Stotfold house prices outstrip wage growth by 18.91% since 2007

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I recently read a report by the Yorkshire Building Society that 54% of the country has seen wages (salaries) rise faster than property prices in the last 10 years. The report said that in the Midlands and North, salaries had outperformed property prices since 2007, whilst in other parts of the UK, especially in the South, the opposite has happened and property prices have outperformed salaries quite noticeably.

As regular readers of my blog know, I always like to find out what has actually happened locally in Stotfold. To talk of North and South is not specific enough for me. Therefore, to start, I looked at what has happened to salaries locally since 2007. Looking at the Office of National Statistics (ONS) data for Central Bedfordshire Council, some interesting figures came out…

188 table

 

188 Biggleswade Graph

Salaries in Central Bedfordshire have risen by 24.47% since 2007 (although it’s been a bit of a roller coaster ride to get there!) – interesting when you compare that with what has happened to salaries regionally (an increase of 18.65%) and nationally, an increase of 17.61%.

Next, I needed to find what had happened to property prices locally over the same time frame of 2007 and today. Net property values in Central Bedfordshire are 43.38% higher than they were in late 2007 (not forgetting they did dip in 2008 and 2009). Therefore…

Property values in the Stotfold area have increased at a higher rate than wages to the tune of 18.91% … meaning, Stotfold is in line with the regional trend

 

188 Stotfold Graph 2

 

All this is important, as the relationship between salaries and property values is the basis on how affordable property is to first (and second, third etc.) time buyers. It is also vitally relevant for Stotfold landlords as they need to be aware of this when making their buy-to-let plans for the future. If more Stotfold people are buying, then demand for Stotfold rental properties will drop (and vice versa).

As I have discussed in a few articles in my blog recently, this issue of ‘property-affordability’ is a great bellwether to the future direction of the Stotfold property market. Now of course, it is not as simple as comparing salaries and property prices, as that measurement disregards issues such as low mortgage rates and the diminishing proportion of disposable income that is spent on mortgage repayments.

On the face of it, the change between 2007 and 2017 in terms of the ‘property-affordability’ has not been that great. However, look back another 10 years to 1997, and that tells a completely different story. Nationally, the affordability of property more than halved between 1997 and today. In 1997, house prices were on average 3.5 times workers’ annual wages, whereas in 2016 workers could typically expect to spend around 7.7 times annual wages on purchasing a home.

The issue of a lack of home ownership has its roots in the 1980’s and 1990’s. It’s quite hard as a tenant to pay your rent and save money for a deposit simultaneously, meaning for many Stotfold people, home ownership is not a realistic goal. Earlier in the year, the Tories released proposals to combat the country’s ‘broken’ housing market, setting out plans to make renting more affordable, while increasing the security of rental deals and threatening to bring tougher legal action to cases involving bad landlords.

This is all great news for Stotfold tenants and decent law-abiding Stotfold landlords (and indirectly owner occupier homeowners). Whatever has happened to salaries or property prices in Stotfold in the last 10 (or 20) years … the demand for decent high-quality rental property keeps growing. If you want a chat about where the Stotfold property market is going – please read my other blog posts on http://www.stotfoldpropertyblog.co.uk or drop me note via email, like many Stotfold landlords are doing.

 

 

Decreasing Numbers of Younger Homeowners in Stotfold

184 graphic one

 

Justin Mitchell, 37-year-old father of two from Stotfold, was out house hunting. It was a pleasant August Saturday afternoon, and our man cycles along on his bike. He cycles up a street of suburban semis, where he spots a few retired mature neighbours, chatting to each other over the garden fence. He leans his bicycle against a lamppost and launches softly into his property search.

Anyone on the road contemplating moving?” Justin asks, “I am not a landlord or developer, I’m just a Stotfold bloke trying to get out of renting, buy a house, do it up and live in it with my wife and two children

The only way I will leave here is in a box”, answers an 80-something lady, wearing her fading Paisley patterned housecoat from the 1970’s.

I‘ve lived here since before you were born, its lovely up here .. we aren’t moving, are we Doris?” (as her neighbour sagely shook his head at his wife).

