4.3 Babies Born for Each New Home

built in the Staines area

 

 
As more babies are being born to Staines and Spelthorne mothers, we see yet another  factor adding pressure to the over stretched Staines property market.  

On the back of eight years of ever increasing birth rates, a significant 4.3 babies were born for every new home that was built in the Spelthorne council area in 2016.  I believe this has and will continue to exacerbate the Staines housing shortage, meaning demand for housing, be it to buy or rent, will remain high. Whilst we are currently seeing rents plateau and even drop slightly in Staines and sales prices are staying rather flat, I do believe that  the high birth rate  is future proofing property investment for landlords, investors and owners alike, despite the many and varied challenges the economy has and is continuing to experience!  

This ratio of births to new homes has reach one of its highest levels since 1945 (back in the early 1970’s the average was only one and a half births for every household built).  Looking at the local birth rates, the latest figures show that we in the Spelthorne council area had an average of 70 births per 1,000 women aged 15 to 44.  Interestingly, the national average is 61.7 births per 1,000 women aged 15 to 44.  

 

The number of births from Staines and Spelthorne women between the ages of 20 to 29 are close to the national average, whilst those between 35 and 44 were higher.  However overall, the birth rate is still increasing, and when that fact is combined with the ever-increasing life expectancy in the Staines area, the high levels of net migration into the area and the higher predominance of single person households … this can only mean one thing ... a continuing increase in the need for housing in Staines.

Again, in a previous article a while back, I commented that more and more people are having children as tenants because they feel safe in rented accommodation.  Renting is becoming a choice for Staines inhabitants.

The planners and politicians in our local authority and central Government need to recognise that with individuals living longer, people having more children and whilst divorce rates have dropped recently, they are still at a relatively high level (meaning one household becomes two households) ... demand for property is still outstripping supply.

 

The simple fact is more Staines properties need to be built

… be that for buying or renting.

 

Only 1.1% of the country is occupied by houses.  Now I am not suggesting we build tower blocks in the middle of the Cotswolds, but the obsession of not building on any green belt land should be carefully re-considered.

Yes, we need to build on brownfield sites first, but there aren’t hundreds of acres of brownfield sites in Staines.  

I am not saying we should crudely tarmac over our entire Green Belt, but we do need a new approach to enable some parts of the countryside to be regarded more positively by local authorities, politicians and communities and allow considered and empathetic development. Society in the UK needs to look at the green belts outside their leisure and visual appeal, and assess how they can help to shape the way we live in the most even-handed way.  Interesting times for the new Housing Minister!

Staines Rents - A rise of 22.6% since 2005 - Sounds good, but is it really?

 

The income from rentals has been progressively increasing over the last 12 years. Today, they are 22.6% higher than they were at the beginning of 2005. In fact, over the last five years, the average growth has been 2.4% per annum. From a landlord’s point of view, increase in average rental income is always welcome. However, the observant readers  amongst you will quickly note that we are ignoring an important factor – inflation.

But how do we work out how we are actually doing? Inflation since 2005 has been 38.5%, rent rises have been 22.5% in Staines.   In real terms,  when we compare rents in Staines to inflation since 2005, then we are 15.9% worse off than we were in 2005.

Of course, rental income is not the only way to generate money from property as property values can increase. Although in the short term, cash flow is being squeezed, many Staines landlords may be content to accept that for the very significant increase they are seeing  in capital value.
 

Property values in Staines have risen by 70.8% since 2005

 

 

 

This equates to a very decent 5.9% per annum increase over the last 12 years. Even more decent, when you factor in that this includes the 2008/9 property crash;  that makes us Staines landlords and investors feel so much better about the information regarding rent increases after inflation.

 

And of course, the point I always come back to , when I am talking about property, where else will you get those returns? 

It would be true to say, my rental income verses property prices study does lead to some interesting thoughts. I am often asked to look at my landlord’s rental portfolios, to ascertain the spread of their investment across their multiple properties. It’s all about judging whether what you have will meet your needs of the investment in the future. It’s the balance of capital growth and yield whilst diversifying this risk.

If you are investing in the Staines property market, do your homework and do it well. While some yields may look attractive, there are properties in many areas that do not have the solid rudiments in place to sustain them. If you are looking for capital growth, you might be surprised where the hidden gems really are. Take advice, even ask your agent for a portfolio analysis like I offer my landlords.  However, if they can’t help – well, you know where I am, the kettle is always on!

 

 

Staines Flats Outperform Staines Property Market Average by 32%

 

According to the Land Registry's latest House Price Index for Staines and the surrounding locality, the value of apartments/flats is rising at a faster rate than terraced/town houses, semi-detached properties and even detached property.

Values of apartments in Staines have increased by 5.18% over the past year, which is proportionally 32% more than the Staines average rise of 3.91%. The last time flats/apartments in Staines outperformed all the other types of property, by such a significant difference, was back in the autumn of 2003. For comparison, the other property types performed as follows ..

