Has the Royal Tunbridge Wells Property Market Peaked?

Should you buy now or wait for the bargains?

 

• Many commentators believe we have seen the peak of the Tunbridge Wells property market.

• So, should savvy bargain hunters wait for Tunbridge Wells house prices to fall?

• Or could postponing your house buying for any anticipated Tunbridge Wells house price drop be a costly mistake?

Over the last two years, the Tunbridge Wells property market has been a rollercoaster ride of hyperactive demand together with the new sport of getting your offer accepted when you compete with 30 other bidders. 

Yet there are clouds on the horizon that the

Tunbridge Wells property market could be at its peak.

Bank of England interest rates have increased four times in the last few months to try and combat inflation. Meanwhile many Tunbridge Wells households are finding it tough to counter the most significant drop in real incomes in a single year since records began in the mid-1950s, all at the same time as gas, heating oil and electricity prices are predicted to rise again in the autumn. 

Hence why some economists are predicting house price drops in the coming 18 to 24 months of 3% to 5%.

So, surely this is not the best time to buy a Tunbridge Wells property – and surely savvy buyers should wait for Tunbridge Wells house values to fall?

Is it realistic to see double-digit national house price growth? Certainly not.

The question is how far the Tunbridge Wells property market will slow and whether the slowing will drop into modest falls.

Let me look at household income first.

At best, the outlook is gloomy as real household disposable income is set to drop by 2.4% in 2022/23, the largest drop since records began in 1956. This is despite the £17.6 billion of financial support for British households revealed in Rishi Sunak’s Spring 2022 Statement with the National Insurance thresholds, energy bill support package and duty cut on petrol. Without these changes announced by the Chancellor, real household disposable income would have fallen by an additional 1% in 2022/23.

Second, as interest rates increase, mortgage rates will increase in line, increasing mortgage costs, so surely that will curtail demand, meaning Tunbridge Wells house prices will drop, and buyers should wait to catch a bargain?

Finally, with inflation on the rise, the real value of people’s savings will decrease quicker, and the value of their deposits will diminish, meaning Tunbridge Wells prices will surely drop, and people should wait to buy? 

Surely the Tunbridge Wells property market has peaked and

buyers should wait for the bargains?

Well, I don't think so, and these are the reasons why I say that: 

I believe, subject to no significant shocks in the world economy, Tunbridge Wells house price growth will be very slow in the next 18/24 months and go into low single digits (even the odd month dipping ever so slightly into the red), but not the 16% to 19% annual drop we saw in 2008/9. 

Let me look at real household income. Every economist predicts growth in real household income in 2023/24 by around 1%.

If the two years are combined, the predicted effect on real household income in the next two years (2022/23/24) is a net loss of 1.4%, whilst in the credit crunch years 2010/11/12, the net loss was 2.7%. 

I was looking at the increase in mortgage rates. 79% of owner-occupiers have fixed their mortgage costs and had their affordability stress-tested to Bank of England interest rates of 3% to 4% under the Mortgage Market Review rule changes in 2014. I believe the most significant impact of increasing interest rates will be at the point of taking on a new mortgage by first-time buyers (as opposed to servicing or the porting of an existing mortgage from one house to the next house).

The four successive Bank of England base rate rises, inflation and the rising cost of living are likely to bring more cautiousness over summer and autumn when it comes to people buying a property. Yet, there is still a massive imbalance of demand for property over the number of properties for sale to quench that demand. 

The potency of the job market and the ongoing mismatch between the supply of properties on the market and demand for those properties will support property values. 

Finally, the by-product of increasing inflation is that it makes buy-to-let more attractive. If there is a reduction in first-time buyers, this will be counterweighted by more landlords buying again, supporting the current level of Tunbridge Wells properties. 

But what if Tunbridge Wells house prices do drop significantly?

So let’s assume that Tunbridge Wells house prices do fall, irrespective of the reasons above, it will not inevitably help Tunbridge Wells buyers.

If we have a house price crash, people tend to find their careers are at risk, and their salaries don’t rise as much. The younger generation (i.e. first-time buyers age range) often gets hit the toughest by recessions.

If first-time buyers wait until 2024 to buy and Tunbridge Wells property values drop by 10%, that will prove more expensive.  

