Thursday 28 September 2017

Slowing Staines Property Market? Yes and No!




My thoughts to the landlords and homeowners of Staines…

The tightrope of being a Staines buy-to-let landlord is a balancing act many do exceptionally well.
Talking to several Staines landlords, they are very conscious of their tenants’ capacity and ability to pay the rent and their own need to raise rents on their rental properties (as Government figure shows ‘real pay’ has dropped 1% in the last six months). Evidence does suggest many landlords feel more assured than they were in the spring about pursuing higher rents on their properties.
 
During the summer months, historic evidence suggests that the rents new tenants have had to pay on move in have increased. June/July/August is a time when renters like to move, demand surges and the normal supply and demand seesaw mean tenants are normally prepared to pay more to secure the property they want to live in, in the place they want to be. This is particularly good news for Staines landlords as average Staines rents have been on a downward trend recently. So look at the figures here..
 
Rents in Staines on average for new tenants moving in have risen 0.9% for the month, taking overall annual Staines rents 0.9% lower for the year
 
However, several Staines landlords have expressed their apprehensions about a slowing of the housing market in Staines. I think this negativity may be exaggerated.

Before we get the Champagne out, the other side of the coin to property investing is capital values (which will also be of interest to all the homeowners in Staines as well as the Staines buy-to-let landlords).  I believe the Staines property market has been trying to find some level of equilibrium since the New Year.  According to the Land Registry…

Property Values in Staines are 2.54% higher than they were 12 months ago, even though they dropped by 1.33% last month
 
 
However, don't forget that those sales figures reflect the sales of Staines properties that took place in early Spring 2017 and only  now are exchanging and completing during the summer months.

The reality is the number of properties that are on the market in Staines today has risen by 33.3% since the New Year and that will have a dampening effect on property values. As tenants have had less choice, buyers now have more choice ... and that will temper Staines property prices as we head towards 2018.
 
Be you a homeowner or landlord, if you are planning to sell your Staines property in the short term, it is crucial, especially with the rise in the number of properties on the market, that you realistically price your property when you bring it to the market ... with the increase in choice of properties, the balance of power during negotiation generally sways towards the buyer. Given that everyone now has access to property details, including historic stats on how much properties have sold for, they will be more astute during the offer and negotiation stages of a purchase.

However, even with this uplift in the number of properties for sale in Staines, property prices will remain stable and strong in the medium to long term. This is because the number of properties on the market today is still way below the peak of summer of 2008, when there were 288 properties for sale compared to the current level of 192 (if you recall, prices dropped by nearly 20% in Credit Crunch years of ‘08 and ‘09).

Compared to 2008, today’s lower supply of Staines properties for sale will keep prices relatively high...and they will continue to stay at these levels for the medium to long term.

Less people are moving than a few years ago, meaning less property is for sale. Fewer properties for sale mean property prices remain relatively high and this is because of a number of underlying reasons:
Firstly, buy-to-let landlords tend not sell their properties as often as  owner-occupiers,   consequently removing the property from the housing market selling cycle.
Secondly, Stamp Duty is much higher compared to 10 years ago (meaning it costs more to move). Next, there is a dearth of local authority rental housing so demand for private rented housing will remain high.
Then we have the UK’s maturing owner occupier population, meaning these older people are less likely to move (compared to when they were younger).
Another reason is the lack of new homes being built in the country (we need 240k houses a year to be built in the UK and we are currently only building 145k a year!)
and finally, the new mortgage rules introduced in 2014 about how much a person can borrow on a mortgage has curtailed demand.

Some final thoughts before I go – to all the Staines homeowners that aren’t planning to sell – this talk of price changes is only on paper profit or loss. To those that are moving ... most people that sell, are buyers as well, so as you might not get as much for yours, the one you will want to buy won’t be as much, (swings and roundabouts as Mum used to say!)

To all the Staines landlords – keep your eyes peeled – I have a feeling there may be some decent buy-to-let deals to be had in the coming months.




