Saturday, 26 November 2016

6.8% of Royal Tunbridge Wells People live in Shared Households

I had an interesting chat the other day with a Royal Tunbridge Wells landlord. He said he had been chatting with an architect friend of his who said back in the mid 2000’s, the developments he was asked to draw were a balance of one and two bed properties, compared to today where the majority of the buildings he is designing are more towards two and sometimes three bedrooms. Now of course, this was all anecdotal but it made me think if similar things were happening in the Royal Tunbridge Wells property market?

This is a really important point as I explained to this landlord, as knowing when and where the demand of tenants is going to come from in the coming decade is just as important as knowing the supply side of the buy to let equation, in relation to the number of properties built in Royal Tunbridge Wells, Royal Tunbridge Wells property prices, Royal Tunbridge Wells yields and Royal Tunbridge Wells rents.

In 2001, there were 42,700 households with a population of 104,000 in the Tunbridge Wells Borough Council area. By 2011, that had grown to 47,200 households and a population of 115,000.

.. meaning, between 2001 and 2011, whilst the number of households in the Tunbridge Wells Borough Council area grew by 10.49%, the population grew by 10.59%

Nothing surprising there then. But, as my readers will know, there is always a but! My analysis of the 2011 Census results, using the most recent in-depth data on household formation (eg ‘one person households’, ‘couples/ family households’ or ‘couple + other adults households and multi -adult households’), has displayed a sudden and unexpected break with the trends of the whole of the 20th Century. There has been a seismic change in household formation in Royal Tunbridge Wells between 2001 and 2011.
Between 2001 and 2011, the population of Royal Tunbridge Wells grew, as did the number of Royal Tunbridge Wells properties (because of new home building). However, the growth rate of new properties built in Royal Tunbridge Wells was much lower than expected though, but still the population has grown by what was expected, meaning the average household size was larger than anticipated in Royal Tunbridge Wells. In fact, average household size (ie the number of people in each property) in 2011 was almost exactly the same as in 2001, the first time for at least 100 years it had not fallen between censuses. (Since 1911, household size has decreased by around 20% every decade).

Looking at figures specifically for Royal Tunbridge Wells itself,

·       One person households - 32.6% 
·       Couples/family households – 60.6%
·       Couple + other adults/multi-adult households – 6.8%

This decline was reflected in large scale shifts in the mix of household types. In particular, there were far more “couple + other adults households and multi -adult households” than expected (6.8% is quite a lot of households). It can be put down to two things; increased international migration and changes to household formation. A particularly important reason for the difference can probably be attributed to the evidence that migrants initially form fewer households (ie two couples share one property) than those who have lived in the UK all their lives. Also, changes to household formation patterns amongst the rest of the population, including adult children living longer with their parents and more young adults living in shared accommodation (as can be seen in the growth of HMO properties (Homes of Multiple Occupation).

So, what does all this mean for Royal Tunbridge Wells Homeowners and Landlords? Quite a lot in fact. There has been a subtle shift to slightly larger households in the last decade, meaning smart landlords might be tempted to buy slightly larger properties to rent out – again good news for homeowners who will get top dollar for their home as they sell on. But now with Brexit, household formation might swing the other way in the next decade? Who knows? Watch this space!

Thursday, 17 November 2016

House Prices in Royal Tunbridge Wells rise by more than 19% in the last 18 months

Over the last month, the Royal Tunbridge Wells property market has seen some interesting movement in house prices, as property values in the Tunbridge Wells Borough Council area rose by 2.0% in the last month, to leave annual price growth at 9.6%. These compare well to the national figures where property prices across the UK saw a monthly uplift of 0.42%, meaning the annual property values across the Country are 8.3% higher, this is all despite the constraining factors of Stamp Duty changes in the spring and more recently our friend Brexit.

Looking at the figures for the last 18 months makes even more fascinating reading, whereby house prices are 19.4% higher, again thought provoking when compared to the national average figure of 13.6% higher.

However, it gets more remarkable when we look at how the different sectors of the Royal Tunbridge Wells market are performing. Over the last 18 months, in the Tunbridge Wells Borough Council area, the best performing type of property was the semi, which outperformed the area average by 0.84% whilst the worst performing type was the apartment, which under-performed the area average by 0.72%.

Now the difference doesn’t sound that much, but remember two things, this is only over eighteen months and the gap of 1.56% (the difference between the semi at +0.84% and apartments at -0.72%) converts into a few thousand pounds disparity, when you consider the average price paid for a semi-detached property in Royal Tunbridge Wells itself over the last 12 months was £421,100 and the average price paid for a Royal Tunbridge Wells apartment was £250,000 over the same time frame.

