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%

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 21^stCentury) 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.

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.

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.

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.

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!