Friday 27 October 2017

Slowing Royal Tunbridge Wells Property Market? Yes and No!

My thoughts to the landlords and homeowners of Royal Tunbridge Wells…

The tightrope of being a Royal Tunbridge Wells buy-to-let landlord is a balancing act many do well at. Talking to several Royal Tunbridge Wells landlords, they are very conscious of their tenants’ capacity and ability to pay the rent and their own need to raise rents on their rental properties (as Government figure shows ‘real pay’ has dropped 1% in the last six months). Evidence does suggest many landlords feel more assured than they were in the spring about pursuing higher rents on their properties.

During the summer months, historic evidence suggests that the rents new tenants have had to pay on move in have increased. June/July/August is a time when renters like to move, demand surges and the normal supply and demand seesaw mean tenants are normally prepared to pay more to secure the property they want to live in, in the place they want to be. This is particularly good news for Royal Tunbridge Wells landlords as average Royal Tunbridge Wells rents have been on a downward trend recently. So look at the figures here...

Rents in Royal Tunbridge Wells on average for new tenants moving in have risen 0.9% for the month, taking overall annual Royal Tunbridge Wells rents 0.9% lower for the year

However, several Royal Tunbridge Wells landlords have expressed their apprehensions about a slowing of the housing market in Royal Tunbridge Wells. I think this negativity may be exaggerated.

Before we get the Champagne out, the other side of the coin to property investing is capital values (which will also be of interest to all the homeowners in Royal Tunbridge Wells as well as the Royal Tunbridge Wells buy-to-let landlords).  I believe the Royal Tunbridge Wells property market has been trying to find some level of equilibrium since the New Year.  According to the Land Registry…

Property Values in Royal Tunbridge Wells are 5.5% higher than they were 12 months ago, rising by 3.55% last month alone!


Yet, I would take those figures with a pinch of salt as they reflect the sales of Royal Tunbridge Wells properties that took place in early Spring 2017 and now are only exchanging and completing during the summer months.

The reality is the number of properties that are on the market in Royal Tunbridge Wells today has risen by 43.9% since the New Year and that will have a dampening effect on property values. As tenants have had less choice, buyers now have more choice ... and that will temper Royal Tunbridge Wells property prices as we head towards 2018.

Be you a homeowner or landlord, if you are planning to sell your Royal Tunbridge Wells property in the short term, it is crucial, especially with the rise in the number of properties on the market, that you realistically price your property when you bring it to the market ... with the increase in choice of properties, the balance of power during negotiation generally sways towards the buyer. Given that everyone now has access to property details, including historic stats for how much property have sold for, they will be more astute during the offer and negotiation stages of a purchase.

However, even with this uplift in the number of properties for sale in Royal Tunbridge Wells, property prices will remain stable and strong in the medium to long term. This is because the number of properties on the market today is still way below the peak of summer of 2008, when there were 1,202 properties for sale compared to the current level of 570 (if you recall, prices dropped by nearly 20% in Credit Crunch years of ‘08 and ‘09).

Compared to 2008, today’s lower supply of Royal Tunbridge Wells properties for sale will keep prices relatively high...and they will continue to stay at these levels for the medium to long term.

Less people are moving than a few years ago, meaning less property is for sale. Fewer properties for sale mean property prices remain relatively high and this is because of a number of underlying reasons. Firstly, buy-to-let landlords tend not sell their properties as often than owner-occupiers, consequently removing the property out of the housing market selling cycle. Secondly, Stamp Duty is much higher compared to 10 years ago (meaning it costs more to move). Next, there is a dearth of local authority rental housing so demand for private rented housing will remain high. Then we have the UK’s maturing owner occupier population, meaning these older people are less likely to move (compared to when they were younger). Another reason is the lack of new homes being built in the country (we need 240k houses a year to be built in the UK and we are currently only building 145k a year!) and finally, the new mortgage rules introduced in 2014 about how much a person can borrow on a mortgage has curtailed demand.