Wednesday 20 September 2017

Supply and Demand Issues produce 1.9% rise in Staines' Property Values over the Last 12 Months






The most recent set of data from the Land Registry has stated that property values in Staines and the surrounding area were 1.89% higher than 12 months ago and 18.59% higher than January 2015. Whilst the increase for the last 12 months may not feel impressive, it is much better than the sharp drop that some were predicting after the Brexit vote and does point to a pretty resilient market.  By comparison Londoners have seen a drop of between 3% and 5% in the last 12 months.

So despite the continued uncertainty surrounding Brexit,   Staines (and most of the UK’s) property values continue their medium and long-term upward trajectory. As economics is about supply and demand,  it is worth looking at the story behind the Staines property market from both these angles.  
 
From the supply side of the Staines’ property market,  the main reason for this sustained house price growth is our historic failure to build enough new homes.

The draconian planning laws, that over the last 70 years (starting with The Town and Country Planning Act 1947) have meant the amount of land built on in the UK today, only stands at 1.8% (no, that’s not a typo – it’s one point eight percent) and that is made up of 1.1% with residential property and 0.7% for commercial property. Now I am not advocating building modern ugly carbuncles and high-rise flats in the Cotswolds, nor blotting our landscape by building massive,  out of place,  ugly 1,000 home housing estates around the beautiful countryside, locally for example close to villages like Englefield Green or Laleham.

 

But the fact is,  the restrictions on building homes for people to live in,  due to these 70-year-old restrictive planning regulations, mean that the homes the youngsters of Staines badly need, simply aren’t being built.
 
Looking at the demand side of the equation, one might have thought property values would drop because of Brexit and buyers uncertainty. However, certain commentators now believe property values might rise because of Brexit. Many people are risk adverse, especially with their hard-earned savings. The stock market is at an all-time high (ready to pop again?) and many people don’t trust the money markets. The thing about property is its tangible, bricks and mortar, you can touch it and you can easily understand it.  

The Brits have historically put their faith in bricks and mortar, which they expect to rise in value, in numerical terms, at least. Nationally, the value of property has risen by 635.4% since 1984 whilst the stock market has risen by a very similar 593.1%. However, the stock market has had a roller coaster of a ride to get to those figures. For example, in the dot.com bubble of the early 2000’s, the FTSE100 dropped 126.3% in two years and it dropped again by 44.6% in 9 months in 2007… the worst drop Staines saw in property values was just 21.91% during the 2008/9 credit crunch.
 
Despite the slowdown in the rate of annual property value growth in Staines to the current 1.89%, from the heady days of 15.71% annual increases seen in mid 2010, it can be argued the headline rate of Staines property price inflation is holding up well, especially with the squeeze on real incomes, new taxation rules for landlords and the slight ambiguity around Brexit. With mortgage rates at an all-time low and tumbling unemployment, all these factors are largely continuing to help support property values in Staines (and the UK).

 

 

 

Tuesday 12 September 2017

Staines’ 987 Mortgage Time-Bombs?

According to my research, of the 11,039 properties in Staines, 4,570  have mortgages on them. 88.0% of those mortgaged properties are made up of owner-occupiers and the rest are buy to let landlords (with a mortgage).

… but this is the concerning part .. 987 of those Staines mortgages are interest only. My research also shows that, each year between 2017 and 2022, 12 of those households with interest only mortgages will mature, and of those, 3 households a year will either have a shortfall or no way of paying the mortgage off. Now that might not sound a lot – but it is still someone’s home that is potentially at risk.
 


Theoretically this is an enormous problem for anyone in this situation as their home is at risk of repossession if they don’t have some means to repay these mortgages at the end of the term (the typical term being 25 to 35 years). Banks and Building Societies are under no obligation to lengthen the term of the mortgage and, when deciding whether they are prepared to do so or not, will look at it in the same way as someone coming to them for a new mortgage.