I know all the Royal Tunbridge Wells landlords and homeowners will want to know how each of the property types have performed, so this is what has happened to property prices over the last 18 months in the area...

·      Overall Average          +19.4%
·      Detached                     +18.9%
·      Semi Detached           +20.4%
·      Terraced                      +19.9%
·      Apartments                 +18.6%

So what does all this mean to Royal Tunbridge Wells’ homeowners and Royal Tunbridge Wells’ landlords and what does the future hold? 

When I looked at the month-by-month figures for the area, you can quite clearly see there is a slight tempering of the Royal Tunbridge Wells property market over these last few months. I have mentioned in previous articles that the number of properties on the market in Royal Tunbridge Wells has increased this summer, something that hasn’t happened since 2008. Greater choice for buyers means, using simple supply and demand economics, that top prices won’t be achieved on every Royal Tunbridge Wells property. You see, some of that growth in Royal Tunbridge Wells property values throughout early 2016 may have come about because of a surge in house purchase activity, an indirect result of the increase in stamp duty on second homes from April, thus providing a temporary boost to prices.

However, it may be possible the recent pattern of robust employment growth, growing real earnings and low borrowing costs will tilt the demand/supply seesaw in favour of sellers and exert upward pressure on prices once again in the quarters ahead.

...And Royal Tunbridge Wells property values, assuming that everything goes well with Brexit, I believe in twelve months’ time we should see values in the order of 4% to 8% higher.

Saturday, 12 November 2016

Royal Tunbridge Wells Property Market in 2017 and Beyond

As the trees turn from green to hues of red and brown, the Royal Tunbridge Wells property market has a confident feel to it. With the underlying fundamentals of a continued lack of properties being built, a shortage of properties (both in terms of quantity and quality) coming to the market and the continued low mortgage rate environment, buyer enquiries from first time buyers and buy to landlords is strong and motivation is even stronger, given those inexpensive lending rates and general demand caused by under supply.

Now of course, there are a few potential hurdles coming towards us in the coming months that could affect the Royal Tunbridge Wells (and UK) property market. Mrs. May has yet to get her teeth into Brexit negotiations and we don’t know what the US Presidential elections might do to the money markets around the world, meaning that on the run up to Christmas, some savvy buyers may take advantage of the lack of certainty by making cheeky offers, but I don’t believe these will have a huge impact on property values (like the 2008 Credit Crunch).

You see, property ownership, whether it’s for yourself as a homeowner or buy to let landlord, is a long term investment. In fact, focusing on buy to let, 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.  Well, as the Politician Edmund Burke said in the 18th century, "Those who don't know history are destined to repeat it." .. in other words, to see the future you must look into the past.

Since the Millennium, the housing market has had everything thrown at it. The recent Brexit, last year’s General Election, the near melt down of the World Economy with the Credit Crunch, The Dot Com boom and bust, the housing market crisis in 2008, the housing boom of 2001 to 2004 .. the list goes on. In fact here is a graph (courtesy of the Land Registry) of average Property values since the Millennium in the Tunbridge Wells Borough Council area.

Even though we had the Dot Com bubble burst in 2000, two years later in January 2002, property values in the Tunbridge Wells Borough Council area have risen from £123,100 (in Jan 2000) to £161,200 .. and kept rising to November 2007, when they peaked at £279,400. Then we had the Credit Crunch and property prices continued to fall until February 2009, where they averaged £217,400 .. but look where they are now…  £372,800.

The point I am trying to get across is long term future property values are more helpful to landlord investors than the month by month headline grabbing micro movements in the property market.  Look at the graph and you will see the growth in property values is an upward trend BUT, the average darts about as each month goes by.  So don’t watch the property indexes and panic if values drop next month or the month afterwards, because even in the glory days of 2001 to 2004 and 2012 to 2014, without fail, values always dropped slightly around Christmas, but people will always need a roof over their heads, and if they can’t buy and the council aren’t building anymore  .. only buy to let landlords can meet that demand.

Royal Tunbridge Wells landlords are being hit in the pocket with the new up and coming taxation rules and yes we might have a bumpy ride on the run up to Christmas (because of the points raised earlier), Brexit or no Brexit, but the trend will be a slow and steady upward momentum of property values, demand for rental properties and yields in the Royal Tunbridge Wells property market into 2017 and beyond.