Saturday, 25 July 2015

Affordability of housing in Royal Tunbridge Wells

Talking to an elderly relative recently, he reminded me that in his day, you could have bought a property for the same price of what a decent second hand car would sell for today and that his father was buying property for the same price as a decent 50 inch LCD TV!  Now of course, these are only headline prices and we have had wage growth and inflation.  Interestingly, since the Second World War, property values in Royal Tunbridge Wells doubled in 1961, 1971, 1975, 1980, 1988, 2000 and 2006.

Looking at more recent times, since the start of the Millennium, these increases in property values have generated large increases in equity for many homeowners but on the other side of the coin also making housing unaffordable for other people.  It might interest readers to note that most of Europe experienced sharp increases in property values in the early years of 2000’s, with only Spain beating  us (although we know what has happened to the Spanish property market over the last few years!).  In the 2000’s, the British situation was different in two regards.  First the property value boom started earlier and saw more sustained increases, second, the regional pattern was fairly uniform.

However, since 2010, the regional pattern has been completely different in the UK.  Compared with  2007 (the last property boom), average property values today in England and Wales are 1.2% higher, whilst in Greater London, they are 35.7% higher, whereas in Royal Tunbridge Wells they are 7.07% higher. The London property market has been like a different country.  Looking specifically at Royal Tunbridge Wells though, it has continued for first time buyers to get on the housing ladder.  The best measure of the affordability of housing is the ratio of Royal Tunbridge Wells Property Prices to Royal Tunbridge Wells Average Wages, (the higher the ratio, the less affordable properties are).  In 1997  the average value of a Royal Tunbridge Wells property was 4.62 times higher than the average annual wage in Royal Tunbridge Wells) ie 4.62 to 1, then in subsequent years

· 2000 6.48 to 1
· 2002 7.95 to 1
· 2003 8.75 to 1
· 2007 9.31 to 1
· 2009 8.60 to 1
· 2012 8.46 to 1
· Today 9.44 to 1

You  can see quite clearly, even though we had an improvement just after the 2007 property crash (i.e. the ratio dropped), in following subsequent years with Royal Tunbridge Wells house price’s rising but wages not keeping up with them,  the ratio started rise.  This has meant there has been a deterioration in affordability of property in Royal Tunbridge Wells over the last couple of years.  This is one of the (many) reasons why the younger generation is deciding more and more to rent instead of buy their own house.  The local Council sold off council houses in the Thatcher years and for many on low incomes or with little capital, owning a home has simply never been an option.

With fewer people able to save up the deposit required by mortgage lenders, more and more people are looking to rent, this has also resulted in a change in attitudes towards renting over the last decade.  This delay in moving up the property ladder has driven rents up in Royal Tunbridge Wells over the last few years, as more people are seeking properties to rent.  All these things have combined to make the demand for rental property in Royal Tunbridge Wells rise.  If you are an existing landlord or someone thinking of become a first time landlord looking for advice and opinion and what (or not to buy in Royal Tunbridge Wells), one source of information is the Royal Tunbridge Wells Property Blog 

Saturday, 18 July 2015

Fewer people are moving house in Royal Tunbridge Wells

Well the dust has settled and the General Election seems a distant memory, we can get back to a more normal property market, or that is what the London based ‘Fleet Street’ journalists would lead  you to believe.  You see I have been talking to many fellow property professionals in Royal Tunbridge Wells (solicitors, conveyancers and one the best sources of info – the chap who puts all the estate agent and letting boards up in Royal Tunbridge Wells, and all of them, every last one of them told me they didn’t see any change over April in business, compared to any other month on the lead up to the Election itself.

 I am now of the opinion that maybe in the upmarket areas of Mayfair and Chelsea, the market went into spasm with the prospect of a Labour/SNP pact with their Mansion Tax for properties over £2,000,000, but in little old Royal Tunbridge Wells, there has only been nine properties sold above £2,000,000 mark in the last 5 years.   

In a nutshell, the General Election in Royal Tunbridge Wells didn’t really have any impact on people’s confidence to buy property.  As I write this article, of  582 properties that have come on to the market in Royal Tunbridge Wells  since the 2nd of April, 233 of them have a buyer and are sold subject to contract, that’s over two in five (40.03% to be precise).

I think that things are starting to change in the way people in Royal Tunbridge Wells (in fact the whole of the country as I talk to other agents around the UK) buy and sell property.  Back in the 1970’s, 80’s and 90’s, the norm was to buy a terraced house as soon as you left home and do it up.  Meanwhile, property prices had gone up, so you traded up to a 2 bed semi, then a 3 bed semi and repeated the process, until you found yourself in a large 4 bed detached house with a large mortgage. 

Looking into this a little deeper like I have said in previous articles Royal Tunbridge Wells people’s attitude to homeownership itself has changed over the last ten years.  The pressure for youngsters to buy when young has gone as renting, not buying, is considered the norm for 20 something’s. This isn’t just a Royal Tunbridge Wells thing, but, a national thing, as I have noticed that people buy property by trading up (or down) because they need to, not because ‘it’s what people do’.  This does means there are a lot less properties on the market compared to the last decade.

A by-product of less people moving is less people selling their property. My research shows there are a lot fewer properties each month selling in Royal Tunbridge Wells compared to the last decade.  For example, in February 2015, only 105 properties were sold in Royal Tunbridge Wells. Compare this to February 2002, and 120 properties sold and the same month in 2003, 111 properties.  I repeated the exercise on different sets of years, (comparing the same month to allow for seasonal variations) and the results were identical if not greater.  

