators anticipated that in the ambiguity that trailed the Brexit vote, UK (and hence Huddersfield) property prices might drop like a stone. The point is - they haven’t.

Now it’s true the market for Huddersfield’s swankiest and poshest properties looks a little fragile (although they are selling if they are realistically priced) and overall, Huddersfield property price growth has slowed, but the lower to middle Huddersfield property market appears to be quite strong.

Scratch under the surface though, and a different long-term picture is emerging away from what is happening to property prices. Huddersfield people are moving home less often than they once did. Data from the Office of National Statistics shows that the number of properties sold in 2016 is again much lower than it was in the Noughties. My statistics show…

The Total Number of Property Sales Per Annum in Huddersfield and the Kirklees Metropolitan Borough Council Area Since 1995
1995	1996	1997	1998	1999	2000	2001	2002	2003	2004	2005
5,551	6,076	6,871	6,725	7,265	7,229	8,604	9,314	9,560	9,046	7,936
2006	2007	2008	2009	2010	2011	2012	2013	2014	2015	2016
9,872	9,526	4,932	4,022	4,105	4,100	4,286	4,731	5,544	5,681	5,993

Even though we are not anywhere near the post credit crunch (2008 and 2009) low levels of property sales, the torpor of the Huddersfield housing market following the 2016 Brexit vote has seen the number of property sales in Huddersfield and the surrounding local authority area level off to what appears to be the start of a new long term trend (compared the Noughties).

Interestingly, it was the 1980’s that saw the highest levels of people moving home. Nationally, everyone was moving on average every decade. Even though it was during the Labour administration of the late 1970’s where the right to buy one’s council house started, it was the Housing Act of 1980 that that really got council tenants moving, as Thatcher’s Tory government financially encouraged council tenants to buy their council-rented homes - for which countless then sold them on for a profit and moved elsewhere. The housing market was awash with money as banks were allowed to offer mortgages as well as the existing building societies, meaning it made it simpler for Brits to borrow even more money on mortgages and to climb up the housing ladder.

But coming back to today, looking at the property sales figures in the Huddersfield area since 2010/11, a new trend of number of property sales appears to have started. Interestingly, this has been mirrored nationally. The reasons behind this are complex, but a good place to start is the growth rate of real UK household disposable income, which has fallen from 5.01% a year in 2000 to 1.68% in 2016. Also, things have deteriorated since the country voted to leave the EU as consumer price inflation has risen to 2.7% per annum, meaning inflation has eaten away at the real value of wages (as they have only grown by 1.1% in the same time frame).

With meagre real income growth, it has become more difficult for homeowners to accumulate the savings needed to climb up the housing ladder as the level of saving has also dropped from 4.26% of household income to -1.11% (i.e. people are eating into their savings).

Next week I will be discussing how these (and other issues) has meant the level of Huddersfield people moving home has slumped to once every 19.5 years.

Huddersfield Wages Outstrip House Price Growth by 6.67% since 2007

I recently read a report by the Yorkshire Building Society that 54% of the country has seen wages (salaries) rise faster than property prices in the last 10 years. The report said that in the Midlands and North, salaries had outperformed property prices since 2007, whilst in other parts of the UK, especially in the South, the opposite has happened and property prices have outperformed salaries quite noticeably.

As regular readers of my blog know, I always like to find out what has actually happened locally in Huddersfield. To talk of North and South is not specific enough for me. Therefore, to start, I looked at what has happened to salaries locally since 2007. Looking at the Office of National Statistics (ONS) data for Kirklees Metropolitan Borough Council, some interesting figures came out...

	Kirklees	Yorkshire & Humber	Nationally
2007	£23,540	£22,131	£23,920
2008	£24,118	£23,104	£24,960
2009	£23,639	£23,535	£25,506
2010	£24,684	£24,050	£26,088
2011	£24,123	£24,008	£26,010
2012	£24,882	£24,190	£26,432
2013	£25,386	£24,913	£26,931
2014	£24,944	£24,908	£27,097
2015	£25,002	£24,991	£27,508
2016	£25,735	£25,912	£28,132

Salaries in Kirklees have risen by 9.32% since 2007 (although it’s been a bit of a rollercoaster ride to get there!) - interesting when you compare that with what has happened to salaries regionally (an increase of 17.08%) and nationally, an increase of 17.61%.

Next, I needed to find what had happened to property prices locally over the same time frame of 2007 and today. Net property values in Kirklees are 2.65% higher than they were in Spring 2007 (not forgetting they did dip in 2008 and 2009). Therefore...

Wages in the Huddersfield area have increased at a higher rate than property values to the tune of 6.67% ... meaning, Huddersfield is in line with the regional trend

All this is important, as the relationship between salaries and property values is the basis on how affordable property is to first (and second, third etc.) time buyers. It is also vitally relevant for Huddersfield landlords, as they need to be aware of this when making their buy-to-let plans for the future. If more Huddersfield people are buying, then demand for Huddersfield rental properties will drop (and vice versa).

As I have discussed in a few articles in my blog recently, this issue of ‘property-affordability’ is a great bellwether to the future direction of the Huddersfield property market. Now of course, it isn’t as simple as comparing salaries and property prices, as that measurement disregards issues such as low mortgage rates and the diminishing proportion of disposable income that is spent on mortgage repayments.