Justin, like many Stotfold people born in the late 1970’s to the early 1990’s, is keen to get a slice of prime Stotfold real estate. Yet people like Justin in Generation Y (or the Millennials as some people call them i.e. born between 1977 and 1994 and needing family housing now) are discovering, as each year passes by, they are becoming more neglected and ignored when it comes to moving up the property ladder.

Looking at the graph for the UK as whole …

 

184 FIXED GRAPH.png

 

Over 75 percent of Brits aged 65 and above (the baby boomers) are owner-occupiers, the biggest share since records began and a proportional rise of over 48.3% since the early 1980’s. Looking at those Baby Boomers (the current 65+year olds)  .. and roll the clock back 36 years (to when they were in their 30’s and 40’s and two thirds (65.6%) of them owned their own home.

Whilst today, just under a half of 25 to 49 year olds (47.3%) own their own home.

However, the biggest drop has been in the 18 to 24-year old’s, where homeownership has dropped from a third (32%) in the 1980’s to less than one in ten (8.9%) today. Looking at the Stotfold statistics, the numbers make even more interesting reading.

 

184 table Stotfold

 

 

184 Graph Stotfold.png

 

Government policy contributes to the generational stalemate. Stamp Duty rules prevent older Brits from moving as the price of land and planning rules make it harder to build affordable bungalows that are attractive to members of the older generation who want to move.

The average value of an acre of prime building land in the UK is between £750,000 and £800,000 per acre. Bungalows are the favoured option for the older generation, but the problem is bungalows take up too much land to make them profitable for new homes builders. The housing market is gridlocked with youngsters wanting to get on (then move up) the property ladder whilst the older generation, who want to move from their larger houses to smaller, more modern bungalows, can’t. The problem is – there simply aren’t enough bungalows being built and the high price of land, means they are prohibitive to build.

So, what is my point? Well, all I would say to the homeowners of Stotfold is that one solution could be to start to talk to your local councillors, so they can mould the planners’ thoughts and the local authority thinking in setting land aside for bungalows instead of two up two down starter homes? That would free the impasse at the top of the property ladder (i.e. mature people living in big houses but unable to move anywhere), releasing the middle aged gridlocked people in the ladder to move up, thus releasing more existing starter homes for the younger generation.

… and to you Justin … the wandering new home searcher – if things are going to change, it will be years before they do .. so keep going out and spreading the word of your search for a new home for your family.

11.98% Drop in Stotfold People Moving Home in the Last 10 Years

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I was having a lazy Saturday morning, reading through the newspapers at my favourite coffee shop in Letchworth.  I find the most interesting bits are their commentaries on the British Housing Market.  Some talk about property prices, whilst others discuss the younger generation grappling to get a foot-hold on the property ladder with difficulties of saving up for the deposit.  Others feature articles about the severe lack of new homes being built (which is especially true in Stotfold!).  A group of people that don’t often get any column inches however are those existing homeowners who can’t move!

Back in the early 2000’s, between 1m and 1.3m people moved each year in England and Wales, peaking at 1,349,306 home-moves (i.e. house sales) in 2002.  However, the ‘credit crunch’ hit in 2008 and the number of house sales fell to 624,994 in 2009.  Since then this has steadily recovered, albeit to a more ‘respectable’ 899,708 properties by 2016.  This means there are around 450,000 fewer house sales (house-moves) each year compared to the noughties.  The question is … why are there fewer house sales?

 

185 Eng and Wales Moving Graph FIXED

 

To answer that, we need to go back 50 years.  Inflation was high in the late 1960’s, 70’s and early 80’s.  To combat this, the Government raised interest rates to a high level in a bid to lower inflation.  Higher interest rates meant the householders monthly mortgage payments were higher, meaning mortgages took a large proportion of the homeowner’s household budget. However, this wasn’t all bad news since inflation tends to erode mortgage debt in ‘real spending power terms’.  Consequently, as wages grew (to keep up with inflation), this allowed home owners to get even bigger mortgages.  At the same time their mortgage debt was decreasing, therefore allowing them to move up the property ladder quicker.

