Royal Tunbridge Wells Unemployment Drops to 3.4% and its effect on the Royal Tunbridge Wells Property Market

It was late May 2016, The Right Hon. Member for Tatton, Mr George Osborne, published an official HM Treasury analysis stating UK house prices would be lower by at least 10% (and up to 18%) by the middle of 2018 compared with what is expected if the UK remained in the European Union. So, eight months on from the Referendum, are we beginning to show signs of that prophecy? The simple answer is yes and no.

Good barometers of the housing market are the share prices of the big UK builders. Much was made of Barratt’s share price dropping by 42.5% in the two weeks after Brexit, along with Taylor Wimpey’s equally eye watering drop in the same two weeks by 37.9%. Looking at the most recent set of data from the Land Registry, property values in Royal Tunbridge Wells are 1.75% down month on month (and two months previously, they had barely grown with an increase of only 0.07%) – so is this the time to panic and run for the hills?

Doom and Gloom then? Well, let me consider the other side of the coin.

Well, as I have spoken about many times in my blog, it is dangerous to look at short term. I have mentioned in several recent articles, the heady days of the Royal Tunbridge Wells property prices rising quicker than a thermometer in the desert sun between the years 2011 and late 2016 are long gone – and good riddance. Yet it might surprise you during those impressive years of house price growth, the growth wasn’t smooth and all upward. Royal Tunbridge Wells property values dropped by an eye watering 0.8% in May 2012 and 1.49% in February 2014 – and no one batted an eyelid then.

You see, property values in Royal Tunbridge Wells are still 11.53% higher than a year ago, meaning the average value of a Royal Tunbridge Wells property today is £477,900. Even the shares of those new home builders Barratt have increased by 43.3% since early July and Taylor Wimpey’s have increased by 37.3%. The Office for Budget Responsibility, the Government Spending Watchdog, recently revised down its forecast for house-price growth in the coming years - but only slightly.

The Royal Tunbridge Wells housing market has been steadfast partly because, so far at least, the wider economy has performed better than expected since Brexit. There is a robust link between the unemployment rate and property prices, and a flimsier one with wage growth. Unemployment in the Tunbridge Wells Borough Council area stands at 2,000 people (3.4%), which is considerably better than a few years ago in 2014 when there were 2,300 people unemployed (4.1%) in the same council area.

However, inflation is the only thing that does worry me. Looking at all the pundits, it will get to at least 3% (if not more) in the latter part of 2017 as the drop in Sterling in late 2016 renders our imports with higher prices. If that transpires then the Bank of England, whose target for inflation is 2%, may raise interest rates from 0.25% to 2%+. However, that won’t be so much of an issue as 81.6% of new mortgages in the UK in the last two years have been fixed-rate and who amongst us can remember 1992 with Interest rates of 15%!

 Photo Credit - Start your Own Business Magazine

Forget Brexit and yes inflation will be a thorn in the side – but the greatest risk to the Royal Tunbridge Wells (and British) property market is that there are simply not enough properties being built thus keeping house prices artificially high. Good news for those on the property ladder, but not for those first-time buyers that aren’t! In the coming weeks in my articles on the Royal Tunbridge Wells Property Market, I will discuss this matter further!

£10.26bn – The total value of all Royal Tunbridge Wells Property Market

“How much would it cost to buy all the properties in Royal Tunbridge Wells?”

This fascinating question was posed by the 11-year-old son of one of my Royal Tunbridge Wells landlords when they both popped into my offices before the Christmas break (doesn’t that seem an age away now!). I thought to myself, that over the Christmas break, I would sit down and calculate what the total value of all the properties in Royal Tunbridge Wells are worth … and just for fun, work out how much they have gone up in value since his son was born back in the autumn of 2005.

In the last 11 years, since the autumn of 2005, the total value of Royal Tunbridge Wells’ property has increased by 55% or £3.64 billion to a total of £10.26 billion. Interesting, when you consider the FTSE100 has only risen by 30.78% and inflation (i.e. the UK Retail Price Index) rose by 37% during the same 11 years.

When I delved deeper into the numbers, the average price currently being paid by Royal Tunbridge Wells households stands at £446,688.… but you know me, I wasn’t going to stop there, so I split the property market down into individual property types in Royal Tunbridge Wells; the average numbers come out like this ..

Royal Tunbridge Wells Property Market
Average Value of a Detached Property	Average Value of a Semi-Detached Property	Average Value of a Terraced/Town House Property	Average Value of an Apartment
£683,378	£445,952	£310,231	£293,582

... yet it got even more fascinating when I multiplied the total number of each type of property by the average value. As detached houses are so expensive, when you compare them with the much cheaper terraced/town houses and apartments, you can quite clearly see how valuable detached properties are in terms of total pound note value, when compared to the value of the terraced/town houses and apartments.

