Tuesday 25 June 2019

Home Ownership among Royal Tunbridge Wells’ young people has nearly halved in 20 years


The proportion of 25 to 34-year olds who own their home in Royal Tunbridge Wells has nearly halved in the last 20 years, so what does this mean for all the existing Royal Tunbridge Wells landlords and homeowners together with all those youngsters considering buying their first home?

Well, looking at the numbers in greater detail, in Royal Tunbridge Wells there has been a 43.5% proportional drop in the number of 25 to 34-year olds owning their own home between 1999 and 2019 .. and a corresponding, yet smaller drop of 21.2% of 35 to 44-year olds owning their own home over the same time frame.

So, if you were born in the late 1980’s or early 1990’s, the dream of owning a home in Royal Tunbridge Wells has reduced dramatically over the past 20 years as young adults’ wages and salaries are now much lower in relation to Royal Tunbridge Wells’ house prices. Nationally, average property values have grown by 186.9%, whilst average incomes have only risen by 44.8%, yet that doesn’t allow for inflation. However, whilst not over the same 20 years (it’s close enough though), the Institute of Fiscal Studies said recently the average British home was just over 2.5 times higher in 2015/6 than in 1995/6 after allowing for inflation; yet the average household income (after tax) of 25 to 34-year olds grew by only 22% in ‘real-terms’ over those 20 years.

Yet, even though property prices are at record highs, on the other side of the coin, the monthly cost of mortgage payments has actually fallen because interest rates have remained low. In 1999, the average mortgage rate paid by UK homeowners was 6.54% whilst today it’s more than halved to 2.64% - a drop of 59.4%. Many of you reading this will remember the 15% mortgage rates of 1992!

The fact is, mortgage repayments take up a considerably smaller proportion of take home pay, on average, than they did before the Credit Crunch or in the late 1980’s. Although the risk that mortgage rates will increase if the Bank of England put up interest rates might leave some homeowners in a difficult position – hence I might suggest (if you haven’t already) you seriously consider fixing your mortgage rate (remember to take advice from a professional before you do).

Yet look at the data in even greater detail and you will see, going back
to the 1960’s, we weren’t always the huge homeowning nation we always thought we were.

Today, 4.5% less 35 to 44-year olds and 33.5% more 45 to 54-year olds own their own home compared to 1969. So as the younger generation in Royal Tunbridge Wells has seen homeownership drop in the medium term, they will in fact end up inheriting the homes of their parents. We are turning into a more European (especially German) model of homeownership, where people buy their first home in their 50’s instead of their 20’s.
My message to first time buyers of Royal Tunbridge Wells is go and get some mortgage advice!  The cost of renting smaller starter homes is between 20% and 25% more than the mortgage payments would be. 95% mortgages (meaning a 5% deposit is required) have been available since late 2009 and some banks even do 100% mortgages (i.e. no deposit) .. I suggest that you don’t assume you can’t get a mortgage – for the sake of a 45 minute chat with a mortgage adviser – you get a straight answer and all the information you need.

Therefore, what does this mean for homeowners and landlords of Royal Tunbridge Wells? Well, for many tenants, renting is a positive choice and as we aren’t building enough homes to meet current demand, let alone eating into the lack of building over the last 35 years, demand will outstrip supply, home values will, over the medium to long term, rise above inflation – meaning it will be a good overall investment as demand for rental properties increases. Good news for Royal Tunbridge Wells’ landlords and Royal Tunbridge Wells’ homeowners alike.

The single biggest issue in the Country (and Royal Tunbridge Wells) today is that we aren’t building enough homes. I know it seems the local area is covered with building sites – yet looking at the actual numbers – we still aren’t building enough homes to live in. Residential property only takes up 1.2% of all the land in the Country – and whilst I’m not suggesting we build housing estates on National Trust land or cut down forests, until we realize that we aren’t building enough .. this issue will only continue to get worse.








Homeownership in Royal Tunbridge Wells by Age - 1969 to today


25-34
35-44
45-54
55-64
65+
1969
48.5%
59.9%
53.5%
50.4%
41.3%
1979
52.1%
66.0%
60.4%
50.2%
42.7%
1989
61.9%
78.6%
81.2%
73.2%
58.7%
1999
49.6%
72.6%
81.2%
80.7%
70.0%
2009
35.8%
62.8%
74.1%
78.5%
77.1%
2019
28.0%
57.2%
71.4%
76.4%
78.2%

Friday 21 June 2019

Royal Tunbridge Wells Property Market Do We Have the Right Sort of Royal Tunbridge Wells Homes For the 21stCentury?


Would it surprise you to know that in some parts of Royal Tunbridge Wells, predominantly prosperous areas with high proportions of mature residents, the housing crisis is not one of supply so much as dispersal of that supply? Theoretically, in Royal Tunbridge Wells there are more than enough bedrooms for everyone - it’s just they are disproportionately spread among the population, with some better-off and more mature households living in large Royal Tunbridge Wells homes with many spare bedrooms, and some younger Royal Tunbridge Wells families being over crowded.

Yet it is not the fault of these well-off mature residents that this is the current situation. Let’s be frank, Royal Tunbridge Wells doesn’t have enough housing full stop (otherwise we wouldn’t have the large Council House waiting list and all the younger generations renting instead of buying), but up until now it hasn't been clear that Royal Tunbridge Wells actually also has the wrong types of properties. 

We're not building the smaller homes in Royal Tunbridge Wells that are needed for the starter homes and we aren’t building enough bungalows for the older generations, so they can be released from their larger Royal Tunbridge Wells homes, thus allowing those growing Royal Tunbridge Wells families to move up the ladder.  

Looking at the stats for Royal Tunbridge Wells, and TN1 in particular...





