Friday, 30 December 2016

Warminster OAP’s sitting on £727.2 m of Property

Warminster people aged over 65 currently hold more housing wealth in their homes than the annual GDP of the whole of the Shetland Isles … and this is a problem.

Many retiree’s want to move but cannot, as there is a shortage of such homes for mature people to downsize into.  Due to the shortage, bungalows command a 10% to 20% premium per square foot over houses of the same size with stairs. To add to the woes, in 2014, just 1% of new builds in the UK were bungalows, according to the National House Building Council - down from 7% in 1996.

My research has found that there are 2,489 households in Warminster owned outright (i.e. no mortgage) by over 65 year olds.  Taking into account the average value of a property in Warminster, this means £727.2 million of equity is locked up in these Warminster homes, compared to the GDP of the whole of the Shetland Isles being £524 million of GDP.

A recent survey by YouGov, found that 36% of people aged over 65 in the UK are looking to downsize into a smaller home.  However, the Government seems to focus all its attention on first-time buyers with strategies such as Starter Homes to ensure the youngsters of the UK don’t become permanent members of ‘Generation Rent’.  Conversely, this overlooks the chronic under-supply of appropriate retirement housing essential to the needs of the Warminster’s rapidly ageing population. Regrettably, the Warminster’s housing stock is woefully unprepared for this demographic shift to the 'stretched middle age’, and this has created a new 'Generation Trapped’ dilemma where older people cannot move.

Some OAP’s who are finding it difficult to live on their own, are unable to leave their bungalow because of a lack of sheltered housing and ‘affordable’ care home places.  So, older retirees can't leave bungalows, younger retirees can't buy bungalows and younger people can't buy family houses.

Interestingly, adding insult to injury, the problem will only get worse, as in the 50 year old to 64 year old home ownership age range there are an additional 1,294 Warminster households that are mortgage free and a further 1,358 Warminster households who will be completing their mortgage responsibility.  With Government projections showing the proportion of over 65’s will rise by over a third from the current 17.7% to 24.3% of the population in the next 20 years ... this can only add greater pressure to the Warminster Property market.

House prices have rocketed over the last 40 years because the supply of property has not kept up with demand. With migration, people living longer and high divorce rates (meaning one family becomes two) we need, as a Country, 240,000 properties to be built a year to just stand still.  In the 1990’s and early 2000’s, the Country was building on average 180,000 to 190,000 households a year, but since the Credit Crunch (2009), that has only been between 130,000 and 145,000 households a year.

The solution …. release more land for starter homes, bungalows and sheltered accommodation because land prices are killing the housing market as the large firms dominating the construction industry are more likely to focus on traditional houses and apartments.  My opinion – until the Government change the planning rules and allow more land to be built on – Bungalows could be a decent bet for future investment as they continue to attract ever growing premiums?

Friday, 23 December 2016

Warminster Property Market – Q4 Update

Well, wasn’t 2016 been eventful. The ups and downs of Brexit, the Queen’s 90th, Andy Murray winning Wimbledon, Trump, Bake Off to Channel 4 and something close to the hearts of every buy to let landlord and homeowner in Warminster ... the Warminster property market.

So, let’s look at the headlines for the Warminster property market...

In the last month, Warminster property values rose by 2.03%, leaving them, year on year 10.4% higher, whilst interestingly, Warminster asking prices are down 0.9% month on month. All three statistics go to show the Warminster property market has recovered well after the beginning of the summer, which was impacted by the uncertainty surrounding the EU vote back in June. Irrespective of all the issues, the average value of a home in BA12 now stands at £296,700.

Generally, Warminster asking prices continue to hold up well, as asking prices are 5.7% higher year on year. At this time of year, asking prices tend to drop on the run up to Christmas and locally, they have dropped by 0.9% in November 2016, although this compares well with last year’s drop in Warminster asking prices, as we saw asking prices drop by 2.3% in November 2015.

Now it’s true to say, after chatting with fellow property professionals, all of us have seen the number of property sales fall slightly, suggesting a slowing market, but it is very early days and it could be the time of year. Also, the numbers are limited, so it’s interesting to take note from a recent survey by the Royal Institution of Chartered Surveyors, stating new buyer enquiries and new instructions are falling at the same rate, suggesting that there will not be a downward pressure on property values.