On the face of it, the change between 2007 and 2017 in terms of the ‘property-affordability’ hasn’t been that great. However, look back another 10 years to 1997, and that tells a completely different story. Nationally, the affordability of property more than halved between 1997 and today. In 1997, house prices were on average 3.5 times workers’ annual wages, whereas in 2016 workers could typically expect to spend around 7.7 times annual wages on purchasing a home.

The issue of a lack of homeownership has its roots in the 1980’s and 1990’s. It’s quite hard as a tenant to pay your rent and save money for a deposit at the same time, meaning for many Huddersfield people, home ownership isn't a realistic goal. Earlier in the year, the Tories released proposals to combat the country’s 'broken' housing market, setting out plans to make renting more affordable, while increasing the security of rental deals and threatening to bring tougher legal action to cases involving bad landlords.

This is all great news for Huddersfield tenants and decent law-abiding Huddersfield landlords (and indirectly owner occupier homeowners). Whatever has happened to salaries or property prices in Huddersfield in the last 10 (or 20) years ... the demand for decent high-quality rental property keeps growing. If you want a chat about where the Huddersfield property market is going – please read my other blog posts on https://huddersfieldproperty.blogspot.co.uk/  or drop me note via email, like many Huddersfield landlords are doing.

Moving from a 2 bed Huddersfield Property to a 4 bed will cost you £870 pm

Moving to a bigger home is something Huddersfield people with growing young families aspire to. Many people in two bedroom homes move to a three-bedroom home and some even make the jump to a four-bed home. Bigger homes, especially three-bed Huddersfield homes are much in demand and it can be a costly move.

If you live in Huddersfield in a two-bedroom property and wish to move to a four-bedroom house in Huddersfield, you would need to spend an additional £220,183 (or £869.72 pm in mortgage payments (based on the UK Bank average standard variable rate)). However, going straight to a four bed from a two-bed home is quite rare as most people jump from a two to three-bedroom home, then later in life, from a three to four-bedroom home.

So, after being asked my thoughts on moving home in Huddersfield by a friend recently, please find my analysis of the local property market and then some thoughts. To start with, let us see what the average property price is for a Huddersfield property by the number of bedrooms it has.

Average Property Price in Huddersfield by Bedroom
1 bed	2 bed	3 bed	4 bed	5 bed
£67,333	£112,909	£167,207	£333,092	£468,053

I then decided to calculate what it would cost to make the jump upmarket from one bedroom to two bedrooms, two to three bedrooms etc, etc, both in actual money and in mortgage payments (using the current standard variable rate of UK Banks of 4.74% - so the mortgage cost could be higher or lower depending on the mortgage taken).

	Huddersfield
	Price Difference to make the move	Cost per month to move up market (Mortgage)
1 bed to 2 bed	£45,576	£180.03
2 bed to 3 bed	£54,298	£214.48
2 bed to 4 bed	£220,183	£869.72
3 bed to 4 bed	£165,885	£655.24
4 bed to 5 bed	£134,961	£533.09

There are some interesting jumps in costs when moving upmarket as a Huddersfield buyer. The cost of moving from one to two beds, and two to three beds is relatively reasonable, whilst the jump from three to four beds in Huddersfield is quite high (and hence why some four bed properties are taking slightly longer to sell nowadays). On an aside, a lesson here for all my landlord property blog readers, you can quite clearly see why the larger 4 and 5 bed properties don’t offer the best returns for buy to let because the monthly finance costs and rents achieved don’t match up so well (i.e. A mortgage for a 4 bed home in Huddersfield would cost you 99.21% compared to a 3 bed mortgage, but the jump in rent would be a lot less than that - although depending on your circumstances, 4 bed homes can offer other advantages to buy to let – pick up the phone if you want to know what they are in more detail).

So, coming back and looking at the stock of properties in Huddersfield, this also makes interesting reading …

Housing Stock in Huddersfield by Bedrooms
1 bed	2 bed	3 bed	4 bed	5 bed
15.91%	30.38%	30.25%	17.60%	5.87%

The most active purchasers are 20 something and 30 something home-owning parents with growing families. Many look to more modern developments for the perfect balance of access to decent primary schools, commutability and lifestyle. For landlords looking to buy within Huddersfield, they face stiff competition from these 20/30 something families, making the three bedroom Huddersfield home massively in demand, often attracting spirited offers and selling within weeks of listing. This mix of homebuyers and landlords is a pressure point in the Huddersfield property market.  Again, if you are a landlord, call me and I will show you areas with decent returns where you aren’t in so much competition with young Huddersfield family homebuyers.

Yet, the cost of an additional bedroom can be too much for some Huddersfield buyers. It is quite challenging moving home the first time, but to then find you are priced out on the next move up the ladder can be quite disconcerting, with families often having to move to a different part of town to get the bigger home they need.

Nevertheless, that’s the place many homeowners find themselves in with the cost of the additional bedroom being too much to bear. To those buying their home for the first time, all I suggest is they not only consider the mortgage payments and other costs of their first home, but also do their homework into their next rung up the Huddersfield property ladder. Thinking about it now will keep you ahead of the game in the future; as your number of bedrooms, family property needs and lifestyle wants change.

..and Huddersfield landlords – well these changes in the way people live also mean there are opportunities to be had in the Huddersfield rental market. Many Huddersfield landlords are starting to pick my brain on this, so if you don’t want to miss out – drop me a line.