When I compared Royal Tunbridge Wells (TN1) with the regional stats of the TN postcode, the locality has proportionally 194.0% more apartments, yet 85.4% less detached homes. Looking nationally, Royal Tunbridge Wells (TN1) has proportionally 184.4% more apartments and proportionally 79.4% less detached houses.

I am finding that there has been a shortage of smaller townhouses and smaller apartments being built in Royal Tunbridge Wells over the last 20 years, because most of the new builds in the last couple of decades seem to have been either large executive houses or the apartments that have been built were of the larger (and posher) variety, even though demand for households (as life styles have changed in the 21stCentury) have been more towards the lower to middle sized households.

The builders do want to build, but there's a deficiency of building land in Royal Tunbridge Wells, and if there's a shortage of building land, then of course new homes builders build whatever gives them the biggest profit. The properties that give them the largest profit are the biggest and most expensive properties and they certainly are not bungalows as they take up too much land. So who can blame them?

Yet would it surprise you to know that it’s not a lack of space (look at all the green you see when flying over the UK), it’s the planning system. Green belts must be observed, but only 1.2% (yes 1.2%- that isn’t a typo) is built on in this country as a whole with homes - we need the planners to release more land (and then force/encourage builders to build on it - not sit on it). Another problem is that of the smaller new homes that have been built, most of them have been snapped up for renting, not owning. 

So, what’s the answer? Build more Council houses? Yes, sounds great but the local authority haven’t enough money to cut the grass verges, let alone spend billions on new homes in Royal Tunbridge Wells. The Government did relax the planning laws a few years ago, for example for changing office space into residential use, yet they could do more as currently new homes builders have no incentive to build inexpensive homes or bungalows that the system needs to make a difference.

So, what does this mean for Royal Tunbridge Wells homeowners and Royal Tunbridge Wells landlords?

Changing the dynamics of the Royal Tunbridge Wells, regional and national property market will only change in decades, not years.  The simple fact is we are living longer, and we need 240,000 to 250,000 houses a year to stand still with demand, let alone start to eat into 30 years of under building where the average has been just under 170,000 households a year. 

That means, today as a country, we have a pent-up demand of 2.25m additional households and we need to build a further 4.2m households on top of that figure for population growth between 2019 and 2039. So, irrespective of whether we have short term blip in the property market in the next 12/18 months, investing in property is, and always will be, a great investment as demand will always outstrip supply.

Tuesday 4 June 2019

Royal Tunbridge Wells Property Market vs London Property Market



Anyone would think that national news, especially when it comes to talking about the property market, is just focused on London centric. In fact, over the last 5 years, the London property market has really manipulated the UK on averages to such an extent that many lenders like the Halifax and Nationwide publish two indices, a national one without London and one with.

Now it’s true the London property market has undergone some quite acute property price falls. In the upmarket areas of Mayfair and Kensington, the Land Registry have reported values are 11.3% lower than a year ago, yet in the UK as a whole they are 1.3% higher. Yet look around the different areas and regions of the UK and Northern Ireland, property values are up 5.8% year on year, whilst over the same time frame, the East Midlands is 3.9% up and Yorkshire is 3.7% up. So, what exactly is happening locally in Royal Tunbridge Wells and what should Royal Tunbridge Wells landlords and homeowners really be concerned about?

Well, to start with, as I have been saying for a while now, property is a long game, and making decisions on the short-term fluctuations is something that could cause a nervous breakdown.

I wanted to look at how Royal Tunbridge Wells had performed over the long term, when compared to London and the UK as a whole.  Yet it is hard to compare differing locations when the average value of a property in Royal Tunbridge Wells differs greatly to one in the capital. I decided if I wanted to compare like for like, I needed to see what would happen if I had spent £100 on property in London in 1979 and what would that £100 be worth today, and then do the same exercise for the UK. So, looking over the last 40 years …



See how the growth of that £100 was broadly similar between 1979 and 2007 on all three strands of the graph and then we had the credit crunch drop between late 2007 and 2009? However, after 2009 London went on a different trajectory to the rest of the UK. Whilst Royal Tunbridge Wells (and the UK) were generally subdued between 2009 and 2012, London kicked on. All areas of the country had a temporary blip in 2012, yet whilst Royal Tunbridge Wells and the UK went up a gear again 2013, London went into overdrive and up like a rocket!

Now you can see London has dipped slightly in the last year, so the hot question for everyone has to be - are price falls likely to spread (as they did in the previous property recessions of 1989 and 2007) to Royal Tunbridge Wells and other places in the UK? The Bank of England’s opinion is that a London house price drop is unlikely to be the beginning of a countrywide trend. Looking at the graph again, it can be seen London has been in decline for 2 years, whilst the rest of the country has been moving forward. 

So, what does all this mean for Royal Tunbridge Wells
homeowners and landlords?

Well what happens in London does have an impact, but there are other issues that will have a bigger impact on the local property market. The simple fact is over the last 40 years, we have had 392.9% inflation, yet looking at a typical Royal Tunbridge Wells terraced house...

A Royal Tunbridge Wells terraced house has jumped in 
value from an average of £37,277 to £401,100
since 1979 - a rise of 1146.5%

Property has in the long term been a good bet. Yes, we might have some short-term blips and as long as you play the long game - you will always win. In the short term, my concern isn’t over monthly up or down property values, Brexit or another General Election. With property values still rising faster than salaries in many parts of the country, what really matters is how much of householder’s take home pay goes into housing costs as opposed to other spending items. If housing gets too expensive - other things will suffer, like holidays and the nice things in life to spend your money on. Only time will tell!

P.S. Wonder what that Royal Tunbridge Wells terraced would be worth if it had gone by London house prices? Here’s your answer - £583,757.