I am genuinely concerned about the Royal Tunbridge Wells
property market, but in a way that might surprise you. Rightmove announced that average ‘asking
prices’ fell slightly last month by 0.4% in the South East, leaving them 5.8%
higher than a year ago. Whilst it could
be said that monthly change is very modest, in the same period a year ago, we
saw a monthly fall of 0.6% in the South East, which is more the norm given the
onset of schools breaking up and
everyone going on holiday.
Looking at all the data on the Royal Tunbridge Wells
property market; putting aside the need for more houses to be built in the next
decade to balance out the increase in population (helped in part by inward European
migration) but not matched by a similar increase in housing being built; my
research shows there is a widening gap between what property buyers want and
what is available to buy. In a nutshell, many more buyers are looking for the
smaller one and two bed properties (the typical semi detached and smaller
terraced houses/apartments), whilst there is an oversupply of the four and five
bed properties, which are the typical large detached properties available.
Demand for smaller properties comes from both first time
buyers and the growing number of buy to let landlords, where it is more cost
effective and efficient to buy smaller properties to let out compared to larger
properties which tend to offer poorer returns.
Also, landlords with larger loans (on those larger more expensive
properties) will also be hit harder with the changes in the way tax is
paid on buy to let investments, which start in 2017.
If you recall, a few weeks ago I did some research on how
different types of properties had performed in Royal Tunbridge Wells since the
year 2000. I revisited those
calculations and it hit me how different types of properties had performed over
the last 15 years. In a nutshell, this
mismatch of demand and supply isn’t a new phenomenon, it’s been happening under
our noses for years!
In the last 15 years, the average terraced house in Royal Tunbridge Wells has risen in value from £122,243
to £330,928 whilst the detached house has risen in value from £307,777
to £809,383. Nothing seems
amiss until you look at the percentage growth.
The terraced has grown in value by 171% whilst the detached by only 163%
meaning the gap between the inexpensive terrace’s and expensive detached
properties has in percentage terms narrowed (this isn’t just a Royal Tunbridge
Wells thing, it has happened all across the Country).
I am concerned because more houses need to be built, not
only in Royal Tunbridge Wells, but in the South East and the UK as a whole. In particular, there is specific need for
more affordable starter homes for the growing demand from both tenants (and the
landlords that will buy them) and first time buyers. The Tories need to face up to the fact that
unless they can get the builders, the planners (to release more building land),
the banks (to finance it) and themselves together, to ensure long term plans
can be made, and implemented, this issue will continue to worsen.
The country needs 200,000 houses a year to be built to keep
up with demand, let alone reverse the imbalance between demand and supply. Last year, only 141,040 properties were
built, the year before 135,510 and 146,850 in the year before that. This means only one thing for Royal Tunbridge
Wells landlords. Unless David Cameron
starts to rip up huge swathes of the British countryside and build on acres and
acres of green belt, demand will always exceed supply when it comes to property
for the foreseeable future.
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