In the last 2008/09 crash, lenders weren't offering 5% deposit mortgages. The lowest deposit mortgage that first-time buyers could get was with a 10% deposit and even then, they were hard to come by.

When writing this article, first-time buyers can obtain a 5% deposit mortgage for a fixed rate of 2.66% for five years. 

The typical first-time buyer terraced house in Tunbridge Wells

sells for £429,700.

So, if they were to buy now, on this mortgage deal, the first-time buyer would have to stump up a £21,485 deposit and their mortgage payments would be £1,494.59 per month. 

Yet, let’s say property values in Tunbridge Wells do drop by 10% in the next 18 months, the terraced house would now be worth £386,730, so a significant saving. Or is it? 

Everyone believes interest rates will rise further, so let’s assume they go to 3% by the autumn of 2023. That means the mortgage rate for a 10% deposit mortgage will be in the early 5%’s, so let me assume 5.29% (because the banks tend to increase the gap between the base rate and the mortgage rate in recessions to allow for the extra risk).

The monthly mortgage payment on the 5.29% mortgage would be £1,821.49 per month, and you would need to double your deposit to £38,673.

So even if Tunbridge Wells' house prices did drop by 10%, the first-time buyer would be £3,920 worse off a year in mortgage payments and would have to find double the deposit.

...and then there is the other cost of waiting.

You have two years’ worth of rent to pay. The average rent for a Tunbridge Wells property is £1,332 per month.

If you waited a couple of years for Tunbridge Wells house prices to drop by 10%, you would spend £31,968 in rent.

Choosing to buy a Tunbridge Wells property makes even more economic sense if it is a long-term choice, as homeowners can ride out any house price drops. 

Homeowners who plan to stay in a property can generally rely on getting their money back within six to ten years whilst not paying any rent.

Will Tunbridge Wells prices go up, or will they go down?

Remember, George Osbourne said house prices would drop by 18% in May 2016 if we voted to leave the EU, whilst many economists said they would drop by 5% to 10% when Covid hit in March 2020.

And we all know what happened.

If you think you will be better off owning your own Tunbridge Wells home rather than renting one, don't bother to wait for the suggested house price drop that may never happen.  

These are my thoughts, what are yours? Let me know in the comments.

Royal Tunbridge Wells Rental Homes Nightmare

• Tunbridge Wells needs 228 additional private rented properties per year to keep up with current and future demand from Tunbridge Wells tenants. 
• Yet over the last 5 years, Tunbridge Wells has lost 364 private rented homes.
• What are the 5 reasons the supply of private rental properties in Tunbridge Wells are falling? What does this mean for tenants and landlords in Tunbridge Wells?

There has been a rise in demand for rental properties and an 8.9% fall in the number of Tunbridge Wells private rented properties, which has caused Tunbridge Wells rents to rise by 5.6% in the last year, a new all-time high. 

The National Residential Landlords Association asked the respected economics think tank Capital Economics, to carry out research on the UK rental market. It found that if the current trends in the property market in terms of growth of the population, Brits living longer, the lack of new homes building, the reduction in social housing (aka council housing), then demand for homes in the private rented sector needs to increase by 227,000 homes per year.

So, based on those numbers, Tunbridge Wells needs to have an additional 228 private rented properties per year. 

The problem is the number of private rented properties in Tunbridge Wells has reduced from 6,815 in 2017 to 6,451 in 2021, a net loss of 364.

So, why has supply of private rented homes in Tunbridge Wells reduced?

1. Section 24 Income Tax

Section 24 was introduced in 2017 to level the playing field on the taxation of property between homeowners and landlords. Section 24 stops landlords from offsetting their buy-to-let mortgage costs against the profits from their rental property. Interestingly, no other kind of UK business is affected by the Section 24 taxation. In other words, whatever other form of business you might be in, be it butcher, baker or candlestick maker, every other business can offset their finance costs against their profits, except buy-to-let.

The issue caused by Section 24 Tax is that some landlords ended up paying more income tax than they really made in profit after paying their buy-to-let mortgages. Meaning on the back of rising Tunbridge Wells house prices in the last five years, some Tunbridge Wells landlords have sold their buy-to-let investments.