Looking at the figures for the UK, property values are generally rising slower than a few years ago, but on a positive note, there's still growth across the UK. You see, slowing property value growth isn't solely Brexit related, but after a number years of double digit rises in property values, affordability has weakened and cooling price growth is widely seen to be a natural correction of the market.

On the other hand, interest rates being at a record low of 0.25% are helping the property market. The cut in interest rates in the late summer was the medicine for the post-Brexit worry and will, as a consequence, ensure that the UK economy continues to be underpinned by buoyant property prices.

 So, what will happen in 2017 in the Warminster property market?

Some say until we know what type of exit the UK will make from the EU it is hard to evaluate the outcome. Although, I believe, the whole Brexit issue is a sideshow to the main issue in the UK (and Warminster) housing market as a whole. As I have mentioned time and time again over the last few months in my blog, the biggest issue is demand outstripping supply when it comes to the number of households required to house us all. Warminster has an ever-growing population: with immigration (we still have at least two years of free movement from EU members into the UK), people living longer and the fact we need thousands of additional households as the country has nearly 115,000 divorces a year (where one household becomes two households).  These are interesting times ahead!  

Friday, 16 December 2016

Warminster Semi Detached House Prices rise by 311% in 20 years

The semi-detached house with its bay windows and net curtains has long been ridiculed as an emblem of safe, lacklustre and desperately uncool suburban life; the homes of the likes of Hyacinth Bucket in Keeping up Appearances and more latterly Alan Partridge – but they could have the last laugh - having enjoyed the highest price growth of any property type in Warminster, up by an average 311% increase in the last twenty years.

The semi can now laugh in the face of its posher detached counterpart, which saw a rise of only 86% in the same 20-year period. Looking at smaller properties, flats/apartments rose 225%, whilst terraced houses only rose 181% (although they were starting from a lower base and demand from buy to let landlords has had a big part in driving the values on that type of house (i.e. the price a buy to let landlord is prepared to pay is driven by the rent the landlord can achieve).

In 1996 the average value of a Warminster semi stood at £55,100,
today it stands at £226,100

Such is the attractiveness of semis, which are cheaper than detached houses but have most of the same benefits for families. Semi-detached houses were built in their hundreds of thousands by the Victorians and Edwardians between the wars and through to the present day. Interestingly in the late 19th Century and early 20th century – they often weren’t referred to as semi-detached – but as villas!

So whilst Europeans live on top of each other in apartments us British chose, in the late Victorian and early Edwardian times, suburban comfort, being near … but not too near, the neighbours! I once heard someone say the semi-detached house was a peculiar crossbreed that doesn’t stand on its own — it is inseparable from its neighbour — yet somehow still embodies a dream of suburban independence.

Over one in three houses in Warminster is a semi-detached house

There are 2,648 semi-detached properties in Warminster and they represent 35.19% of all the households in Warminster. Warminster has such a mix of semi-detached properties with the older semis to more modern ones built in the last couple of decades. Especially with the older ones, the semi offered a hall to provided separation between the reception rooms and privacy for their occupants. Also the downstairs offered larger rooms to accommodate dining tables, whilst upstairs, bedrooms were smaller, yet cosy.

However, probably the most overlooked aspect of popularity for semis is the garden. The front garden, designed to separate the house from the world, and the back garden designed for private relaxation. The semi in the suburbs was relaxing, well presented, plumbed and enhanced by a garden so that when a window was opened the air had a chance of being genuinely fresh… and it’s for all those reasons why 54 semi-detached houses have been sold in Warminster in the last 12 months alone.  Still as popular today as they were with the Victorians all those years ago – some things just stand the test of time!

Friday, 9 December 2016

Warminster First Time Buyers Are Paying 9.4% More Than 12 Months Ago

Figures released by the Bank of England, show that for the first half of 2016, £128.73bn was lent by UK banks to buy UK property - impressive when you consider only £106.7bn was lent in the first half of 2015. Even more interesting, was that most of the difference was in Q2, as £68.12bn was lent by UK banks in new mortgages for house purchase, which is the highest it has been for two years. Looking locally, in Warminster at the last quarter, £346.1m was loaned on BA12 properties alone!

Even though the Bank won’t be releasing the Q3 figures until December 2016, as I discussed a few weeks ago, HMRC have published their own preliminary data to suggest Q3 will be even better, with a massive growth of buy-to-let landlords to the housing market in that time frame. Fascinating, as it seems to fly in the face of the popular narrative – that the uncertainty surrounding Brexit would negatively impact buyer sentiment.

