Monday 27 May 2019

As 33.4% of Royal Tunbridge Wells Property on the Market is Sold Are there any bargains because of Brexit?

Bargains – well yes and no – and let me explain why. To find a bargain you need to know the ‘market’, yet there is not one ‘property market’ in the UK. In fact, the British property market is like a fly’s eye, it looks one whole but in fact it is split into lots of fragmented pieces and the same goes for the Royal Tunbridge Wells property market as that too is split into different patches… in fact it can even come down to two streets adjacent to each other, one street selling like hot cakes for top dollar whilst the next street can stick and at comparatively lower prices (i.e. if there is a school catchment boundary or differing postcode).

According to Coutts, property values in ‘Prime London’ have dropped by 14.7% in the last 5 years … yet look closely at those stats and Prime London is considered anything within a 1,500m radius of Kensington High Street above £4.6m – a totally different world to the average property in Royal Tunbridge Wells, which is worth just over £490,000 and has risen in value over those same 5 years by 29.6%  .. a different world!

I have noticed that the top end of the market above £750,000 in Royal Tunbridge Wells and the surrounding areas is proving a little tougher to shift than a few years ago, yet this can’t all be blamed on Brexit, as buyers have long been flinching at overestimated asking prices and excessive stamp duty rates. 

In Royal Tunbridge Wells, 25.7% of properties for sale have 
reduced their asking price in the last 3 months by
an average of 5.0%

A lot less than the reductions that are being seen in central London. In fact, the property market in Royal Tunbridge Wells is looking reasonably good with 

33.4% of properties on the market in Royal Tunbridge Wells being 
shown as under offer and Sold subject to contract

…Interesting when compared with the aforementioned London Prime market where only 5.86% of the properties for sale are sold .. some bargains to be had there!



So, where are the bargains in Royal Tunbridge Wells? Well, to start with, it’s all about knowing the local Royal Tunbridge Wells market. It’s all about comparing and contrasting property, so to start with, check out the property web-portals such as Zoopla and Rightmove to see what’s for sale. The art here is to click on the ‘include Sold stc’ in the filters .. then arrange them in price order. Then you will get a feel for what properties are roughly selling for. Also look at recent sales, so in Rightmove click on ‘House Prices’ on the main menu, on the proceeding drop down menu click on ‘Find Sold House prices’ and now you can type in a street, or even a street plus 0.25miles/0.5miles .. click on ‘List View’ and they are in date order. There is a similar function in Zoopla (feel free to contact me if you need a hand with that).

Then once you have found what you think is a bargain .. view it. Ask the agent why the sellers are moving.  By doing your research on the seller, seeing how long it has been on the market, whether they have reduced the asking price (if you ask an agent they have to tell you and by how much)  — you could cut a better deal if they are compelled to sell. Push home your advantage i.e. if you are a first-time buyer, don’t have a property to sell, chain free or cash purchaser it can all make a difference.

Looking at the numbers above, some savvy Royal Tunbridge Wells landlords and home buyers are taking advantage of the doom and gloom newspaper headlines as property owners’ expectations are probably at the lowest they have ever been since the Credit Crunch, especially if they are in the ‘got to sell’ category instead of the ‘would like to sell’ category.

Like anything in life .. buying a property bargain comes down to putting the hard-work in, doing your homework and jumping at opportunities.

Monday 13 May 2019

How Did Brexit Affect the Royal Tunbridge Wells Property Market in 2018 – and its Future for 2019?

A few weeks ago, I suggested property values in Royal Tunbridge Wells would be between 0.8%and 1.8% different by the end of the year. It might surprise some people that Brexit hasn’t had the effect on the Royal Tunbridge Wells property market that most feared at the start of 2018.

The basis of this point of view can clearly be seen in the number of property transactions (i.e. the number of property sold) that have taken place locally since 2008. The most recent property recession was the Credit Crunch years of 2008/2009/2010. 