2. 3% More Stamp Duty for Landlords

When someone buys a property, they normally must pay a tax to the Government for the privilege. This tax is called Stamp Duty. Yet landlords must pay an additional 3% stamp duty supplement on top of that when they purchase a Tunbridge Wells buy-to-let property. Evidence suggests some Tunbridge Wells landlords have decided to hold off or scale back buying additional buy-to-let properties for their portfolio because of the thousands of extra pounds that landlords have to pay to buy the rental property. 

3. Holiday and AirBnb Lets

Some Tunbridge Wells landlords are converting their long-term rental properties into short-term furnished holiday and AirBnB properties. Whilst the hassle, stress and service levels are much higher, these types of properties do tend to make more money and aren’t as heavily taxed as normal lets. When properties convert to short-term lets, it removes another Tunbridge Wells property out of the general supply chain of long-term rental properties.

4. Greater Legislation for Rental Properties

With more than 150 pieces of legalisation, and new laws being added each year, the burden on landlords is huge. On the horizon is the Renters Reform Bill which will remove the no fault evictions. Also, all rental properties with an Energy Performance Certificate (EPC) rating of below a ‘C’ will have to be improved (i.e., money spent on them) by the landlord. This could be more than £10,000 per property. Hence, why some Tunbridge Wells landlords have been selling their rental properties with low EPC ratings in the last 18 months. 

5. Accidental Landlords Selling Up

There are some Tunbridge Wells landlords who are classed as ‘Accidental Landlords’. In 2008/9, with a slowing property market and house price values dropping in the order of 16% to 19% (depending on the type of property) some Tunbridge Wells homeowners decided to let their home out as opposed to selling it at a loss. Yet, with the price booms of the last 18 months, many decided to cash in on the higher property prices and sell - again taking another private rental property out of the system.

So, why is demand of private rented homes in Tunbridge Wells increasing, even though more people own their home in Tunbridge Wells than 5 years ago?

Even with better provision of affordable social housing and higher rates of owner occupation in Tunbridge Wells (rising from 59.2% of homes in Tunbridge Wells being owner occupied in 2017 to 61.4% in 2021), demand for private rental property continues to outstrip supply. 

There are many reasons behind this including:

1. People are living longer, meaning not so many properties are coming back into the mix to be recycled for the younger generation.

2. Net migration to the UK has continued at just over a quarter of a million people a year since 2017, meaning we need an additional 115,000 households to house them alone.

3. For the last two years, one in six of the owners of properties that have been sold have moved into rented accommodation instead of buying on because of the lack of properties to buy.

So, what is the outcome of the imbalance between supply and demand on Tunbridge Wells rental properties?

Quite simply - Tunbridge Wells rents have rocketed. They are 5.6% higher today than the spring of 2020 … and that’s on the back of rents being 6.3% higher in spring 2020, compared to spring of 2019.

The severe shortage of housing in the private rented sector is pushing up rents in Tunbridge Wells as demand continues to grow. Many Tunbridge Wells people are finding it hard work to find appropriate accommodation at a reasonable rent, and with mounting numbers of tenants predicted to continue, this situation will only get worse unless more houses are built.

My heart goes out to those Tunbridge Wells tenants struggling with the cost-of-living crisis, only to then be hit by higher rents.

Yet, these higher rents are now enticing new landlords back into the Tunbridge Wells buy-to-let market because of the higher returns.

With higher inflation, property investment has been seen in the past a safe harbour to invest one’s money in. With the bonus of rising yields (because of the increase in rents) together with the nervousness of the Bank of England to increase interest rates too much because of the issues in Eastern Europe, this could be the start of a second renaissance in the Tunbridge Wells buy-to-let market.

If you have concerns about the issues in legislation and taxation, then the advantage of employing a letting agent, with the choice of property, what you pay for it and how it’s managed, will go a long way to mitigate them. 

If you are considering getting into the Tunbridge Wells buy-to-let market for the first time or expanding your property portfolio (whether you are a client of mine or not) please do not hesitate to give me a call and we can discuss these matters further.

4,586 Royal Tunbridge Wells Terraced Houses - Why Are They So Popular?

The terraced house is one of the most familiar styles of home in Tunbridge Wells (and the UK as a whole).

18.4% of Tunbridge Wells people live in a terraced home,

interesting when compared with the national average of 22.7%.