Roll the clock on to the late 1990’s and the early Noughties, and things had changed.  UK interest rates tumbled as UK inflation dropped.  Lower interest rates and low inflation, especially in the five years 2000 to 2005, meant we saw double digit growth in the value of UK property.  This inevitably meant all the home owner’s equity grew significantly, meaning people could continue to move up the property ladder (even without the effects of inflation).

This snowball effect of significant numbers moving house continued into the mid noughties (2004 to 2007), as Banks and Building Society’s slackened their lending criteria.  [You will probably remember the 125% loan to value Northern Rock Mortgages that could be obtained with just a note from your Mum!!].  This meant home movers could borrow even more to move up the property ladder.

So, now it’s 2017 and things have changed yet again!

You would think that with ultra-low interest rates at 0.25% (a 320-year low) the number of people moving would be booming – wouldn’t you?  However, this has not been the case.  Less people are moving because:

(1) low wage growth of 1.1% per annum

(2) the tougher mortgage rules since 2014

(3) sporadic property price growth in the last few years

(4) high property values comparative to salaries (I talked about this a couple of months ago)

 What does this translate to in pure numbers locally?

 In 2007, 6,528 properties sold in the Central Bedfordshire District Council area and last year, in 2016 only 5,746 properties sold – a drop of 11.98%.

 

185 graph Central Bedfordshire.png

 

Therefore, we have 782 less households moving in the Stotfold and surrounding Council area each year.  Now of that number, it is recognised throughout the property industry around fourth fifths of them are homeowners with a mortgage. That means there are around 626 mortgaged households a year (fourth fifths of the figure of 782) in the Stotfold and surrounding council area that would have moved 10 years ago, but won’t this year.

The reason they can’t/won’t move can be split down into different categories, explained in a recent report by the Council of Mortgage Lenders (CML). So, of those estimated 626 annual Stotfold (and surrounding area) non-movers, based on that CML report –

  1. There are around 225 households a year that aren’t moving due to a fall in the number of mortgaged owner occupiers (i.e. demographics).
  1. I estimate another 88 households a year are of the older generation mortgaged owner occupiers. As they are increasingly getting older, older people don’t tend to move, regardless of what is happening to the property market (i.e. lifestyle).
  1. Then, I estimate 37 households of our Stotfold (and surrounding area) annual non-movers will mirror the rising number of high equity owner occupiers, who previously would have moved with a mortgage but now move as cash buyers (i.e. high house price growth).
  1. I believe there are 276 Stotfold (and surrounding area) mortgaged homeowners that are unable to move because of the financing of the new mortgage or keeping within the new rules of mortgage affordability that came into play in 2014 (i.e. mortgage).

The first three above are beyond the Government or Bank of England control.  However could there be some influence exerted to help the non-movers because of financing the new mortgage and keeping within the new rules of mortgage affordability? If Stotfold property values were lower, this would decrease the size of each step up the property ladder.  This would mean the opportunity cost of increasing their mortgage would reduce (i.e. opportunity cost = the step up in their mortgage payments between their existing and future new mortgage) and they would be able to move to more upmarket properties.

Then there is the mortgage rules, but before we all start demanding a relaxation in lending criteria for the banks, do we want to return to free and easy mortgages – 125% Northern Rock footloose and fancy-free mortgage lending that seemed to be available in the mid 2000’s … available at a drop of hat and three tokens from a cereal packet?

We all know what happened with Northern Rock …. Your thoughts would be welcome on this topic.

 

Supply and Demand Issues mean Stotfold Property Values Rise by 9.23% in the Last 12 Months

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The most recent set of data from the Land Registry has stated that property values in Stotfold and the surrounding area were 9.23% higher than 12 months ago and 31.21% higher than January 2015.

Despite the uncertainty over Brexit as Stotfold (and most of the UK’s) property values continue their medium and long-term upward trajectory. As economics is about supply and demand, the story behind the Stotfold property market can also be seen from those two sides of the story.

