Royal Tunbridge Wells Property Market – What has 2015 got install for us?

I had an interesting chat with a landlord who uses another letting agent in the town after he popped into our offices for a coffee whilst his wife was doing some last minute Christmas shopping. We got taking about the Royal Tunbridge Wells market and thought other landlords might be interested.

You see, property values didn’t stop dropping in Royal Tunbridge Wells until June 2012 so after a strong run over the last 30 months, the ever upward drive of house price rises has started to turn with increases now at an almost standstill for the first time since the start of 2013. Now it could be said this easing of the housing market in Royal Tunbridge Wells can be attributed partly to the time of year (last year property values in Royal Tunbridge Wells dropped by 0.1% in November but recovered by 1% in February 2014), it is obvious that estate agents in Royal Tunbridge Wells are wary about the direction of the market as a result of the not as strong demand and fewer house sales.

With the uncertainty of a possible interest rate rise, new mortgage rules, a general election on the horizon and recent warnings of a house price bubble. Although the main indicators suggest that buyers will start to gain the upper hand, especially with the new stamp duty rules announced recently by George Osbourne. However, there are many homeowners who don’t need to sell and won’t bother unless it’s economically beneficial to do so, but most homeowners are homebuyers, so what they loose with one they gain with another.

This is all good news for landlords looking to buy rental property with the changes in stamp duty and later in 2015, the new rules regarding pensions, where you will be able to take money out of your pension pot to invest in property. However, at the same time, I would say don’t just buy any old property in Royal Tunbridge Wells. First time landlords need to be cautious. The doubling of house prices every seven to ten years which has taken place since WW2 doesn’t seem to have been seen since the mid 2000’s. The property market is shifting with more properties being built and restrictions put on mortgage lending, the likelihood of the property market increasing at the same levels as the past are questionable. But investing in property is also about receiving the rent.

On the one hand going for high yielding Royal Tunbridge Wells property to rent out seems an obvious choice, but high yielding property often doesn’t go up in value that well and in some circumstances doesn’t keep up with inflation, meaning in real terms you have a depreciating asset (I spoke about this a few months ago in ‘The Royal Tunbridge Wells Property Blog’ when comparing the Ramslye estate to Culverden, where property values in Ramslye Estate had only risen by 102% in last 13 years yet the property values in the  Culverden housing market had risen by 158%!)).

So surely you should pick a property that has great capital growth then, because of the obvious potential to generate long term capital profit, especially with inflation eating away at our savings. However, rental yields on high capital growth properties (in areas such as Calverley Park, the Warwick Park area and Speldhurst) tend to be low meaning if you are taking a high percentage mortgage, the rent doesn’t pay the mortgage payments.

Royal Tunbridge Wells Property Prices?

A number of landlords, who own property in Royal Tunbridge Wells, have made contact with me recently asking for my thoughts on the future of the buy to let market in Royal Tunbridge Wells. In previous articles, we have talked about Royal Tunbridge Wells’s history of rents, property values, tenant demand and yields; all important matters for a landlord, but we haven’t discussed the future.

Property values rose by 9.7% (Oct 13 to Oct 14) in Royal Tunbridge Wells. Good news all round, but when you consider property values in the city have previously dropped by 17.8% between February 2008 and April 2009, this is not as good as the media would have you believe.  It should be no great surprise to hear that Royal Tunbridge Wells property values are starting slow up as we head in to the New Year.  Property values in the city were growing at 1.3% a month in the summer months this year, but in October they slowed down considerably.

                   

The reality is we have had a year and a half of decent market conditions in Royal Tunbridge Wells, but now all that pent up demand is starting to fade. The big question moving forward is whether the Royal Tunbridge Wells market will now be held back by affordability and restricted mortgage lending, and what long term impact this will have on the Royal Tunbridge Wells property market.

Looking at the UK as a whole, because we can’t look at Royal Tunbridge Wells in just its little own bubble, the recent rapid rise in house values in some parts of the UK in the early part of the year (especially in London), along with earnings growth that remain below inflation and the possibility of an interest rate rise over the coming months, appear to have tempered housing demand. This weakening in demand has led to a modest easing in both property price growth and sales. A moderation in growth looks likely into next year as supply and demand become increasingly better balanced.

Now with the General Election on the horizon, whichever Government takes power, they, along with the Bank of England, have a thorny job to do in balancing the expected rise in interest rates with the continued resurgence of the housing market, to ensure the property market doesn’t drop and drag down the economic recovery forcing people into selling their property at a loss.

However, back to Royal Tunbridge Wells, long term property values which track peaks and troughs are more helpful to landlord investors. The questions I seem to be asked on an almost daily basis by landlords are:-

·         “Should I sell my property in Royal Tunbridge Wells, or even buy another?”

·         “Is the time right to buy 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?”

Many other Royal Tunbridge Wells landlords, both who are with us and many who are with other  Royal Tunbridge Wells letting agents, like to pop in for a coffee to  discuss the Royal Tunbridge Wells property market, how Royal Tunbridge Wells compares with its closest rivals (Sittingbourne, Maidstone, Rochester and Tonbridge), 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.

In the meantime may I take this opportunity to wish you all a very Merry Christmas and a prosperous 2015.

Is the Royal Tunbridge Wells Property market a runaway train?

Some of my landlords invest for yield, some invest for capital growth (and some for a bit of both). Everyone is different; if you are a landlord in Royal Tunbridge Wells, who invests for capital growth as opposed to yield, it is crucial to look to build in capital growth in a property by getting a property at a discount or by finding a way to add value.

So, how can you get a discount in this property market, with Royal Tunbridge Wells property values alight and property being snapped up over night? Achieving capital growth in Royal Tunbridge Wells is going to be tough over the coming few years isn’t it? Well yes and no. Looking at the headline figures, of the 1,047 properties available for sale today in Royal Tunbridge Wells, 581 of them are sold subject to contract, an impressive 55.4% which is obviously a sign of a runaway Royal Tunbridge Wells property market? Well, no it isn’t. Don’t get me wrong it is a lot better than it was a few years ago, but there are still good property deals to be had.

We asked Rightmove for all of the properties that had come on to the market in the last 28 days (264 to be precise), after one month, how many of those 264 had found buyers .. less than one in five (51 to be precise or 19.3%). Look at the last 56 days (2 months) and of the 501 properties that have come on to the market in Royal Tunbridge Wells, only 179 have a sale agreed on them (or 35.7%) .. the property market is good but it’s not a runaway train, is it?

The main thing is that landlords must take as much advice as possible. They will need to take a long and serious look at any existing properties or new ones to make sure they can achieve capital growth and that this increases in line with inflation.  

We are able to look at the whole of the Royal Tunbridge Wells property market.  There are good estate agents and bad ones, but one thing is always the same,  they are all paid by a vendor to sell you a property, not paid by you to help you buy. Therefore, when they show you that bargain, don’t get pressured into buying a property until you have a good feel for the market. We have many landlords who send me a web link of any Royal Tunbridge Wells properties they are interested in and I always give my honest opinion. (It might not be what you want to hear, but it will always what you need to hear!).

If you would like to discuss my thoughts on the rental markets Royal Tunbridge Wells, feel free to pop into our offices on Vale Road or email me on david.rogers@martinco.com