Some final thought’s before I go – to all the Royal Tunbridge Wells homeowners that aren’t planning to sell – this talk of price changes is only on paper profit or loss. To those that are moving ... most people that sell, are buyers as well, so as you might not get as much for yours, the one you will want to buy won’t be as much, (swings and roundabouts as Mum used to say!)

To all the Royal Tunbridge Wells landlords – keep your eyes peeled – I have a feeling there may be some decent buy-to-let deals to be had in the coming months. One place for such deals, irrespective of which agent is selling it, is my Royal Tunbridge Wells Property Blog ..


Friday 20 October 2017

Supply and Demand Issues mean Royal Tunbridge Wells Property Values Rise by 3.18% in the Last 12 Months

The most recent set of data from the Land Registry has stated that property values in Royal Tunbridge Wells and the surrounding area were 3.18% higher than 12 months ago and 17.48% higher than January 2015.

Despite the uncertainty over Brexit as Royal Tunbridge Wells (and most of the UK’s) property values continue their medium and long-term upward trajectory. As economics is about supply and demand, the story behind the Royal Tunbridge Wells property market can also be seen from those two sides of the story.

Looking at the supply issues of the Royal Tunbridge Wells property market, putting aside the short-term dearth of property on the market, one of the main reasons of this sustained house price growth has been down to of the lack of building new homes.

The draconian planning laws, that over the last 70 years (starting with The Town and Country Planning Act 1947) has meant the amount of land built on in the UK today, only stands at 1.8% (no, that’s not a typo – its one point eight percent) and that is made up of 1.1% with residential property and 0.7% for commercial property. Now I am not advocating building modern ugly carbuncles and high-rise flats in the Cotswolds, nor blot the landscape with the building of massive out of place ugly 1,000 home housing estates around the beautiful countryside of such villages as Penshurst, Langton Green and Matfield.

The facts are, with the restrictions on building homes for people to live in, because of these 70-year-old restrictive planning regulations, homes that the youngsters of Royal Tunbridge Wells badly need, aren’t being built. Adding fuel to that fire, there has been a large dose of nimby-ism and landowners deliberately sitting on land, which has kept land values high and from that keeps house prices high.

Looking at the demand side of the equation, one might have thought property values would drop because of Brexit and buyers uncertainty. However, certain commenters now believe property values might rise because of Brexit. Many people are risk adverse, especially with their hard-earned savings. The stock market is at an all-time high (ready to pop again?) and many people don’t trust the money markets. The thing about property is its tangible, bricks and mortar, you can touch it and you can easily understand it.  

The Brits have historically put their faith in bricks and mortar, which they expect to rise in value, in numerical terms, at least. Nationally, the value of property has risen by 635.4% since 1984 whilst the stock market has risen by a very similar 593.1%. However, the stock market has had a roller coaster of a ride to get to those figures. For example, in the dot com bubble of the early 2000’s, the FTSE100 dropped 126.3% in two years and it dropped again by 44.6% in 9 months in 2007… the worst drop Royal Tunbridge Wells saw in property values was just 22.19% in the 2008/9 credit crunch.

Despite the slowdown in the rate of annual property value growth in Royal Tunbridge Wells to the current 3.18%, from the heady days of 18.05% annual increases seen in early 2010, it can be argued the headline rate of Royal Tunbridge Wells property price inflation is holding up well, especially with the squeeze on real incomes, new taxation rules for landlords and the slight ambiguity around Brexit. With mortgage rates at an all-time low and tumbling unemployment, all these factors are largely continuing to help support property values in Royal Tunbridge Wells (and the UK).


For more thoughts on the Royal Tunbridge Wells Property Market, please visit the Royal Tunbridge Wells Property Market Blog 

Saturday 14 October 2017

Royal Tunbridge Wells’ New 3 Speed Property Market


“What’s happening to the Royal Tunbridge Wells Property Market” is a question I am asked repeatedly.  Well, would it be a surprise to hear that my own research suggests that there isn’t just one big Royal Tunbridge Wells’ property market – but many small micro-property markets?