Looking at the supply issues of the Stotfold property market, putting aside the short-term dearth of property on the market, one of the main reasons of this sustained house price growth has been down to of the lack of building new homes.

The draconian planning laws, that over the last 70 years (starting with The Town and Country Planning Act 1947) has meant the amount of land built on in the UK today, only stands at 1.8% (no, that’s not a typo – its one point eight percent) and that is made up of 1.1% with residential property and 0.7% for commercial property. Now I am not advocating building modern ugly carbuncles and high-rise flats in the Cotswolds, nor blot the landscape with the building of massive out of place ugly 1,000 home housing estates around the beautiful countryside of such villages as Astwick, Hinxworth and Ickleford.

 

182 fixed graph on land usage

 

The facts are, with the restrictions on building homes for people to live in, because of these 70-year-old restrictive planning regulations, homes that the youngsters of Stotfold badly need, aren’t being built. Adding fuel to that fire, there has been a large dose of nimby-ism and landowners deliberately sitting on land, which has kept land values high and from that keeps house prices high.

Looking at the demand side of the equation, one might have thought property values would drop because of Brexit and buyers uncertainty. However, certain commenters now believe property values might rise because of Brexit. Many people are risk adverse, especially with their hard-earned savings. The stock market is at an all-time high (ready to pop again?) and many people don’t trust the money markets. The thing about property is its tangible, bricks and mortar, you can touch it and you can easily understand it.

The Brits have historically put their faith in bricks and mortar, which they expect to rise in value, in numerical terms, at least. Nationally, the value of property has risen by 635.4% since 1984 whilst the stock market has risen by a very similar 593.1%. However, the stock market has had a roller coaster of a ride to get to those figures. For example, in the dot com bubble of the early 2000’s, the FTSE100 dropped 126.3% in two years and it dropped again by 44.6% in 9 months in 2007… the worst drop Stotfold saw in property values was just 16.73% in the 2008/9 credit crunch.

Despite the slowdown in the rate of annual property value growth in Stotfold to the current 9.23%, from the heady days of 13.88% annual increases seen in mid 2015, it can be argued the headline rate of Stotfold property price inflation is holding up well, especially with the squeeze on real incomes, new taxation rules for landlords and the slight ambiguity around Brexit. With mortgage rates at an all-time low and tumbling unemployment, all these factors are largely continuing to help support property values in Stotfold (and the UK).

For more thoughts on the Stotfold Property Market, please visit the Stotfold Property Market Blog: http://www.stotfoldpropertyblog.co.uk

 

237 Stotfold Landlords – Is This a Legal Tax Loop-Hole?

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In November 2015, George Osborne disclosed plans to restrain the buy-to-let (BTL) market, implying its growing attractiveness was leaving aspiring first time buyers contesting with landlords for the restricted number of properties on the market.  One of things he brought in was that tax relief on BTL mortgages would be capped, starting in April 2017.  Before April 2017, a private landlord could claim tax relief from their interest on their BTL mortgage at the rate they paid income tax – (i.e. 20% basic / 40% higher rate and 45% additional rate).

So, for example, let’s say we have a Stotfold landlord, a high rate tax payer who has a BTL investment where the rent is £900 a month and the mortgage is £600 per month.  In the tax year just gone (2016/17), assuming no other costs or allowable items, the figures are below:

  • Annual rental income £10,800.
  • Taxable rental income would be £3,600 after tax relief from mortgage relief
  • Meaning they would pay £1,440 in income tax on the rental income

And assuming no other changes, the landlord would have income tax liabilities (at the time of writing May 2017) in the tax years of:

  • (17/18) £1,800
  • (18/19) £2,160
  • (19/20) £2,520
  • (20/21) £2,880

Landlords who are higher rate tax payers are going to have be a lot smarter with their BTL investments and ensure they are maximising their rental properties full rental capability.  However, there is another option for landlords.

The Stotfold landlords who own the 237 Rental properties

in the town could set up a Limited Company and sell their

property personally to that Limited Company

In fact, looking at the numbers from Companies House, many landlords are doing this.  In the UK, there are 93,262 buy-to-let limited companies, and since the announcement in November 2015, the numbers have seen a massive rise.