In property recessions, the headline most people look at is the average value of property. Yet, as most people that sell also go on to buy, for most home movers, if your property has gone down in value, the one you want to buy has also gone down in value so you are no better or worse off. If you are moving up market - which most people do when they move home - in a repressed market, the gap between what yours is worth and what you will buy gets lower ... meaning you will be better off. 

Yet, most property commentators, including myself, suggest (and I have mentioned this before in some of my other blog articles) a better measure of the health of the property market is the transaction numbers (i.e.the number of people selling and buying). So, I decided to look at the 2018 statistics, and compare them with the Credit Crunch years (2008 to 2010) and the boom years (2014 to 2017). The results can be seen in the table below.

The Average Number of Properties Sold Per Month Over the Last 10 Years in Tunbridge Wells

2008 to 2010
2014 to 2017
2018
Jan
93
153
127
Feb
104
144
132
March
113
171
138
April
123
137
99
May
135
156
90
June
142
189
139
July
155
205
186
Aug
132
216
187
Sept
139
180
130
Oct
128
179
127
Nov
142
163
145
Dec
137
158
115


Then, I looked at the average quarterly figures for those chosen date ranges ... and created this graph ... 




In that 2008 to 2010 property Credit Crunch recession, the average number of properties sold in the Royal Tunbridge Wells council area were 129 per month. Interesting when we compare that to the boom years of 2014 to 2017, when an average of 171 properties changed hands monthly … yet in the ‘supposed’ doom laden year of 2018, an impressive average of 135 properties changed hands monthly … meaning 2018 compared to the boom years of 2014 to 2017 saw a drop of 21.3% - yet still 4.6% higher than the Credit Crunch years of 2008 to 2010.

The simple fact is the fundamental problems of the Royal Tunbridge Wells property market are that there haven’t been enough new homes being built since the 1980’s (and I don’t say that lightly with all the new homes sites dotted around the locality). Also, the cost of buying your first home remaining relatively high compared to wages and to add insult to injury, all those issues are armor-plated by the tougher mortgage rules which were introduced in 2014 and the current mortgage market conditions.

It is these issues which will ultimately determine and form the rather unexciting, yet still vital, long term outlook for the Royal Tunbridge Wells (and national) housing market, as I feel the Brexit issue over the last few years has been the ‘current passing diversion’ for us to worry about. Assuming something can be sorted with Brexit, in the long term property values in Royal Tunbridge Wells will be constrained by earnings increases with long term house price rises of no more than 2.5% to 4% a year. 

Fundamentally, the question I am asked by many Royal Tunbridge Wells buy to let landlords and Royal Tunbridge Wells homebuyers is ... “should I wait to buy or not?”

As a Royal Tunbridge Wells homebuyer, one shouldn’t be thinking of what is happening in Westminster, Brussels, Irish Backstop, China or Trump and more of your own personal circumstances. Do you want to move to get your child in ‘that’ school or do you need an extra bedroom for your third child? For lots of people, the response is a resounding yes - and in fact, I feel many people have held back, so once we know what is finally happening with Brexit and the future of it, there could a be a release of that pent-up demand to move home as people humbly just want to get on with their lives. 

There is little to be lost in postponing a house purchase until there is better clarity on the situation. If it isn’t Brexit it will something else - so just get on with your lives and start living. We got through the global financial crisis/Credit Crunch in ‘08/’09, Black Wednesday in ’92 where mortgage interest rates went from 8.5% to 15% in one day, we got through the worst stock market crash with Black Monday in ’87, hyperinflation, power shortages, petrol quadrupling in price in less than a year and a 3 day week in the ‘70’s … need I go on?

Royal Tunbridge Wells Landlords? Well, where else are you going to invest your money? Like I said earlier in the article, we aren’t building enough homes to keep up with demand ... so as demand outstrips supply, house values will continue to grow. Putting the money in the building society will only get you 1% to 2% if you are lucky. In the short term though, there could be some bargains to be had from shortsighted panicking sellers and in the long term ... well, the same reasons I gave to homeowners also apply to you.