Back in the 1970’s and 1980’s, when endowment mortgages were all the rage, having an endowment meant you were taking out an interest only mortgage and then paying into an endowment policy which would pay the mortgage off (plus hopefully leave some profit) at the end of the 25/35-year term. There were advantages to that type of mortgage as the monthly repayments were lower than with a traditional capital repayment and interest mortgage. Only the interest, rather than any capital, is paid to the mortgage company - but the full debt must be cleared at the end of the 25/35-year term.

Historically plenty of Staines homeowners bought an endowment policy to run alongside their interest only mortgage. However, because the endowment policy was a stock market linked investment plan and the stock market poorly performed between 1999 and 2003 (when the FTSE dropped 49.72%), the endowments of many of these homeowners didn’t cover the shortfall. Indeed, it left them significantly in debt!

Nonetheless, in the mid 2000s, when the word endowment had become a dirty word, the banks still sold ‘interest only’ mortgages, but this time with no savings plan, endowment or investment product to pay the mortgage off at the end of the term. It was a case of ‘we’ll sort that nearer the time’ as property prices were on the rampage in an upwards direction!

Thankfully, the proportion of interest only mortgages sold started to decline after the Credit Crunch, as you can see looking at the graph below, from a peak of 43.81% of all mortgages to the current 8.71%.

Increasing the length of the mortgage to obtain more time to raise the money has gradually become more difficult since the introduction of stricter lending criteria in 2014, with many mature borrowers considered too old for a mortgage extension.

Staines people who took out interest only mortgages years ago and don’t have a strategy to pay back the mortgage face a ticking time bomb. It would either be a choice of hastily scraping the money together to pay off their mortgage, selling their property or the possibility of repossession (which to be frank is a disturbing prospect).

I want to stress to all existing and future homeowners who use mortgages,  to go in to them with your eyes open. You must understand, whilst the banks and building societies could do more to help, you too have personal responsibility in understanding what you are signing yourself up to. It’s not just the monthly repayments, but the whole picture in the short and long term. 

Thursday 7 September 2017

Staines Homeowners and their £1.06 Billion Debt - Sould you be Re-Mortgaging Now?

 
 
The last 12 months have been quite tumultuous: the UK decided to leave the EU, Mrs May called a General Election which didn't quite go to plan and finally, to add insult to injury our American cousins elected Donald Trump as the 45th President of the United States.  One might have expected this to introduce some unwanted unpredictability into the UK property market.
The reality is that the housing and mortgage market (for the time being) has shown a noteworthy resilience. Indeed on the back of the Monetary Policy pursued by the Bank of England there has been a notable improvement of macro-economic conditions! In July for example it was announced that we are witness to the lowest levels of unemployment for nearly 50 years. Furthermore, despite the UK construction industry building 21% more properties than same time the previous year, there has still been a disproportionate increase in demand for housing, particularly in the most thriving areas of the Country. Repossessions too are also at an all-time low at 3,985 for the last Quarter (Q1 2017) from a high of 29,145 in Q1 2009. All these things have resulted in...

 
Staines property values rising 1.89% over the last 12 months
(Source: Land Registry)
So, what does all this mean for the homeowners and landlords of Staines, especially in relation to property prices moving forward?
One vital bellwether of the property market (and property values) is the mortgage market. The UK mortgage market is worth £961,653,701,493 (that’s £961bn) and it representative of 13,314,512 mortgages (interestingly, the UK’s mortgage market is the largest in Europe in terms of amount lent per year and the total value of outstanding loans). Uncertainty causes banks to stop lending – look what happened in the credit crunch and that seriously affects property prices.
 