So, what is it about the humble terraced/townhouse us Brits love so much? In this article, I look at the history of the terraced house, how it relates to Tunbridge Wells and what the future holds for terraced homes.

A terraced house is a property built as part of a continuous row of three (or more) properties in a similar and uniform style.

The reason the British call them "terraced houses"; and not "row houses"; came about because 18th century British architects borrowed the phrase "terrace"; from "terraced gardens’.

Terraced gardens were known for their uniform nature (in looks, style and height etc.), so the architects decided to name them the same way as opposed to a "row house". In fact, in most countries, they are called "row houses".

The terraced house originated in the Low Countries of Europe in the late 1500s.

Terraced houses were first built en-masse in the UK after the Great Fire of 1666 with the rebuilding of London. 

They became fashionable for the landed gentry in the early Georgian era with chic and stylish terraces appearing in London's Mayfair and Bath with its Queen Square (the forerunner of the famous Royal Crescent) and were sometimes built around a garden square.

However, it wasn’t until the early 1800s that the terraced house turned out to be the solution to the increasing population of the towns as more and more people were attracted to towns and cities for work.

The terraced house fell out of favour with the upper-middle classes in the late Victorian age (1870’s onwards) as they wanted more privacy and space. They moved to live in detached houses or semi-detached villas, as the terrace house had started to become associated with the lower-middle and working classes.

With all these terraced houses being built, their quality of construction and design dropped as builders tried to squeeze more profit. The biggest issue was that most of the terraced houses built in the early to mid-Victorian age (1840s to 1870s) were made back-to-back with no rear garden, causing unsanitary conditions. Therefore, the Public Health Act of 1875 was introduced to regulate the building of terraced houses with design and standards. 

These new building standards in the Act improved the terraced house’s ventilation and, more importantly, required the house to have a toilet (frequently built outside). To meet these new building standards, the designs of these new houses created the well-known landscape of ‘grid' streets lined with two-storey terraces serviced by a pedestrian path between them, the name of which is a hotly debated topic. The various names for the pathway include alleyway / jitty / cut/ ginnel / snicket / passageway / ten foot / five foot/witchel / lonnin / vennel.

As a Tunbridge Wells resident, why not say what you call them in the comments?

As we entered the 20th Century, the terrace house continued to be popular, albeit with some new architectural additions.

The advent of Arts and Craft architecture with stain glass windows, Tudor style cladding, ornate porches, and elaborate chimney stacks.

After the First World War and the introduction of the Housing and Town Planning Act 1919 (which made local councils build council houses), the Victorian terraced rapidly became associated with overcrowding and slums (especially those back-to-back terraced houses built before 1875). Many of the back-to-back terraced houses were knocked down between

1930 and 1960 in what is known as the slum clearances.

Private builders started building the iconic suburban semi-detached houses with more extensive gardens, and local authorities decided to build high-rise blocks after World War II. Yet after the partial collapse of Ronan Point in 1968, the popularity of high-rise tower blocks waned.

Since the early 1990s though, the terraced house has steadily come back into favour as building land prices have increased by 322% in the last 30 years.

Many private builders have started to build modern three-storey townhouses in rows of five to seven. This terraced "townhouse-style" allows three and four bedrooms on a land footprint that would have usually only accommodated a smaller two-bed property.

So, let's look at some interesting stats on Tunbridge Wells terraced houses.

• There are 4,586 terraced houses in Tunbridge Wells (broken down as 3,062 privately owned terraced houses, 763 terraced council houses and 761 in the private rented sector)

• 16.6% of terraced houses in Tunbridge Wells are in the private rented sector, which is below the national average of 19.1%
• The most expensive terraced house in Tunbridge Wells ever sold was on Mount Ephraim, Tunbridge Wells for £1,670,000 in 2017
• The cheapest Tunbridge Wells terraced house sold in the last two years was on Pennine Walk, a three-bed terraced house for £170,000
• Terraced houses in Tunbridge Wells sell for an average of £393 per square foot

I hope you found that thought-provoking?

So, why is the terraced house, be it a red brick Victorian house or a more modern three- storey townhouse, still popular today in Tunbridge Wells?

They are typically well built, cheaper to maintain (especially the older terraced houses), comparatively spacious, and in good locations. Many terraced houses have been improved and extended through the inventive use of rear gardens/yards and converted roof spaces; their unpretentious design remains adaptable enough for 21st century living; what isn't

there to like about them?

