Tuesday, 6 August 2019

Royal Tunbridge Wells’ Homeowners Sell Their Home Over a Third More Than the UK Average


The average homeowner in the UK moves every 20.2 years… 
That average in the 1970’s and 80’s was around every 10 to 11 years; in the 1990’s it increased to the mid-teens (in terms of years) and in the early part of the Millennium, it dropped again to the low teens. When we had the Credit Crunch years of 2008/09/10, that shot up to every 25.3 years and has been steadily decreasing ever since to the 2018 figure of 18.7 years.

The graph shows that as the economy improved after the Credit Crunch, British homeowners started to move home more and may have be taking advantage of higher demand and lower supply in the housing market to sell their homes and move on to the next property. Yet, most Royal Tunbridge Wells (and British) homeowners are more often than not buyers as well, so that cannot be the real cause. As mentioned already, people in the 70’s and 80’s moved a lot more than today.
So why is the long-term average length of time between moves since 2000 still much higher than it was in the preceding 30 years? For existing homeowners, some people have said their lack of an appetite to move home compared to the 1970’s and 1980’s might come down to their mortgages and the need for higher equity to put down on the next house. It is true the number of years you stay in your home determines how much you will pay back on the mortgage you took out when buying it. If you stay longer, you have the prospect to pay back a larger portion of the money you borrowed to buy the home. Interestingly, if you consider someone with a 25-year mortgage on the UK average variable rate of 3.4% for existing mortgage borrowers, borrowed say £200,000 at the start of the mortgage and made monthly payments on that mortgage, it would take 15 years and 1 month to build up over 50% (or £100k) in equity (and 17 years 2 months if interest rates were at their historic average in the 1980’s and 1990’s of 7%) … all assuming there was no decrease in value of the property. 
Instead, I think the issue is a lot deeper than that. Firstly, I believe there has been a long-term change in attitude to moving home and this lack of people moving home (compared to the last 30 years of the 20thCentury) is part of a slowdown in the country in social mobility. Interestingly, a million fewer people moved in the noughties (2000 to 2010) than in the 1970’s, after other changes in population have been taken into consideration. You see back in the 1970’s and 80’s, it was expected that people kept moving up the ‘property ladder’ to bigger and better homes (i.e. keeping up the Jones’).
Secondly, there has been a change in attitude to homeownership per se… as 20 to 30 somethings (Generation Rent) have been weaning themselves off the ‘homeownership drug’ for the last 15 years that the baby boomers were addicted to in the 1970’s and 80’s ... meaning there are less buyers at the bottom of the housing ladder to fuel the fire. That is an important factor on the long-term decrease in home moving as buy to let landlords have been buying the smaller style starter homes to house Generation Rent … yet landlords don’t tend to move up the housing ladder after a few years like first time buyers - landlords just buy another property. 
So, what is happening in Royal Tunbridge Wells with regard to people moving home?
I have mentioned a number of times in my articles about the property market in Royal Tunbridge Wells, that the number of people who move home (i.e. the number of property transactions) is a more important bellwether to the health of the local property market. 

Therefore, I comparedthe number of people moving home in Royal Tunbridge Wells to the regional stats of home movers and the country as a whole. I also decided to look at a long-term point of view to judge the Royal Tunbridge Wells housing market, because as can be seen on the first graph, there is often short-term volatility. Looking at the stats...  
Since 1995, people in Royal Tunbridge Wells have moved home 35.55% more often than the national average

Looking at this second graph, 107% of the Royal Tunbridge Wells’ (TN4 to be precise) privately owned housing stock has been sold since 1995 - interesting when compared to the national figure of 79%. Why? Well I am sure this might be the topic of an up and coming article on the Royal Tunbridge Wells Property Market Blog.

Tuesday, 23 July 2019

Which Royal Tunbridge Wells Properties are Selling the Best?