  • Q2 2015 / Q3 2015 – 4,193 Buy to Let limited companies set up
  • Q4 2015 / Q1 2016 – 5,403 Buy to Let limited companies set up
  • Q2 2016 / Q3 2016 – 3,007 Buy to Let limited companies set up
  • Q4 2016 / Q1 2017 – 7,149 Buy to Let limited companies set up

 

173 Stotfold Graph

By selling their buy to let investments to their own limited company, owned 100% by them, these landlords could then offset the costs of running their BTL’s as an ‘allowable expense’ – effectively writing off the cost of 100% of their mortgage outgoings, wear and tear and upkeep, letting agent’s fees etc.

I am undeniably seeing more Stotfold landlords approach me for my thoughts on setting up a BTL limited company, so should you make the change to a limited company?

In fact, I have done some extensive research with companies house and in the 15 months between 1st January 2016 to 31st March 2017, 67 buy-to-let limited companies have been set up in the SG postcode alone.

If you are looking to hold your BTL investments for a long time, it could be very favourable to take the short-term pain of putting your BTL’s in a limited company for a long-term gain.  You see, there are huge tax advantages to swapping property ownership into a limited company but there are some big costs that go with the privilege.

As the law sees the new limited company as a separate entity to yourself, you are legally selling your BTL property to your limited company, just like you would be selling it on the open market.  Your limited company would have to pay stamp duty on the purchase and if you (as an individual) made a profit from the original purchase price, there could be a capital gains tax liability of 18% to 28%.  The mortgage might need to be redeemed and renegotiated too and this could come with exit charges.

On a more positive note, what I have seen by incorporating (setting up the limited company) is landlords can roll up all their little buy to let mortgages into one big loan, often meaning they obtain a lower interest rate and the ability to advance new purchase capital.  Finally, if the tax liability is too high to swap to a limited company, some savvy buy to let investors are leaving their existing portfolios in their personal name whilst purchasing any new investment through a limited company, just an idea, not advice!

It’s vital that landlords get the very best guidance and information from tax consultants with the right qualifications, experience and insurance.  Whatever you do, always get the opinions from these tax consultants in writing and you shouldn’t hurry into making any hasty decisions.  The modifications to BTL tax relief are being progressively eased in over the next three years so there is no need to be unnerved and rush into any decisions before finding out the specifics as they relate precisely to your personal situation.  With decent tax planning from a tax consultant and good rental / BTL portfolio management (which I can help you with), whatever you do, let’s keep you the right side of the line!

6.82 Babies born for each new home built in the Stotfold area

166 - Biggleswade

As more babies are being born to Stotfold and  Central Bedfordshire mothers, I believe this increase will continue to add pressure to the over stretched Stotfold property market and materially affect the local property market in the years to come.

On the back of eight years of ever incremental increasing birth rates, a significant 6.82 babies were born for every new home that was built in the Central Bedfordshire Council area in 2016.  I believe this has and will continue to exacerbate the Stotfold housing shortage, meaning demand for housing, be it to buy or rent, has remained high.  The high birth rate has meant Stotfold rents and Stotfold property prices have remained resilient, even with the challenges the economy has felt over the last eight years, and they will continue to remain high in the years to come.

This ratio of births to new homes has reach one its highest levels since 1945 (back in the early 1970’s the average was only one and a half births for every household built).  Looking at the local birth rates, the latest figures show we in the Central Bedfordshire Council area had an average of 66.7 births per 1,000 women aged 15 to 44.  Interestingly, the national average is 61.7 births per 1,000 women aged 15 to 44 and for the region its 67.6 births per 1,000 women aged 15 to 44.

166 - National Graph JPEG (fixed graph) - to be used to add weight to your local graph

The number of births  from Stotfold  and Central Bedfordshire women between the ages of 20 to 29  are close to the National average, but those between 35 and 44 were much higher.

 However overall, the birth rate is  still increasing and when  that fact is  combined  with the ever-increasing life  expectancy in the Stotfold area, the high levels of net migration into the area over the last 14  years (which I talked about in the previous articles)  and the  higher predominance of single person households … this can only mean one thing … a huge increase in the need for housing in Stotfold.