Roll  the clock back to 2007, and nobody had heard of the term ‘credit crunch’, but now the expression has entered our everyday language.  It took a few months throughout the autumn of 2007, before the crunch started to hit the Staines property market, but in late 2007, and for the following year and half, Staines property values dropped each month like the notorious lead balloon, meaning
The credit crunch caused Staines property values to drop by 21.9%

Under the sustained pressure of the Credit Crunch, the Bank of England realised that the UK economy was stalling in the early autumn of 2008. Loan book lending (sub-prime phenomenon) in the US and across the world was the trigger for this pressure. In a bid to stimulate the British economy there were six successive interest rates drops between October 2008 and March 2009; this resulted in interest rates falling from 5% to 0.5%!
Thankfully, after a period of stagnation, the Staines property market started to recover slowly in 2011 as certainty returned to the economy as a whole and Staines property values really took off in 2013 as the economy sped upwards. Thankfully, the ‘fire’ was taken out of the property market in Spring 2015 (otherwise we could have had another boom and bust scenario like we had in the 1960’s, 70’s and 80’s), with new mortgage lending rules. Throughout 2016, we saw a return to more realistic and stable medium term property price growth. Interestingly, property prices recovered in Staines from the post Credit Crunch 2009 dip and are now 76.7% higher than they were in 2009.



Now, as we enter the summer of 2017, with the Conservatives having been re-elected on their slender majority, the Staines property market has re-gathered its composure.       Also  over the last few months a mortgage price war has broken out between lenders, with many slashing the rates on their deals to the lowest they have ever offered.  For example, last month, HSBC launched a 1.69% five-year fixed mortgage!  This is good news for Staines homeowners and landlords alike - if you haven't renewed your mortgage recently, now would be a great time.

Interestingly, according to the Council of Mortgage Lenders, the level of mortgage lending had soared to an all-time high in the UK. 
In the Staines postcodes of TW18 & TW19, if you added up everyone’s mortgage, it would total £1,064,373,705!

Since 1977, the average Bank of England interest rate has been 6.65%, making the current 323 year all time low rate of 0.25% very low indeed. Thankfully, the proportion of borrowers fixing their mortgage rate has gone from 31.52% in the autumn of 2012 to the current 59.3%. If you haven’t fixed – maybe you should follow the majority?

In my modest opinion, especially if things do get a little rocky and uncertainty seeps back in the coming years (and nobody knows what will happen on that front), one thing I know is for certain, interest rates can only go one way from their 300 year ultra 0.25% low level ... and that is why I consider it important to highlight this to all the homeowners and landlords of Staines. Maybe, just maybe, you might want to consider taking some advice from a qualified mortgage adviser? There are plenty of them in Staines.

Wednesday 6 September 2017

Back from my Holidays!


After a lovely rest, I am now back in sunny Staines, enjoying the delights of the Staines property market once again.  I hope you all  managed to enjoy the sun somewhere as well this summer.

Apologies for the gap in posts, but it's taken me a while to catch up with myself after my holiday.  Normal service will be resumed tomorrow!

Tuesday 25 July 2017

Staines Baby Boomers vs Staines Milennials (Part 2)





Well last week’s article ‘Staines Baby boomers’ £1.5bn Windfall – Unfair or Not?’ caused quite a stir. In it we looked at a young family member of mine who was arguing the case that Millennials (those born after 1985) were suffering on the back of the older generation in Staines. They claimed the older generation had seen the benefit of the cumulative value of Staines properties significantly increasing over the last 25/30 years (which I calculated at  £2.52bn since 1990). In addition many of the older generation (the baby boomers) had fantastic pensions, which meant the younger generation were priced out of the Staines housing market.

I replied there should be no surprise though that the older members of our society hold considerably more of our country’s wealth than the younger generation. This wealth is accrued and saved across someone’s life, and reaches its peak about the time of retirement. If we are to comprehend differing wealth levels between generations we need to compare ‘apples with apples’. It is much more important to track the wealth held by different generations at the same age, i.e. what was ‘real’ wealth of the 30-something couple in the 1960’s compared to a 30-something couple say in the 1980’s or 2010’s?
Looking back over the last 120 years at various economic studies, this growth in wealth from one generation to the next (at the age range), only happened over a 30 year period of between 1960 and late 1980’s. Since the 1990’s, wealth has not improved across the generations, in the same age range.
So could it be all about these people saving? The fact is, in the last 10 years, UK households have saved on average 7.5% to 8% of the household income into savings accounts, compared to an average of 6% to 7% in the late 1960’s and 1970’s. The baby boomers haven’t been actively squirreling away their cash for the last 30 or 40 years in savings accounts to accumulate their wealth. Most of their gains have been passive, lucky bonuses gained on the back of things out of their control (unanticipated and massive property value rises or people living longer making final salary pensions more valuable) – it’s not their fault!
...and herein lies the issue … it is assumed that these Millennials aren’t buying property in the same numbers like the older generation did in the past (because most of their wealth has come from house price inflation). The Millennials have often been described as ‘Generation Rent’, because they rent as opposed to buying property – because we are told they can’t buy.