Moving home is said to be the third most stressful life event, following a member of your family dying or getting divorced. So it is always best to keep your stress levels down by investigating and doing your homework on both the particular area of Royal Tunbridge Wells (or nearby conurbations) where you live (i.e. where you are selling) and where you want to search for your next Royal Tunbridge Wells home. Being mindful of how fast (or slow) the different aspects of the Royal Tunbridge Wells property market is moving is key.. because it could save you much heartache and many thousands of pounds. 

You see, if you know you are selling a property in a sluggish price range and buying in a faster moving price range in Royal Tunbridge Wells then putting your property on the market first is vital, otherwise you will always find the one you want to buy tends to sell before your property sells - there is nothing worse than pondering over a property only to find that someone else has bought it. Being primed with all the knowledge is key. On the other side of the coin, if you are selling in a fast moving market and buying in a sluggish market .. you can probably get a better deal on the one you are buying.

For buy to let landlords in Royal Tunbridge Wells, this evidence is particularly critical as purchasing a high-demand property in a well-liked area of Royal Tunbridge Wells will safeguard a surfeit of availability of tenants, as well as respectable house price growth. 
Being an agent in Royal Tunbridge Wells, I like to keep an eye on the Royal Tunbridge Wells property market on a daily basis because it enables me to give the best advice and opinion on what (or not) to buy in Royal Tunbridge Wells; be that a buy to let property for a landlord or an owner occupier house.  So, I thought, how could I scientifically split the Royal Tunbridge Wells housing market into sections, so I could analyse which part of the Royal Tunbridge Wells property market was doing the best (or the worst)
I took the decision that the preeminent way was to fragment the Royal Tunbridge Wells property market into roughly four uniform size price bands (in terms of properties for sale). Each price band would have roughly around 25% of the property in Royal Tunbridge Wells available for sale .. then add up all the sold (stc) properties and see which sector of the Royal Tunbridge Wells property market was performing best? … And these were the results .. 

# Properties For Sale 
# Properties Sold (stc)
up to £270,000
190
101
£270,000 to £350,000
202
107
£350,000 to £550,000
208
118
£550,000 upwards
218
107

The best performing price range in Royal Tunbridge Wells is the middle to upper market £350,000 to £550,000 where 36.2% of all property in that price range has a buyer and is sold stc.
It’s not unexpected that the upper end of the property market (the top 25%) in Royal Tunbridge Wells is finding things a little tougher compared to the others. Remarkably for Royal Tunbridge Wells landlords, the lower market is doing reasonably well, but it’s not the best, so maybe there could be some property deals out there for buy to let investment? Even though the number of first time buyers in 2018 did increase over the 2017 levels, it was from a low starting point and the large majority of 20 to 30yo’s don’t want to or can’t buy their first home and the local authority has no money to build Council houses meaning an increase in demand as private landlords take up the slack – because everyone needs a roof over their head!
If you would like to pick my brains on the Royal Tunbridge Wells Property Market – pop in for a coffee or drop me a line on social media or email. 

Wednesday, 17 July 2019

10% more homes for sale in Royal Tunbridge Wells than a year ago


One of the key factors of the health of the Royal Tunbridge Wells property market is the number of properties for sale at any one time. The issue with housing is that when demand goes up, unlike with a chocolate bar factory, who can add a couple of hours overtime to increase supply/production to satisfy demand, it takes a good 18 months to two years from planning permission to someone moving into a home. I have talked at length (and proved) in previous articles that we are still not building enough homes in the long term in the Royal Tunbridge Wells area.. yet for the short term, a good indicator is the number of properties for sale and how long they have been on the market.

How long a property has been on the market is important as a guide to how the property market is performing – potential buyers can always find this information on the Rightmove and Zoopla listings (if you don’t know where – drop me an email or message and I can let you know). 

So, let’s have a look at what is happening in Royal Tunbridge Wells, both in terms of the number of properties for sale and how long they have been on the market compared to a year ago, then discuss what that means for the current state of play of the Royal Tunbridge Wells property market. So to start, let’s look at the number of properties for sale in Royal Tunbridge Wells compared to a year ago.