These are my thoughts; tell me your thoughts about the humble yet versatile Tunbridge Wells terraced house.

Why Does it Take 112 Days to Get the Keys When You Buy a Royal Tunbridge Wells House?

• 1,105 properties have sold in the Royal Tunbridge Wells area in the last 12 months.

• It only takes 63 days to sell a Royal Tunbridge Wells home, so why does it take 112 days from the sold board going up to the buyer getting the keys?

• With a shortage of solicitors and a sub-standard conveyancing system, this article discusses what Royal Tunbridge Wells house sellers (and buyers) can do to speed up the house buying process.

Nationally, the average length of time it takes from agreeing the sale of a property to the keys being handed over is 111 days (down from 117 days last year), and in Royal Tunbridge Wells we come in at 112 days – pretty much on par with that national average.

So why does it take 16 weeks, when all that is required is the lawyers to look at some paperwork and get a mortgage? Also, what can Royal Tunbridge Wells homebuyers and sellers do to speed this up?  

The legal process to buy and sell a UK property is called conveyancing. The conveyancing system itself hasn’t really changed in hundreds of years. After the housing market was reopened after the first lockdown in the spring of 2020, the property market returned with a bang, helped on with the stamp duty holiday. 

In 2021, the number of properties selling in Royal Tunbridge Wells in some months went up massively, e.g., by 96% June 2021 and by 65% in March 2021. Many conveyancers and solicitors had to sort the legal paperwork out for upwards of 120 to 150 properties each at any one time.

This glut of sold properties caused by the pandemic that needed legal work to be sorted exacerbated a problem already present in the conveyancing industry.

For years conveyancers have complained of overwork and underpay. Conveyancing is seen as the Cinderella of the legal profession. This workload was the straw that broke the camel’s back, making many conveyancers leave the profession and go into better paid legal work like corporate work.

Also, the legal process of conveyancing has built-in inefficiencies, and the conveyancing profession has been relatively slow to innovate. However, there are some excellent tech solutions that are being slowly rolled out across the industry to make the process more efficient and effective. 

What can Royal Tunbridge Wells home buyers and sellers do to speed up their property sale?

If you are buying or selling your Royal Tunbridge Wells property as we speak, you won’t be able to wait for the conveyancing profession to be revamped, yet you can be as pre-emptive as possible to get your Royal Tunbridge Wells house sale through earlier. 

In a nutshell, ensure you have all the paperwork sorted on your Royal Tunbridge Wells home before you put your home on the market. Next, get the ball rolling on your mortgage. If you receive some paperwork, read it, check it, sign it and send it back in a day, do not leave it a week; finally, always communicate frequently with your estate agent and conveyancer.

When you instruct a solicitor, most will request money to start the ball rolling for searches and disbursements. They won’t lift a finger until that is paid. 

You will have to prove who you are in the conveyancing process, so your conveyancer will ask you to show them proof of ID and address. If you are buying, they will need to prove you have the funds/deposit to buy the home (and if your deposit is coming from family/friends, then they are required to write a letter to that effect).

How can the house buying and selling process be improved?

A couple of years ago, the Government set up the Home Buying and Selling Group to find the answer to this problem. Chaired by the well-known property guru Kate Faulkner, it is looking at an amalgamated Seller’s Information Pack (SIPs) and an IT-based single platform to share and communicate that SIP between buyers, sellers, their conveyancers, the estate agent, mortgage providers and brokers and finally surveyors.

The advantage of the SIP is that it can be created before the buyer has been found, meaning property buyers would be more knowledgeable when making an offer. Also, once the sale has been agreed upon, the SIP could be sent straightaway electronically to the buyers’ legal team (from the seller’s legal team) to start the procedure of asking for searches and raising inquiries. 

The bottom line is the conveyancing process is not fit for purpose in the 21^st century and change is on the horizon.

So, before the SIP becomes mandatory, there are things everyone can do to ensure they get the home of their dreams quicker. 

At my agency, I recommend the seller, us as the agent and the conveyancer start to liaise with each other to get the key information on the property being sold as quickly as possible. Then once a buyer is found, I believe it is vital we, as the agent, regularly communicate with all the stakeholders in the chain to ensure everyone is playing their part to expedite the sale. 