Total Value of all the Royal Tunbridge Wells Detached Properties	Total Value of all the Royal Tunbridge Wells Semi-Detached Properties	Total Value of all the Royal Tunbridge Wells Terraced/Town House Properties	Total Value of all the Royal Tunbridge Wells Apartments
£3,402,539,062	£2,841,606,144	£1,422,719,366	£2,597,613,536

So, what does this all mean for Royal Tunbridge Wells?  Well as we enter the unchartered waters of 2017 and beyond, even though property values are already declining in certain parts of the previously over cooked Central London property market, the outlook in Royal Tunbridge Wells remains relatively good as over the last five years, the local property market was a lot more sensible than central London’s.

Royal Tunbridge Wells house values will remain resilient for several reasons. Firstly, demand for rental property remains strong with continued immigration and population growth.  Secondly, with 0.25 per cent interest rates, borrowing has never been so cheap and finally the simple lack of new house building in Royal Tunbridge Wells not keeping up with current demand, let alone eating into years and years of under investment – means only one thing – yes it might be a bumpy ride over the next 12 to 24 months but, in the medium term, property ownership and property investment in Royal Tunbridge Wells has always, and will always, ride out the storm.

In the coming weeks, I will look in greater detail at my thoughts for the 2017 Royal Tunbridge Wells Property Market. As always, all my articles can be found at the Royal Tunbridge Wells Property Market Blog 

£44m a year black hole in the Royal Tunbridge Wells Property Market - Is Buy to Let Immoral? (Part 2)

An Englishman’s Home is His Castle as Maggie Thatcher lauded - everyone should own their own home. In 1971, around 50% of people owned their own home and, as the baby-boomers got better jobs and pay, that proportion of homeowners rose to 69% by 2001. Homeownership was here to stay as many baby boomers assumed it’s very much a cultural thing here in Britain to own your own home.

But on the back of TV programmes like Homes Under the Hammer, these same baby boomers started to jump on the band wagon of Royal Tunbridge Wells buy to let properties as an investment. Royal Tunbridge Wells first time buyers were in competition with Royal Tunbridge Wells landlords to buy these smaller starter homes … pushing house prices up in the 2000’s (as mentioned in Part One) beyond the reach of first time buyers. Alas, it is not as simple as that. Many factors come into play, such as economics, the banks and government policy. But are Royal Tunbridge Wells landlords fanning the flames of the Royal Tunbridge Wells housing crisis bonfire?

Photo Credit - ThinkGlink

I believe that the landlords of the 5,353 Royal Tunbridge Wells rental properties are not exploitive and are in fact, making many positive contributions to Royal Tunbridge Wells and the people of Royal Tunbridge Wells. Like I have said before, Royal Tunbridge Wells (and the rest of the UK) isn’t building enough properties to keep up the demand; with high birth rate, job mobility, growing population and longer life expectancy.

According to the Barker Review, for the UK to standstill and meet current demand, the country needs to be building 8.7 new households each and every year for every 1,000 households already built. Nationally, we are currently running at 5.07 per thousand and in the early part of this decade were running at 4.1 to 4.3 per thousand.

It doesn’t sound a lot of difference, so let us look at what this means for Royal Tunbridge Wells …

For Royal Tunbridge Wells to meet its obligation on the building of new homes, Royal Tunbridge Wells would need to build 217 households each year. Yet, we are missing that figure by around 91 households a year.

For the Government to buy the land and build those additional 91 households, it would need to spend £44,565,458 a year in Royal Tunbridge Wells alone. Add up all the additional households required over the whole of the UK and the Government would need to spend £23.31bn each year … the Country hasn’t got that sort of money!

With these problems, it is the property developers who are buying the old run-down houses and office blocks which are deemed uninhabitable by the local authority, and turning them into new attractive homes to either be rented privately to Royal Tunbridge Wells families or Royal Tunbridge Wells people who need council housing because the local authority hasn’t got enough properties to go around.

The bottom line is that, as the population grows, there aren’t enough properties being built for everyone to have a roof over their head. Rogue landlords need to be put out of business, whilst tenants should expect a more regulated rental market, with greater security for tenants, where they can rely on good landlords providing them high standards from their safe and modernised home. As in Europe, where most people rent rather than buy, it doesn’t matter who owns the house – all people want is a clean, decent roof over their head at a reasonable rent.

 So only you, the reader, can decide if buy to let is immoral, but first let me ask this question - if the private buy to let landlords had not taken up the slack and provided a roof over these people’s heads over the last decade .. where would these tenants be living now? ….. because the alternative doesn’t even bear thinking about!