Again, in a previous article a while back, I said more and more people are having children as tenants because they feel safe in rented accommodation.  Renting is becoming a choice for Stotfold people.

The planners and politicians of our local authority, central Government and people as a whole need to recognise that with individuals living longer, people having more children and whilst divorce rates have dropped recently, they are still at a relatively high level (meaning one household becomes two households) … demand for property is simply outstripping supply.  The simple fact is more Stotfold properties need to be built, be that for buying or renting.

Only 1.1% of the Country is built on by houses.  Now I am not suggesting we build tower blocks in the middle of the  Stotfold Nature Reserve , but the obsession of not building on any green belt land should be carefully re-considered.

Yes, we need to build on brownfield sites first, but there are not  hundreds of acres of brownfield sites in Stotfold, and what brownfield sites there are, building on them can only work with complementary public investment.  Many such sites are contaminated and are not financially viable to develop, so unless the Government put their hand in their pocket, they will never be built on.

I am not saying we should crudely go ‘hell for leather’ building on our Green Belt, but we need a new approach to enable some parts of the countryside to be regarded more positively by local authorities, politicians and communities and allow considered and empathetic development.  Society in the UK needs to look at the green belts outside their leisure and visual appeal, and assess how they can help to shape the way we live in the most even-handed way.  Interesting times

Should the 1,155 home owning OAP’s of Stotfold be forced to downsize?

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This was a question posed to me on social media a few weeks ago, after my article about our mature members of Stotfold society and the fact many retirees feel trapped in their homes.  After working hard for many years and buying a home for themselves and their family, the children have subsequently flown the nest and now they are left to rattle round in a big house.  Many feel trapped in their big homes (hence I dubbed these Stotfold home owning mature members of our society, ‘Generation Trapped’).

Should we force OAP Stotfold homeowners to downsize?

In the original article, I suggested that we as a society should encourage, through building, tax breaks and social acceptance that it’s a good thing to downsize. But should the Government force OAP’s?

One of the biggest reasons OAP’s move home is health (or lack of it).  Looking at the statistics for Stotfold, of the 1,155 homeowners who are 65 years and older, whilst 681 of them described themselves in good or very good health, a sizeable 366 home owning OAPs described themselves as in fair health and 105 in bad or very bad health.

164 Graph Stotfold

9.54% of Stotfold home owning OAP’s are in poor health

If you look at the figures for the whole of Central Bedfordshire District Council (not just Stotfold), there are only 818 specialist retirement homes that one could buy (if they were in fact for sale) and 956 homes available to rent from the Council and other specialist providers (again, you would be waiting for dead man’s shoes to get your foot in the door) and many older homeowners wouldn’t feel comfortable with the idea of renting a retirement property after enjoying the security of owning their own home for most of their adult lives.

My intuition tells me the majority ‘would be’ Stotfold down-sizers could certainly afford to move but are staying put in bigger family homes because they can’t find a suitable smaller property.  The fact is there simply aren’t enough bungalows for the healthy older members of the Stotfold population and specialist retirement properties for the ones who aren’t in such good health … we need to build more appropriate houses in Stotfold.

The government’s Housing White Paper, published recently, could have solved so many problems with the UK housing market, including the issue of homing our ageing population. Instead, it ended up feeling annoyingly ambiguous. Forcing our older generation to move with such measures as a punitive taxation (say a tax on wasted bedrooms for people who are retired) would be the wrong thing to do.  Instead of the stick, maybe the Government could use the carrot tactics and offered tax breaks for down-sizers.  Who knows, but something has to happen?

Come to think about it, isn’t the word ‘downsize’ such an awful word?  I prefer to use the word ‘decent-size’ instead of ‘down-size’ as the other phrase feels like they are lowering themselves as though they are having to downgrade themselves in their retirement (and let’s be frank – no one likes to be downgraded).