In the future, utilising technology and every agent/conveyancer preparing information upfront with the SIP will drastically reduce the time it takes between agreeing a sale and the keys/monies handed over. 

The conveyancing process will have to change to meet the needs of the 21^st century, but how long that will take is the big question.

If you would like to chat with me about how we do things differently to ensure your property not only gets the best price and how we do all we can, as agents, to expedite a smooth sale for your Royal Tunbridge Wells property, do not hesitate to pick up the phone to me or drop me a line at the office.

 

How Will Rising Inflation Affect the Tunbridge Wells Property Market in 2022?

 

The UK is currently experiencing its highest inflation rate since the early 1990s. This increase in prices has primally come about by the combination of an increase in demand for goods and services from consumers following lockdown last year together with global supply chain disruptions.

Most economists weren't too concerned about this increase in the inflation rate as the very same thing happened in the early 1990s following the Credit Crunch with a similar rise in demand and supply chain issues. Thankfully, back in the early 1990s, inflation returned to lower levels quite quickly. However, the situation in Eastern Europe now could change matters.

So, let me look at all the factors and what it means for the Tunbridge Wells property market.

The crisis in Eastern Europe has sparked even further rises in crude oil, (which diesel and petrol are made from) gas and grain prices as pressure on supply chains around the world increases.

In my previous articles, I suggested UK inflation would rise to around 7% in the spring and drop back to 5% in the autumn and as we entered 2023, be approximately 3% to 4%.

Yet, with these issues, inflation could rise to 8% to 9% by late spring and still be around 6% to 7% in autumn, well above the Bank of England's target of 2%.

With Tunbridge Wells wages rising at only 3% to 4% and inflation at 7%+,

Tunbridge Wells household incomes, in real terms, will fall.

This is because ‘real’ UK household incomes characteristically have been the most consistent lead indicator of growth (or a drop) in house prices. This is because growing inflation erodes the value of money you earn, which reduces its buying power. When the cash in your pocket has a lower spending power, people tend to spend less when they buy (and rent) a home (and vice versa).

Next month, Income Tax thresholds will be frozen, and National Insurance contributions are increasing. Collectively, all these issues will create a drop of around 2% to 2.5% in the real disposable incomes of Britain's households in 2022 (real disposable income - somebody's take-home wages after tax and then the effects of inflation are considered).

Will Tunbridge Wells people be more anxious to spend their money?

With less money in people's pockets, people's inclination to spend the money they do have could also be curtailed. People's savings are at an all-time high, yet many will decide to sit on the cash, instead of spending it, especially as consumer confidence has dropped to minus 26 on the GfK index (whatever that means – but in all seriousness though - more on that below).

All this can only mean there is going to be a house price crash.

It’s all doom and gloom! … Or is it?

My heart goes out to people caught up in the awful humanitarian crisis in Eastern Europe. Yet, I respectfully need to put that to one side for just a moment for the purpose of this article.

This blog is about the Tunbridge Wells property market, and Tunbridge Wells people want to know what will happen to the Tunbridge Wells property market.

In the first half of the article, I looked at the impending fall in real disposable incomes of 2% to 2.5% in 2022. I appreciate it's going to be tough for many families in Tunbridge Wells. Yet, it is always important to consider what has happened in previous times.

1982 – a drop of 2.3% in real disposable income

1992 – a drop of 3.7% in real disposable income

2008 – a drop of 5.8% in real disposable income

Yes, it's going to be tough, yet we got through 1982, 1992 and 2008 – and so we shall in 2022/23.

Next, the price of petrol is very high compared to a year ago.

The average price of unleaded petrol is £1.51/litre today, quite a jump from the £1.21/litre a year ago. But, here is an interesting fact, petrol was a lot more expensive (in real terms) in 2011 than today. In TODAY's money, a litre of unleaded petrol in 2011 would be the equivalent of £1.79/litre.

We have some way to go before we get to those levels – and again, the Tunbridge Wells economy (and property market) kicked on quite nicely after 2011.

What are Tunbridge Wells people spending on their rent and mortgages?

Housing costs - owner occupiers were spending on average 17.3% of their household income on mortgages in 2015, yet in 2021 this had risen, albeit to 17.7% - not a huge increase.