Wednesday 1 May 2019

Royal Tunbridge Wells House Prices up 29.6% in the last 5 Years

Over the last 5 years, we have seen some interesting subtle changes to the Royal Tunbridge Wells property market as buying patterns of landlords have changed ever so slightly.
The background to this story was the recently published set of buy-to-let (BTL) lending statistics. Roll the clock back 12 months and 6,700 BTL mortgages were granted (in the same month) for £900m, meaning the average BTL mortgage was £134,200. Looking at last month’s figures, and as one might expect with the Brexit issue overhanging the property market, the lending figures were down, yet not by the amount I originally thought. Last month, just over 6,100 new buy-to-let mortgages were granted for a total sum of £800m (meaning the average landlord mortgage was a respectable £131,100). Yet, when I looked back to the boom year of the 2014 property market, in the corresponding same month, only £1,030 million was borrowed on 8,300 buy-to-let properties (meaning the average buy-to-let mortgage was £124,100). It seems Brexit is having no effect on landlords buying habits.
Looking closer to home in Royal Tunbridge Wells, throughout 2018, I have been regularly chatting to more and more landlords, be they seasoned professional Royal Tunbridge Wells BTL landlords or FTL’s (first time landlords) and their attitude is mostly positive. Instead of reading the scare-papers (oops sorry newspapers), those Royal Tunbridge Wells landlords that look with their eyes, will see the Royal Tunbridge Wells property market is doing reasonably well, with medium term rents and property values rising; as quite obviously from the mortgage figures .. landlords are still buying. 
The question I get asked all the time is .. “What type of buy-to-let property should I buy?  You can make money from property through both the rent (expressed as a yield when compared to the value of the property) and how the actual value of the home itself changes.
Since 2014, property values in Royal Tunbridge Wells have risen by 29.6%.
We have records of what each type of property (i.e. Detached/Semi/Terraced/Apartments) has achieved per square metre going back 20 years … and looking back over the last 5 years, these are the numbers ..


2014 Royal Tunbridge Wells Average Value £/Sq.M
Current
Royal Tunbridge Wells Average Value £/Sq.M
Detached
£3,499 
£4,482 
Semi Detached
£3,242 
£4,250 
Terraced
£3,405 
£4,458 
Apartments
£3,170 
£4,016 




They all look to have similar percentage uplifts, however as you can see from the table there is in fact some variation throughout and although only slight this can equate to thousands of pounds in monetary terms.
Price Changes in Royal Tunbridge Wells
in Last 5 years by Type
Detached
28.1%
Semi Detached
31.1%
Terraced
30.9%
Apartments
26.7%
Overall Average
29.6%

This has proved that semis and terraced houses have performed the best .. although like the £/Sq.M figures, these are just averages. When investing, whilst Royal Tunbridge Wells’ apartments haven’t been the best performers in terms of capital growth, they do tend to generate a slightly better yield than houses, probably because several sharers can afford to pay more than a single family. But houses tend to appreciate in value more rapidly and may well be easier to sell, simply because there are fewer being built.
Now these are of course averages, but it gives you a good place to start from. The bigger picture here though is this - irrespective of what is happening in the world, be it Brexit/no Brexit, China, Trump, whatever, Royal Tunbridge Wells people still need a roof over their heads and we as a Country haven’t built enough homes to keep up with the demand since the late 1980’s. This means even if we have a short term wobble in 2019 when it comes to property values ..in the medium term, demand will always outstrip supply and prices and rents will increase – because, I doubt the local authority, let alone Westminster, have the billions of pounds required to build the one hundred thousand Council houses per year nationally for the next decade to fix this issue – meaning as the population increases, the only people who can fulfil the demand for accommodation in the medium term is the private BTL landlord.
Before I go …on average, housing associations and local authorities have built around 26,500 houses each year since 2010. The Labour government had a lower average, building about 19,000 homes per year, yet in the 1960’s, under both administrations, 180,000 councils were built per year!