The simple fact is we are living longer as a population and constantly growing with increased birth rates and immigration. So, what I would say to all the homeowners and property owning public of Stotfold is … more houses and apartments need to be built in the Stotfold area, especially more specialist retirement properties and bungalows.  The government had a golden opportunity with the White Paper and were sadly found lacking.

A message to my Stotfold property investor readers, whilst this issue gets sorted in the coming decade(s), maybe seriously consider doing up older bungalows as people will pay handsomely for them be that for sale or even rent?  Just a thought!

 

What will the General Election do to 3,077 Stotfold Homeowners?

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In Stotfold, of the 3,978 households, 1,171 homes are owned without a mortgage and 1,906 homes are owned with a mortgage. Many homeowners have made contact me with asking what the General Election will do the Stotfold property market?  The best way to tell the future is to look at the past.

I have looked over the last five general elections and analysed in detail what happened to the property market on the lead up to and after each general election. Some very interesting information has come to light.

Of the last five general elections (1997, 2001, 2005, 2010 and 2015), the two elections that weren’t certain were the last two (2010 with the collation and 2015 with unexpected Tory majority). Therefore, I wanted to compare what happened in 1997, 2001 and 2005 when Tony Blair was guaranteed to be elected/re-elected versus the last knife edge uncertain votes of 2010 and 2015 … in terms of the number of houses sold and the prices achieved.

Look at the first graph below comparing the number of properties sold and the dates of the general elections:

168 Graph One

It is clear, looking at the number of monthly transactions (the blue line), there is a certain rhythm or seasonality to the housing market. That rhythm/seasonality has never changed since 1995 (seasonality meaning the periodic fluctuations that occur regularly based on a season – i.e. you can see how the number of properties sold dips around Christmas, rises in Spring and Summer and drops again at the end of the year).

To remove that seasonality, I have introduced the red line. The red line is a 12 month ‘moving average’ trend line which enables us to look at the ‘de-seasonalised’ housing transaction numbers, whilst the yellow arrows denote the times of the general elections. It is clear to see that after the 1997, 2001 and 2005 elections, there was significant uplift in number of households sold, whilst in 2010 and 2015, there was slight drop in house transactions (i.e. number of properties sold).

I then wanted to consider what happened to property prices. In the graph below, I have used that same 12-month average, housing transactions numbers (in red) and yellow arrows for the dates of the general elections but this time compared that to what happened to property values (pink line):

168 Graph Two

It is quite clear none of the general elections had any effect on the property values.  Also, the timescales between the calling of the election and the date itself also means that any property buyer’s indecisiveness and indecision before the election will have less of an impact on the market.

Finally, what does this mean for the landlords of the 388 private rented properties in Stotfold?  As I have discussed in previous articles (and just as relevant for homeowners as well) property value growth in Stotfold will be more subdued in the coming few years for reasons other than the general election. The growth of rents has taken a slight hit in the last few months as there has been a slight over supply of rental property in Stotfold, making it imperative that Stotfold landlords are realistic with their market rents. However, in the long term, as the younger generation still choose to rent rather than buy the prospects, even with the changes in taxation, mean investing in buy-to-let still looks a good bet.  If you want to find out more about the Stotfold property market or need some advice please feel free to pop into the office, phone us on 01462 894565 or e-mail us at: lettings@satchells.co.uk.

 

39 Properties For Sale in Stotfold … is this a good time to sell?

image12017 has started with some positive interest in the Stotfold property market.  Taking a snap shot of the Stotfold property market for the first quarter of 2017, the picture suggests some interesting trends when it comes to the number of properties available to buy, their asking prices and what prices properties are actually selling for.

Let us first consider the number of properties for sale, compared to   twelve  months ago:

Stotfold 159 Table 1

When we add in building plots and other types of properties that do  not   fit into the four main categories, that means there are 39 properties for sale today compared with 15 a year ago, a rise of 160%.

Secondly, Stotfold asking prices, compared
to the same as a year ago, are 3.96% higher..

With that in mind, I wanted to look at what property was actually selling for in Stotfold. Taking my information from the Land Registry, the last available six months property transactions for SG5 4 show an interesting picture (note the Land Registry data is always a few months behind due to the nature of the house buying process and so March 2017 is latest set of data). The price shown is the average price paid and the number in brackets is the number of properties actually sold.