According to recent data released by the Office of National Statistics (ONS), I have discovered that at least three of these micro-property markets have emerged over the last 20+ years in the town.

For ease, I have named them the …

1.     lower’ Royal Tunbridge Wells Property Market.
2.     lower to middle’ Royal Tunbridge Wells Property Market.
3.     ‘middle’ Royal Tunbridge Wells Property Market.

The ‘lower’ and ‘lower to middle’ sectors of the Royal Tunbridge Wells property market have been fuelled over the last few years by two sets of buyers. The first set, making up the clear majority of those buyers, are cash rich landlord investors who are throwing themselves into the Royal Tunbridge Wells property market to take advantage of alluringly low prices and even lower interest rates. The other set of buyers in the ‘lower’ and ‘lower to middle’ Royal Tunbridge Wells property market are the first-time buyers (FTB), although the FTB market is in a state of unparalleled deadlock as it’s been trampled into near-immobility and incapacity by the new 2014 stricter mortgage affordability regulations and also fewer mortgages with low deposits. 

Some of you may be interested to know how I have classified the three sectors ..

1.     lower’ Royal Tunbridge Wells housing market – the bottom 10% (in terms of value) of properties sold
2.     lower to middleRoyal Tunbridge Wells housing market – lower Quartile (or lowest 25% in terms of value) of properties sold
3.     middle’ Royal Tunbridge Wells housing market - which is the median in terms of value

…. and if one looks at the figures for Royal Tunbridge Wells Borough Council area you can see the three different sectors (lower, lower/middle and middle) have performed quite differently.

Royal Tunbridge Wells Borough Council Property Market – Sold Prices
Price Paid in 1995
Price Paid in 2017
Percentage Uplift
1995 - 2017
Lower (Bottom 10%)
£40,000
£189,000
372.50%
Lower to Middle (Lower Quartile)
£52,975
£250,000
371.92%
Middle (The Median)
£91,797
£423,245
361.07%

You can see that it is the ‘lower’ market that has performed the best.

You might ask, what do all these different figures mean to homeowners and landlords alike?  Quite a lot – so let me explain. The worst performing sector (with the lowest Percentage uplift) was the ‘middle’ housing market. Therefore, interestingly, if we applied the best percentage uplift figure (i.e. from the ‘lower’ market percentage uplift), to the ‘middle’ 1995 housing market figure, the 2017 figure of £423,245, would have been £433,741 instead – quite a difference you must agree?

Now, I have specifically not mentioned the upper reaches of the Royal Tunbridge Wells housing market for several reasons.  Firstly, the lower or middle market is where most of the buy to let investment landlords buy their property and where the majority of property transactions take place. Secondly, due to the unique and distinctive nature of Royal Tunbridge Wells’ up-market property scene (because every property is different and they don’t tend to sell as often as the lower to middle market), it is much more difficult to calculate what changes have occurred to property prices in that part of the Royal Tunbridge Wells property market - looking at the stats for the up-market Royal Tunbridge Wells property market from Land Registry, only 28 properties in Royal Tunbridge Wells (and a 3 mile radius around it) have sold for £2,500,000 or more since 1997.

So, what should every homeowner and buy to let landlord take from the information that there are many micro-property markets? Well, when you realise there isn’t just one Royal Tunbridge Wells Property Market, but many Royal Tunbridge Wells “micro-property markets”, you can spot trends and bag yourself some potential bargains. Even in this market, I have spotted a number of bargains over the last few months that I have shared in my Property Blog and to my landlord database, especially in the ‘lower’ and ‘lower/middle’ market. If you want to be kept informed of those buy to let bargains, have a look at my blog .. it’s free to do so and I’m sure you wouldn’t want to miss out – would you?

I would love to know if you have spotted any micro-property markets in Royal Tunbridge Wells.