Tuesday 28 February 2017

Royal Tunbridge Wells property price rises set to be more restrained in 2017 due to Brexit

While Brexit has not yet had a sizeable impact on the Royal Tunbridge Wells housing market, my analysis is pointing to the fact that the economic viewpoint still remains uncertain and Royal Tunbridge Wells property price growth is likely to be more subdued in 2017 - although that isn’t a bad thing so let me explain.

Since the summer, apart from a little wobble of uncertainty a few weeks after the Referendum vote, property values (and the economy), on the whole has outperformed what most people were anticipating. In fact, when I looked at the property prices for our Tunbridge Wells Borough Council area, these were the results...

October 2016              - drop of 1.75%
September 2016         - rise of 1.52%
August 2016                - rise of 0.07%
July 2016                     - rise of 2.7%
June 2016                    - rise of 2.77%

The UK property market continues to perform robustly (because we can’t just look at Royal Tunbridge Wells as if in its own little bubble) with annual price growth set to end this year at 6.91% and most South East region property market at 9.1%.


(Photo Source : Times of Tunbridge Wells)

Talking to fellow agents in London, the significant tidal wave of growth seen from 2013 through to 2015 in the capital has subdued over the last six months. However, as that central London house price wave has started to ripple out, agents are starting to see stronger property growth values in East Anglia and the South East regions outside of London, than what is being seen within the M25. So, fellow Royal Tunbridge Wells landlords and homeowners, is this the time to get your surfboards ready for the London wave?

Well, we in Royal Tunbridge Wells haven’t really been affected by what is happening in the central London property mega bubble (i.e. Kensington, Chelsea, Marylebone, Mayfair etc.). The property market locally is more driven by sentiment, especially the ‘C’ word ... confidence. The main forces for a weaker Royal Tunbridge Wells Property market relate to economic uncertainty surrounding the Brexit process, which I believe will impact unhelpfully on consumer confidence in the run up to and just after the serving of the Section 50 Notice by the end of Q1 2017.

In addition, the influence of reforms to the taxation of landlords is expected to result in a reduced demand from buy to let landlords, which will limit upward pressure on property values. However, on the other side of the coin, demand from tenants has been strong, but this has been counterbalanced by a strong supply of rental properties. In my opinion, there is a slight risk of rents not growing as much in 2017 as they have in 2016, but by 2018 they will rise again to counteract Philip Hammond’s changes to tenant fees.

The broader Royal Tunbridge Wells rental market looks relatively positive with modest rental growth expected and rents might rise further if landlords begin to sell properties in an effort to offset to the impact of tax rises.

So what do I predict will happen to the Royal Tunbridge Wells housing market in 2017? In Royal Tunbridge Wells, I believe price values are expected to fall by 2.3% in 2017 compared to a rise of 11.5% this year, then pick up to growth of 1.9% in 2018, 3.1% in 2019, then 4.2% in 2020 and 6.5% in 2021.


But these predictions do not take into account any effect of a possible snap General Election or further referendum on ratifying any Brexit deal (if that comes to pass in the future).

Friday 24 February 2017

Royal Tunbridge Wells OAP’s sitting on £2.95 bn of Property

Royal Tunbridge Wells people aged over 65 currently hold more housing wealth in their homes than the annual GDP of the whole of Blackpool … and this is a problem for everyone in Royal Tunbridge Wells!

Many retiree’s want to move but cannot, as there is a shortage of such homes for mature people to downsize into.  Due to the shortage, bungalows command a 10% to 20% premium per square foot over houses of the same size with stairs. To add to the woes, in 2014, just 1% of new builds in the UK were bungalows, according to the National House Building Council - down from 7% in 1996.

My research has found that there are 5,974 households in Royal Tunbridge Wells owned outright (i.e. no mortgage) by over 65 year olds.  Taking into account the average value of a property in Royal Tunbridge Wells, this means £2.95 billion of equity is locked up in these Royal Tunbridge Wells homes, compared to the GDP of the whole of Blackpool being £2 billion of GDP.

A recent survey by YouGov, found that 36% of people aged over 65 in the UK are looking to downsize into a smaller home.  However, the Government seems to focus all its attention on first-time buyers with strategies such as Starter Homes to ensure the youngsters of the UK don’t become permanent members of ‘Generation Rent’.  Conversely, this overlooks the chronic under-supply of appropriate retirement housing essential to the needs of the Royal Tunbridge Wells’s rapidly ageing population. Regrettably, the Royal Tunbridge Wells’s housing stock is woefully unprepared for this demographic shift to the 'stretched middle age’, and this has created a new 'Generation Trapped’ dilemma where older people cannot move.

Some OAP’s who are finding it difficult to live on their own, are unable to leave their bungalow because of a lack of sheltered housing and ‘affordable’ care home places.  So, older retirees can't leave bungalows, younger retirees can't buy bungalows and younger people can't buy family houses.



Interestingly, adding insult to injury, the problem will only get worse, as in the 50 year old to 64 year old homeownership age range there are an additional 3,839 Royal Tunbridge Wells households that are mortgage free and a further 3,607 Royal Tunbridge Wells households who will be completing their mortgage responsibility.  With Government projections showing the proportion of over 65’s will rise by over a third from the current 17.7% to 24.3% of the population in the next 20 years ... this can only add greater pressure to the Royal Tunbridge Wells Property market.

House prices have rocketed over the last 40 years because the supply of property has not kept up with demand. With migration, people living longer and high divorce rates (meaning one family becomes two) we need, as a Country, 240,000 properties to be built a year to just stand still.  In the 1990’s and early 2000’s, the Country was building on average 180,000 to 190,000 households a year, but since the Credit Crunch (2009), that has only been between 130,000 and 145,000 households a year.

The solution …. release more land for starter homes, bungalows and sheltered accommodation because land prices are killing the housing market as the large firms dominating the construction industry are more likely to focus on traditional houses and apartments.  My opinion – until the Government change the planning rules and allow more land to be built on – Bungalows could be a decent bet for future investment as they continue to attract ever growing premiums?