Interestingly, you can see there has been a proportional increase of 41% in terraced properties on the market in Royal Tunbridge Wells, yet a 12% reduction in detached property .. overall in the last year there are 10% more properties on the market in Royal Tunbridge Wells, compared to a year ago. Now, let’s look how long they have been on the market ..



Interesting to see that the biggest jump in the number of days on the market is terraced houses, from 121 days to 169 days .. demand and supply working again. Also, the length of time an average Royal Tunbridge Wells’ property has been on the market has increased by 23% in the last year.

So what does this all mean for Royal Tunbridge Wells Buy To let landlords and Royal Tunbridge Wells homeowners looking to buy and sell?  Well, if you are thinking of selling, as the number of properties on the market has increased and the length of time Royal Tunbridge Wells properties are on the market has also increased – you have to be mindful that realistic pricing is the key to get the property sold. If you are a buyer, that means you find yourself in a better position to negotiate a good deal on your Royal Tunbridge Wells property purchase. 

There is an argument to suggest that property buyers see excessive days on the market as an indication that the seller is becoming desperate to sell because the property hasn’t sold. Buyers are also mindful to believe that there might be something wrong with the home, a defect that caused other buyers to pass it up. This can concern them when they view the property – if they view it at all, as that possible and perhaps made-up defect is on their minds, even if it is sub-consciously.

Normally, both assumptions are wrong. A property can loiter on the market for several reasons. The most common reason for a property sticking on the market is overvaluing or overpricing. In an effort to get the property on the market, some estate agents may have deluded the seller into believing the property was worth more than the property market will bear. Don’t get me wrong, if you don’t ask, you don’t get and homeowners naturally want to get the best price for their home, and so test the market. Yet, if you aren’t getting a steady stream of viewers after a few weeks, then that testing can back fire. You see, by setting the asking price too high to see if they can find someone to pay that inflated price, then finding there is nobody in the market that will pay the price, here lies the biggest trap for house sellers on keeping the inflated asking prices for too long. 

Sellers can also get stuck on an asking price and they are willing to wait out the market until it catches up to what they want for their property – yet we aren’t in that type of property market at the moment. Consumer champion Which said that if you have to reduce your asking price by 5% or more, it adds an extra 64 days to the sales process meaning you might lose the property of your dreams.

Also, I have seen countless times, house sellers insist on an inflated asking price, reduce 12 weeks later, yet buyers think there is something wrong with it so the homeowner gets fed up and accepts a lower offer to get the property sold, whereas if the house seller had gone onto the market at the right asking price, they would get much nearer to what they deserve for their property.

So, if you are looking for a bargain to buy – all the Portals (Rightmove, Zoopla and On The Market) allow you to search and sort by the length of time on the market as well as the asking price.. who knows – there could be a bargain waiting for you!

Tuesday, 2 July 2019

What Has Happened to the Property Market in Royal Tunbridge Wells Since the Last Property Market Crash?

A handful of landlords and homeowners from Royal Tunbridge Wells have been asking me what would happen if we had another property crash like we did in 2008/9? 
The UK property crash in 2008/9 caused property prices in the UK to drop by an average of 18.37% in a period of 16 months.
On the run up to the Parliamentary vote on Brexit scheduled for March, a number of people asked what a no-deal Brexit would do to the property market and if there would be a crash as a result. I have discussed in a previous article on the chances of that (slim but always a possibility) … but assuming it happens, it is my opinion the outcome of a no-deal Brexit would be no worse than the country’s 2008/9 credit crunch property crash, the late 1988 property crash, the 1974 property crash, 1951 property crash … I could go on. The British economy would bounce back from the shock of a no-deal Brexit with lower property values and a continued low interest rate environment (together with an additional round of Quantitative Easing) and that would mean we would see a similar bounce back as savvy buyers saw it as a fantastic buying opportunity. 
So, let me explain the reasons I believe this...
Many said after the Brexit vote in June 2016, we were due a property crash - but we all know what happened afterwards.
Initially, let’s see what would happen if we did have a crash, how quickly it would bounce back and then finally discuss how the chances of a crash are actually quite minimal.
Therefore, to start, I have initially split down the types of property in Royal Tunbridge Wells (Det/Semi etc.) and in the red column put the average value of that Royal Tunbridge Wells property type in 2009. Next in the orange column what those average values are today in 2019.
Royal Tunbridge Wells Property Market 
The likely effects of a Property Crash and Recovery