Council house (social) tenants have seen a drop in their rent from 29.2% in 2015 to 26.7% in 2021, whilst private tenants from 36.4% in 2015 to 31.2% in 2021.

Interesting that private tenants are proportionally 14.29% better off in 2021 than in 2015.

How we spend our money - the average UK home spent 4.2% of their household income on energy in 2021, and that is due to rise to 6.3% after April (and probably 7% in October). Yet, as a country, we spend 9% of our income on restaurants and hotels and 8% on recreation and culture. As with all aspects of life, it will mean choices, and maybe we will have to forego some luxuries?

Just before I move on from this aspect of the article, again I appreciate I am talking in averages. Many people with low incomes suffer from fuel poverty and they will find the increases in energy prices hard – my thoughts go out to you.

Interest rates - higher inflation is generally brought under control using higher interest rates, meaning mortgage payments will be higher.

First, 79% of homeowners with a mortgage are on a fixed rate, so any rise won't be instantaneous. Yet, there will be a bizarre side effect from the issues in Eastern Europe. Surprisingly, though the current situation in Eastern Europe, by its very nature, will bring greater UK inflation, it will also probably defer the Bank of England raising interest rates. This means mortgage rates won't increase as much as the bank won't want to exacerbate any pressures to the UK economy in 2023/24 caused by the conflict.

The stock market had priced an interest rate rise to 2% by the end of 2022. I suspect this will now be no more than 1% to 1.25% by Christmas, slowly going up in quarters of one per cent every few months. The crisis in Eastern Europe might even come to be seen as a defence for higher inflation throughout 2022, all meaning everyone's mortgage will be less.

Next, looking at Consumer Confidence Indexes - these indexes are fickle things. I prefer to look at the Organisation for Economic Co-operation and Development Consumer Confidence Index as it has a larger sample range and a longer time frame to compare against. Looking at the data from the mid 1970s, the drop in consumer confidence is big, yet nothing like the drops seen in the Oil Crisis of the mid 1970s, Recession of the early 1980s, ERM crisis of 1992 and the Global Financial Crisis of 2008/09. Also, when compared to the other main economies of the world (G7), the UK has always bounced back much more quickly from recessions when it comes to consumer confidence.

What about house prices in Tunbridge Wells in 2022/23?

Increasing energy prices, rising inflation, an increase of sanctions, and a probable drop in consumer confidence and spending in the aftermath of the conflict will knock the post-pandemic recovery globally, which will lead to a recession around the world, including the UK.

A recession is when a country’s GDP drops in two consecutive quarters. For the last 300 years, there has been a direct link between British house prices and GDP – (i.e. when GDP drops, UK house prices fall). Yet in 2020, the British GDP dropped by nearly 12%, yet house prices went the other way.

But, let’s look at what would happen if Tunbridge Wells’ house prices did drop by the same extent they did in the Global Financial Crisis of 2008/09.

House prices in Tunbridge Wells dropped by 18.1% in the Global Financial Crisis, the biggest drop in house prices over 16 months ever recorded in the UK.

The average value of a property in Tunbridge Wells today is £419,429.

Meaning if Tunbridge Wells' house prices dropped by the same percentage in the next 16 months, an average home locally would only be worth £343,512.

On the face of it, not good – until you realise that it would only take us back to Tunbridge Wells house prices being achieved in April 2016.

Yes, that will mean if they do drop in price, the 8.9% of Tunbridge Wells homeowners who have moved home since April 2016 would lose out if they sold after that price crash. But how many people move home after only being in their home for a few years? Not many!

The simple fact is that 91.1% of Tunbridge Wells homeowners will be better off when they move if house prices crash.

And all this assumes there will be a crash.

The simple fact is, the circumstances of 2009 that caused the property crash are entirely different to 2022 (no lending by the banks, higher interest rates and increasing unemployment compared to today’s increased lending, ultra-low interest rates and low unemployment environment).

I do believe with all that's happening in the world we might see a rebalancing of the Tunbridge Wells property market later in 2022 and could see the odd month with little negative growth in house prices, yet it will be nothing like 2009.

The expected fall in household spending could be counterbalanced by UK businesses’ plans to invest more in their businesses (with last year’s tax breaks on investing), which will create even more jobs.

Who knows what the future holds? These are just my opinions – what are yours?