Stotfold 159 Table 2

What does all this mean for the property
 owning folk of Stotfold?

With more property on the market than a year ago and asking prices 3.69% higher, those trying to sell their property need to be mindful that buyers, be they first timers, buy to let landlords or people moving up the Stotfold property ladder have much more price information about the Stotfold property market at their fingertips than ever before.

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Those Stotfold people who are looking to sell their property in 2017, need to be aware of the risks of over pricing their property when initially placing it on the market. Over the last 12 months, I have noticed the approach of a few Stotfold estate agents is to suggest an inflated asking price to encourage the homeowner and secure the property to sell on their books. The down side to this is that when offered to the market for the first time, buyers will realise it is overpriced and will not waste their time asking for a brochure. They will not   even view the property, let alone make an offer. So when the price is reduced a few months later, the property has become market stale and continues to be ignored.

Whilst the Stotfold property market has an unassailable demand for property, there is one saying that always rings true:

As long as the property is being marketed
at the right price it will sell.

If you want to know if your Stotfold property is being marketed at the right price, send me a web link and I will give you my honest opinion.

Stotfold’s ‘Generation Trapped’ and the £702.5m legacy

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I have previously written an article on the plight of the Stotfold 20 something’s often referred to by the press as ‘Generation Rent’.  Attitudes to renting have certainly changed over the last twenty years and as my analysis suggested, this change is likely to be permanent. In the article, whilst a minority of this Generation Rent feel trapped, the majority don’t – making renting a choice not a predicament. The Royal Institution of Chartered Surveyors (RICS) predicted that the private rental sector is likely to grow substantially by 1.8m households across the UK in the next 8 years, with demand for rental property unlikely to slow and newly formed households continuing to choose the rental market as opposed to buying.

However, my real concern for Stotfold homeowners and Stotfold landlords alike, is our mature members of the population of Stotfold.  Currently OAP’s (65+ yrs in age) in Stotfold are sitting on £282.9m of residential property.  However, what about the ‘Baby Boomers’, the 50yr to 64yr old Stotfold people and what their properties are worth – and more importantly, how the current state of affairs could be holding back those younger generation renters.

In Stotfold, there are 672 households whose owners are aged between 50yrs and 64yrs and about to pay their mortgage off.  That property is worth, in today’s prices, £255.2m. There are an additional 433 mortgage free Stotfold households, owned by 50yr to 64yr olds, worth £164.4m in today’s prices, meaning…

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Stotfold Baby Boomers and Stotfold OAP’s are sitting

on £702.5m worth of Stotfold Property

These Stotfold Baby Boomers and OAP’s are sitting on 1,850 Stotfold properties and many of them feel trapped in their homes, and hence I have dubbed them ‘Generation Trapped’.

Recently, the English Housing Survey stated 49% of these properties owned by the Generation Trapped, as I have dubbed them, are ‘under-occupied’ (under-occupied classed as having at least two bedrooms more than needed). These houses could be better utilised by younger families, but research carried out by the Prudential suggest in Britain it’s estimated that only one in ten older people downsize while in the USA for example one in five do so.

The growing numbers of older homeowners who want to downsize their home are often put off by the difficulties of moving. The charity United for all Ages, suggested recently many are put off by the lack of housing options, 19% by the hassle and cost of moving, 14% by having to de-clutter their possessions and 14% by family reasons such as staying close to children and grandchildren.

Helping mature Stotfold (and the country) homeowners to downsize at the right time will also enable younger Stotfold people to find the homes they need – meaning every generation wins, both young and old. However, to ensure downsizing works, as a Country, we need more choices for these ‘last time buyers’.

Theresa May and Philip Hammond can do their part and consider stamp duty tax breaks for downsizers, our local Council in Stotfold and the Planning Dept. should play their part, as should landlords and property investors to ensure Stotfold’s ‘Generation Trapped’ can find suitable property locally, close to friends, family and facilities.