Average Value in 2009
Average Value in 2019
Assumed Average Value by Q2 2020  (if Property Crash)
Assumed Value in 2024/5
Detached
£567,800
£865,300
£706,300
£891,300
Semi Detached
£292,200
£470,100
£383,700
£500,500
Terraced
£244,300
£401,800
£328,000
£433,700
Apartment
£205,500
£292,500
£238,800
£289,300

Now, assuming we had a property crash like we did in 2008, when average property values dropped nationally by 18.37%, I applied a similar drop to the current 2019 Royal Tunbridge Wells figures (i.e.the green column) to see what would happen to property values by the middle 2020 (because the last crash only took 13/14 months).
…and finally, what would subsequently happen to those same property prices if we had a repeat of the 2009 to 2014 property market bounce back. 

Of course, these are all assumptions and we can’t factor in such things as China going pop on all its debt ... yet either way, the chance of such a crash coming from internal UK factors are much slimmer than in another of the four property crashes we have experienced in the last 80 years. Why, you might ask? 
The seven reasons I believe are these … 
1.    The new Bank of England mortgage rules on lending 2014 to stop reckless lending that fuelled that last crash.
2.    Low inflation.
3.    Low mortgage rates (the average Brit’s fixed rate mortgage is currently 2.26% and the variable rate mortgage of 3.07%).
4.    Wage rises are forecast to continue to outgrow inflation.
5.    Unemployment figures dropping to 4% (down from 8.4% in 2011).
6.    The high percentage (67.7%) of all British mortgages being on a fixed rate.
7.    And notwithstanding the distractions of Brexit over the last few years, it cannot be denied that the British economy has slowly and steadily been heading in the right direction for a number of years, built on some decent foundations of a steady housing market (unlike the 1988 and 2008 crashes when the housing market got overheated very quickly on the run up to the crashes).

So as the circumstances are much different to the last two crashes, the chances of a crash are much slimmer. Yet if we do have a crash, for the very same 7 reasons above why the chances of a crash are unlikely, those 7 reasons would definitely contribute to making the ensuing recession neither too long nor substantial in scale.

One final thought for the homeowners of Royal Tunbridge Wells. Most people when they move home, move up market, meaning in a decreasing market you will actually be the winner, as a 10% drop on yours would be much smaller in £notes than a 10% drop on a bigger property ... think about it.
One final thought for the new and existing buy to let landlords of Royal Tunbridge Wells. Well, the questions I seem to be asked on an almost daily basis by landlords are: -
·      “Should I sell my property in Royal Tunbridge Wells?”
·      “Is the time right to purchase another buy to let property in Royal Tunbridge Wells and if not Royal Tunbridge Wells, where?”
·     “Are there any property bargains out there in Royal Tunbridge Wells to be had?” 


Many other Royal Tunbridge Wells landlords, who are with us and many who are with other Royal Tunbridge Wells letting agents, all like to pop in for a coffee, pick up the phone or email usto discuss the Royal Tunbridge Wells property market, how Royal Tunbridge Wells compares with its closest rivals (Tonbridge, Crowborough and Heathfield), and hopefully answer the three questions above. I don’t bite, I don’t do hard sell, I will just give you my honest and straight-talking opinion. I look forward to hearing from you.

Tuesday, 25 June 2019

Home Ownership among Royal Tunbridge Wells’ young people has nearly halved in 20 years


The proportion of 25 to 34-year olds who own their home in Royal Tunbridge Wells has nearly halved in the last 20 years, so what does this mean for all the existing Royal Tunbridge Wells landlords and homeowners together with all those youngsters considering buying their first home?