·         Detached homes rose by 3.68%

·         Semi-detached homes rose by 3.36%

·         Terraced/Town-Houses rose by 3.23%

This moderately increasing rate of property value growth is nice to see – but no one should confuse it with a strong and vigorous healthy Staines property market. Instead, it is somewhat an indicator of the long-lasting lack of property on the market. In fact, I have spoken about the lack of homes for sale in Staines on a number of occasions in my Staines Property Blog and whilst it isn’t as bad as it was 12 months ago – choice is quite limited for buyers.

 

The average property value in Staines now stands at £430,300

 

When split down into property types :

 

·         Staines Apartments at £273,400

·         Staines Detached at £701,800

·         Staines Semi-Detached at £427,600

·         Staines Terraced/Town-House at £366,200

 

So why have Staines apartments performed so well, and is it just a Staines thing? When I scrutinised the figures for the rest of the UK, it appears that apartments are pacemakers in the clear majority of the country. Of the 379 local authority areas in the UK, the value of apartments is rising faster than detached, semi-detached and terraced houses in 320 of them.

 

So, should Staines apartment owners be getting out the champagne? Well, I would keep it on ice as the Land Registry figures are notorious for short term fluctuations. It’s hard to have faith in the fact that Staines house values rose rapidly last month given that, in the last six months, the Land Registry has frequently made downward revisions to their first published House Price Index figures.

 

Thankfully, the bigger picture from the Council of Mortgage Lenders (CML) stated that home buying activity in April was up 2% over the same month in 2016 – not bad really. The CML stated first time buyer’s levels of affordability was being squeezed and that the average amount borrowed by those first-time buyers dropped slightly in April, but the overall amount borrowed (by all buyers) was an impressive 12% higher than the same month in 2016.

So, what next for the Staines Property market? I believe the uplift in the values of apartments is a short-term blip. The real issue is that wage growth might not keep up with inflation as the effects of 2016 exchange rate sucks in inflation (meaning real wage growth stagnates). This will mean buyer demand growth will be curtailed and with property values already so high, I firmly believe a renewed increase in house price growth is unlikely.

I do think we are starting to return to the housing market we saw in the mid 1990’s:  steady demand, steady supply – nothing silly when it comes to house price growth.  No bad thing, in my view.

DEAL OF THE WEEK - EGHAM

12 6 17

 

SPACIOUS, THREE BED SEMI  for only £385,000.   This wont be around for long, so get in touch with the sales agent quickly.  On top of the three beds, it has a conservatory, a loft room and a decent sized garden.

 On with YourMove, see more details at :  http://www.rightmove.co.uk/property-for-sale/property-60257392.html

What will the General Election do to the 7,905 Staines Homeowners?

 

 

In Staines, of the 11, 039 households, 7905 are owner occupied; of these 3,882 homes are owned without a mortgage and 4,023 homes are owned with a mortgage (the difference are either council houses, Housing Association or privately rented). Many homeowners have made contact me with asking what the General Election will do the Staines property market?  The best way to predict the future is to look at the past.

I have looked over the last five General Elections and analysed in detail what happened to the property market in the lead up to and after the General Election. Some very interesting information has come to light.

Of the last five general elections (1997, 2001, 2005, 2010 and 2015), the two elections that weren’t certain were the last two (2010 with the coalition and 2015 with unexpected Tory majority). Therefore, I wanted to compare what happened in 1997, 2001 and 2005 when Tony Blair was guaranteed to be elected /re-elected verses the last knife edge uncertain votes of 2010 and 2015,  in terms of the number of houses sold and the prices achieved.

Look at the first graph below comparing the number of properties sold and the dates of the General Elections

 

 

It is clear, looking at the number of monthly transactions (the blue line), there is a certain rhythm or seasonality to the housing market. That rhythm / seasonality has never changed since 1995 (Seasonality meaning the periodic fluctuations that occur regularly based on a season -  i.e. you can see how the number of properties sold dips around Christmas, rises in Spring and Summer and drops again at the end of the year).

To remove that seasonality, I have introduced the red line. The red line is a 12 month ‘moving average’ trend line which enables us to look at the ‘de-seasonalised’ housing transaction numbers, whilst the yellow arrows denote the times of the General Elections. It is clear to see that after the 1997, 2001 and 2005 elections, there was significant uplift in number of households sold, whilst in 2010 and 2015, there was slight drop in house transactions (ie number of properties sold).

Next, I wanted to consider what happened to property prices. In the graph below, I have used that same 12 month average, housing transactions numbers (in red) and yellow arrows for the dates of the General Elections but this time compared that to what happened to property values (pink line).

 

It is quite clear that none of the General Elections had any effect on the property values.  Also, the timescales between the calling of the election and the date itself also means that any property buyer’s indecisiveness and indecision before the election will have less of an impact on the market.

So finally, what does this mean for the landlords of the 1,658 private rented properties in Staines? Well, as I have discussed in previous articles (and just as relevant for homeowners as well) property value growth in Staines will be more subdued in the coming few years for reasons other than the General Election. The growth of rents has taken a slight hit in the last few months as there has been a slight over supply of rental property in Staines, making it imperative that Staines landlords are realistic with their market rents. But in the long term as the younger generation still choose to rent rather than buy,  the prospects, even with the changes in taxation, mean investing in buy to let still looks a good bet.