However, when Staines mortgage payments are measured against monthly income, home ownership is affordable by historic standards because mortgage rates are currently so low. As you can see, whilst the ratio of average house price to average earnings in Staines has  changed over the last decade, it is not as much as one might think.......

 ·       2008 average house price to average earnings of a single person in Staines 8.33 to 1 
 ·       2017 average house price to average earnings of a single person in Staines 11.45 to 1











 (i.e. in 2008, the average house price in Staines was 8.33 times more than the average person’s salary in Staines and this has only risen to 11.45 in 2017 – and all this off the property boom of the early 2010’s)
 
  
 

95% first-time buyer mortgages were reintroduced in 2010. The average interest rate charged for those 95% FTB mortgages has slowly dropped from around 5.5% in 2009 to the current 4% rate. Back in the 1980’s/1990’s mortgage interest rates were between 8% and 10%, and one time in the early 1990’s, reached 15%! The main difference between the two periods was the absolute borrowing relative to income is greater now than in the 1980’s. They call this the ‘mortgage to joint household income ratio’. In the 1980’s the mortgage was between 1.8x to 2x joint income; today it is 3.4x to 3.6x salary.

The simple fact is, in the majority of cases, it is still cheaper for a first-time buyer to buy a property with a 95% mortgage, than it is to rent it. The barrier for these Millennials, has to be finding the 5% mortgage deposit – instead of being able to afford monthly mortgage outgoings at the current 95% mortgage rates?

Millennials make up 5,629 households in the Spelthorne Borough Council area (or 14.2% of all households in the area).  However, behind the doom and gloom, surprisingly, 45.1% did save up the 5% deposit and do in fact own their own home (that surprised you didn’t it!)

Nonetheless, the majority of Millennials in the area still do rent from a landlord (2,260 Millennial households to be exact). Yet, they have a choice. Knuckle down and do what their parents did and go without the nice things in life for a couple of years and save for a 5% mortgage deposit ... or live in a lovely rented house or apartment (because they are nowadays), without any maintenance bills and live a life with no intention of buying (because renting doesn’t have a stigma anymore like it did in the 1960’s/70’s).

Neither decision is right or wrong – although it is still a choice. Until Millennials decide to change their choices – the country’s private rental sector will continue to grow for the next 30 years – meaning happy tenants and happy landlords.




Tuesday 18 July 2017

Staines Baby Boomers' £2.5bn Windfall - Unfair or Not?




Recently I was having a chat with one of my second cousins at a big family get-together. The last time I had seen them their children were in their early teens. Now their children are all grown up, have partners, dogs and children. Wow – how time flies!

So, I got talking over a glass of lemonade with my second cousins and a couple of their children, about the times of 15% interest rates and how the more mature members of our family had to endure the 3 day week, 20% inflation and the threat of nuclear annihilation in 4 minutes .., foolishly, I said what with all the opportunities youngsters had today, they had never had it so good!

And of course, one of my cousin’s children had gained some financial/economics qualifications before going to Law School, so they debated with me the genuine economic predicament of Millennials and how a combination of student debt, unemployment, global proliferation, EU migration and rising house values is reducing the salaries and outlook of masses of the UK’s younger generation, causing an unparalleled disparity of wealth between the generations. And of course I had to ask why that was?