Well, looking at the numbers in greater detail, in Royal Tunbridge Wells there has been a 43.5% proportional drop in the number of 25 to 34-year olds owning their own home between 1999 and 2019 .. and a corresponding, yet smaller drop of 21.2% of 35 to 44-year olds owning their own home over the same time frame.

So, if you were born in the late 1980’s or early 1990’s, the dream of owning a home in Royal Tunbridge Wells has reduced dramatically over the past 20 years as young adults’ wages and salaries are now much lower in relation to Royal Tunbridge Wells’ house prices. Nationally, average property values have grown by 186.9%, whilst average incomes have only risen by 44.8%, yet that doesn’t allow for inflation. However, whilst not over the same 20 years (it’s close enough though), the Institute of Fiscal Studies said recently the average British home was just over 2.5 times higher in 2015/6 than in 1995/6 after allowing for inflation; yet the average household income (after tax) of 25 to 34-year olds grew by only 22% in ‘real-terms’ over those 20 years.

Yet, even though property prices are at record highs, on the other side of the coin, the monthly cost of mortgage payments has actually fallen because interest rates have remained low. In 1999, the average mortgage rate paid by UK homeowners was 6.54% whilst today it’s more than halved to 2.64% - a drop of 59.4%. Many of you reading this will remember the 15% mortgage rates of 1992!

The fact is, mortgage repayments take up a considerably smaller proportion of take home pay, on average, than they did before the Credit Crunch or in the late 1980’s. Although the risk that mortgage rates will increase if the Bank of England put up interest rates might leave some homeowners in a difficult position – hence I might suggest (if you haven’t already) you seriously consider fixing your mortgage rate (remember to take advice from a professional before you do).

Yet look at the data in even greater detail and you will see, going back
to the 1960’s, we weren’t always the huge homeowning nation we always thought we were.

Today, 4.5% less 35 to 44-year olds and 33.5% more 45 to 54-year olds own their own home compared to 1969. So as the younger generation in Royal Tunbridge Wells has seen homeownership drop in the medium term, they will in fact end up inheriting the homes of their parents. We are turning into a more European (especially German) model of homeownership, where people buy their first home in their 50’s instead of their 20’s.
My message to first time buyers of Royal Tunbridge Wells is go and get some mortgage advice!  The cost of renting smaller starter homes is between 20% and 25% more than the mortgage payments would be. 95% mortgages (meaning a 5% deposit is required) have been available since late 2009 and some banks even do 100% mortgages (i.e. no deposit) .. I suggest that you don’t assume you can’t get a mortgage – for the sake of a 45 minute chat with a mortgage adviser – you get a straight answer and all the information you need.

Therefore, what does this mean for homeowners and landlords of Royal Tunbridge Wells? Well, for many tenants, renting is a positive choice and as we aren’t building enough homes to meet current demand, let alone eating into the lack of building over the last 35 years, demand will outstrip supply, home values will, over the medium to long term, rise above inflation – meaning it will be a good overall investment as demand for rental properties increases. Good news for Royal Tunbridge Wells’ landlords and Royal Tunbridge Wells’ homeowners alike.

The single biggest issue in the Country (and Royal Tunbridge Wells) today is that we aren’t building enough homes. I know it seems the local area is covered with building sites – yet looking at the actual numbers – we still aren’t building enough homes to live in. Residential property only takes up 1.2% of all the land in the Country – and whilst I’m not suggesting we build housing estates on National Trust land or cut down forests, until we realize that we aren’t building enough .. this issue will only continue to get worse.








Homeownership in Royal Tunbridge Wells by Age - 1969 to today


25-34
35-44
45-54
55-64
65+
1969
48.5%
59.9%
53.5%
50.4%
41.3%
1979
52.1%
66.0%
60.4%
50.2%
42.7%
1989
61.9%
78.6%
81.2%
73.2%
58.7%
1999
49.6%
72.6%
81.2%
80.7%
70.0%
2009
35.8%
62.8%
74.1%
78.5%
77.1%
2019
28.0%
57.2%
71.4%
76.4%
78.2%