So what does this all mean?  Demand for Royal Tunbridge Wells property isn’t flying away, but with fewer properties for sale, it means property prices are proving reasonably stable too. Stable, consistent and steady growth of property values in Royal Tunbridge Wells, year on year, without the massive peaks and troughs we saw in the late 1980’s and mid/late2000’s might just be the thing that the Royal Tunbridge Wells property market needs in the long term.

Saturday, 11 July 2015

Royal Tunbridge Wells Buy To let – Bedrooms?

Last week, a landlord from Royal Tunbridge Wells emailed me to ask, after reading the Royal Tunbridge Wells Property Blog, if he should extend his terraced house making an extra bedroom in the loft. He had a builder friend who owed him a favour, and thought a good way would be get an ‘inexpensive’ extension.

Having more useable space is generally thought to be consistent with better quality accommodation and homeowners and tenants are prepared to pay for it. If you added a bedroom to a two bed terraced to make a three bed terraced, it will add 10% to the value of the property.  Turn a three bed terraced into a four bed terraced and 9% will be added to the value. Looking at semi detached properties, and turn a two into a three bed and 12% will be added to the value, whilst making a three bed semi into four bed will add 9% in value.

However, before you rush off to the planning department there are some important considerations, whether you are a homeowner or landlord.  What would be the cost of making that extra bedroom? The average value of a terraced house in Royal Tunbridge Wells is currently £407,298 whilst the average value of a semi detached house is £782,800 meaning to make money the cost of the extension would need to be less than £38,693 on the terraced property and £82,194 on the semi detached house. Talking to a number of trades people in the town, most are booking up into the New Year. Also, no matter how good a friend he was, I know of no builders that would charge as little as that. Maybe the builder was just thinking of a bit of pointing work on the chimney!

Well, that got me thinking about how bedrooms affected rental prices and rent-ability as well.   Interestingly below, you will see that whilst bedrooms do have an effect on the rent that can be achieved and the rent-ability of the property – the difference does not warrant the expense, hassle and trouble of extending.

·         51.4% of the one bed properties on the market to rent in Royal Tunbridge Wells have a tenant with an average rent of £789 per month
·         45.5% of the two bed properties on the market to rent in Royal Tunbridge Wells have a tenant with an average rent of £1,141 per month
·         49.1% of the three bed properties on the market to rent in Royal Tunbridge Wells have a tenant with an average rent of £1,485 per month
·         35.7% of the four bed properties on the market to rent in Royal Tunbridge Wells have a tenant with an average rent of £2,250 per month

No, if you want to increase the value of your property, be you a Royal Tunbridge Wells landlord or homeowner, there are things that cost a lot less than building extra bedrooms. Spruce up the exterior, emulsion all the rooms, install fresh carpets and curtains. For homeowners, a matter of a few hundred pounds will add thousands whilst for landlords, these things can add an extra 10% to the rent that you can achieve. For more advice and opinion on the Royal Tunbridge Wells Property Market, visit the Royal Tunbridge Wells Property Blog

Saturday, 4 July 2015

Royal Tunbridge Wells Buy To Let – Demand and Supply

Following on from my recent article about the state of the Royal Tunbridge Wells property market and in particular what had happened to the rents Royal Tunbridge Wells tenants have had to pay since the Credit Crunch, if you recall, I said rents in Royal Tunbridge Wells are 7.4% higher than they were in 2008. A Royal Tunbridge Wells landlord has since rung me after reading the Royal Tunbridge Wells Property Blog, wanting to know more of the story of what was happening to current rents in the town. The reason he asked was that his current agent hadn’t increased his rent for a number of years and was concerned if he was getting the best return from his buy to let investment.

The Royal Tunbridge Wells rental market is all about supply and demand (isn’t it so in all parts of the economy?). On the supply side, 225 rental properties have come up for let in the last 31 days in Royal Tunbridge Wells. It sounds a lot until you consider there are 5353 rental properties in Royal Tunbridge Wells, that means only 4.2% of the rental stock of properties in Royal Tunbridge Wells are coming onto the market each month (it is normally around 5%). One reason for this lack of new rental properties coming on the market is the fact that tenants seem to be staying in properties longer.

With this lack of supply, newer tenants have to pay more to secure the property they want. And this is the crux of the matter they want. Older properties in Royal Tunbridge Wells, that haven’t been maintained, still retain their wood chip wallpaper from the 1970’s and thread bare carpets have seen their rents drop. Tenants want either modern properties with all the mod cons or older style properties that have been presented to an exceptional standard – and they are prepared to pay for the privilege. Rents for top quality properties in Royal Tunbridge Wells have risen by 0.5% in the last month. Any properties, old or modern, put on the market in good or excellent condition will rent in a matter of days.

Interestingly, looking at Royal Tunbridge Wells property values, the Land Registry have just released their latest set of data on property values. Throughout April 2015 (the latest set of data), property values rose in Royal Tunbridge Wells, with 0.4% growth, meaning they are now 8.9% higher than they were a year ago. When one looks at the regional picture, the South East average property values rose by 0.8% in the last month. The difference doesn’t concern me, as the regional and local property values always even themselves out over the months.

Looking forward, after considering all the statistics and talking to other property professionals, I expect property values in Royal Tunbridge Wells to rise by 3% to 5% over the coming 12 months, following the Conservative victory. In a forthcoming article, I will discuss how the number of properties changing hands each month has dropped considerably in the last 10 to 15 years in the town.

...And so back to our landlord. Each property is unique and so as his tenancy agreement allows him to inspect the property with notice to the tenant, we will be visiting the property next week. For more in depth thoughts and opinions like this on the Royal Tunbridge Wells Property market ...visit the Royal Tunbridge Wells Property Blog