They said Millennials were paying the price for the UK’s most spectacular bookkeeping catastrophe to date (bigger than the Bank bailout after the Credit Crunch). Back in the 1950’s and 1960’s, nobody predicted us Brits would live as long as we do today, and in such abundant numbers. The pensions that were promised in the past (be that Government State Pension or Company Final Salary Schemes) which appeared to be nothing fancy at the time, are now burdensomely over-lavish and they are now hurting the Millennials of today and will do so for years to come.

Bringing it back to property, the young second cousin once removed ‘soon to be’ lawyer, stated that baby boomers born between 1945 and 1965 have been big recipients of the vast rising house prices over the 1970’s/80’s/90’s and 2000’s. Add to that their decent pensions, meaning cumulatively, their wealth has grown exponentially through no skill of their own.

This disparity of wealth between the older and younger generations could have unparalleled consequences for the living standards of younger Millennials…. So Houston Staines – do we have a problem??

Well Staines Property Blog readers, you know I like a challenge. I couldn’t disagree with some of what the younger family member said, but there are always two sides to every story, so I thought I would do some homework on the matter ..

Since 1990, the average value of a property in Staines has risen from £107,500 to its current level of £443,000. As there are a total of 7,506 homeowners aged over 50 in Staines; that means there has been a £2.52bn windfall for those Staines homeowners fortunate enough to own their own homes during the property boom of the 1990s and early 2000’s.
 
 

I must admit that the growth in property values in the 1990’s and 2000’s certainly helped many of Staines’ baby boomers. The figures do appear to put into reverse gear the perceived wisdom that each generation gets wealthier than the previous one  … and so with all this wealth, the figures do back up the youngsters argument that Millennials are being priced out of home ownership.

Or do they? Are they?

Next week, I will carry on this discussion where I will give the Baby Boomer’s defence to the prosecution’s case!

 

Friday 14 July 2017

Landlords still Looking for Future Property Investments




Results from a recent Property Investor Survey show that the proportion of landlords looking to expand their portfolios in the coming months has grown. Although many landlords will have been affected by the recent and ongoing restrictions to tax relief on mortgage interest costs and the introduction of the stamp duty surcharge on second homes, a recent study has found landlords are still looking for future property investments.

Results from the Property Investor Survey show that the proportion of landlords looking to expand their portfolios has grown to 48 percent, up from 45 percent in November 2016 and 41 percent at the same time last year.

The survey, which was conducted over a two-week period in May this year, shows that optimism is slowly returning to the buy-to-let sector, despite the raft of changes that have impacted landlords and their buy-to-let property portfolios in recent years.

Landlords prefer 5-year fixed rate mortgage deals

Part of the reason for the increase in landlord optimism is down to the record-low interest rates that show no sign of rising anytime soon. To make the most of the incredible deals that are currently available, landlords have been increasingly opting for five-year fixed rate mortgages.



In May 2016, the same survey found that 21 percent of buy-to-let landlords were opting for five-year deals compared with 18 percent choosing the three-year alternative. Since then, there has been a dramatic shift in investor preferences, with five-year fixed rate deals now the preferred option for 42 percent of landlords. That’s twice the number in May last year and up 9 percent on November 2016.  

On the other hand, the number of landlords choosing a three-year fix has plummeted with just 5 percent of respondents going for that option, making it even less popular than ten-year fixed deals.

Adjusting to the current environment

Although the experts do expect buy-to-let lending to fall slightly over the course of the year, these latest results show landlords are starting to bounce back. Rather than exiting the sector, landlords are instead choosing to adapt their investment strategies to successfully accommodate the new regulatory landscape. Two of the biggest shifts we have seen are the rise in the number of landlords choosing to incorporate their buy-to-let portfolios and the surge in the popularity of five-year fixes as landlords maximise their borrowing options.

The survey also revealed some of the other changes landlords are making to adjust to the shifting economic environment. 62 percent of respondents said they had consulted a professional tax adviser, with 34 percent admitting to seeking advice specifically because of the changes to tax relief on finance costs. 28 percent said they already had an existing relationship in place.  
 

Tuesday 27 June 2017


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!

Tuesday 20 June 2017


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!

 

 

Tuesday 13 June 2017

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.