And it’s not just buy-to-let landlords that seem to be flourishing. I am finding that first-time buyers are also a lot more confident too. Low, and now negative, inflation has had a tangible impact on household finances and first-time buyers feel more secure in their jobs. Couple with a low interest rate environment and you have all the ingredients for a strengthening property market. To back that up with numbers, of the £68.12bn of mortgages lent in the Quarter (Q2), £14.9bn was lent to first-time buyers (the highest proportion of that overall lending for over two years at 21.99%).

When I looked at the data for Wiltshire Council area, the average price paid by first-time buyers (FTB’S) was £200,834, which is a drop of 0.41% from last month but a rise of 9.40% to twelve months ago. The Land Registry then categorise the remaining buyers into cash buyers or those buying with a mortgage. The average price paid by cash buyers was £244,735, a drop of 0.54% from last month but a rise of 9.19% to twelve months ago, whilst buyers with mortgages (but not FTB’s), the average price paid by them was £255,962, again a drop of 0.52% from last month with a rise of 9.30% to twelve months ago.

What surprised me with these figures was how close the property prices, values and percentages were to each other. It just goes to show the combination of low mortgage rates and a stable job market will continue to have a positive effect on the Warminster and UK market.  And that is why, while there is undoubtedly more cautiousness in the market at present than a year or so ago (among borrowers and mortgage companies alike) - mortgage rates are so competitive that they are inducing people to commit to a home purchase.

It seems the great Brexit uncertainty was over hyped, and house price growth as well as mortgage approvals, could pick up pace into 2017.

Tuesday, 6 December 2016

£10m paid in Stamp Duty by Warminster Residents

“A pound saved is worth two pounds earned . . . after taxes” is what my Grandfather used to say. He loved his irony, yet was always a wise man, and it is tax I want to talk about today, in particular, property taxation .. Stamp Duty in fact.

Apart from some minor exemptions, Stamp Duty is paid by anyone buying a property over £125,000 in the UK. It presently raises £10.68bn a year for the HM Treasury (interesting when compared with £27.6bn in fuel duty, £10.69bn in alcohol duty and £9.48bn in tobacco duty).

In the latest set of data from HMRC, in the MP constituency that covers Warminster, property buyers paid £10m stamp duty in one year alone – a lot of money in anyone’s eyes (although not as much as the £227m in income tax that all of us in the same area paid last year).

However, as you may know, George Osborne introduced an additional tax for landlords and from 1st April 2016 they had to pay an additional 3% stamp duty surcharge on top of the normal stamp duty rate when purchasing a buy to let property. There were tales of woe and Armageddon with a report by Deutsche Bank suggesting that the new surcharge could see house prices fall by as much as 20%.

HMRC data released in the Summer for Quarter 2 (Q2) of 2016 did seem to back up those fears as they published some worrying figures; only one in seven properties purchased was a second home or buy-to-let (in real numbers, only 30,300 of the 207,900 properties in Q2 were bought by landlords).

In previous articles, I spoke about the slump of property transactions after the 1st of April (as landlords rushed through their property purchases in March to beat the April deadline). In Q2 of 2016, £1.976bn was raised in Stamp Duty from Residential Property. Of that £1.976bn, £652m was paid by buy to let landlords (£424m in normal stamp duty and £228m in the additional 3% surcharge).

However, looking at Q3, the numbers have improved significantly. Of the 235,000 property sales, nearly one in four of them (56,100 to be precise) were bought by buy to let landlords and of the £2.208bn in stamp duty, £864m was paid in ‘normal’ stamp duty by BTL landlords and an impressive £442m paid by those same landlords in the additional stamp duty surcharge.

The statistics suggest buy to let investors have thankfully not been deterred by the stamp duty surcharge introduced in April this year. The figures also show that 65.4% of "buy to let" purchases cost less than £250,000, 23.7% of properties were in the £250k to £500k range and 10.9% (or 6,100 additional properties) of buy to let properties bought cost over £500k – interestingly nearly one in four (22.2%) of £500k properties purchased in Q3 were buy to let properties.

It just goes to back up what I stated a few weeks ago when I suggested that many investors had rushed to make purchases before 31st March, making figures in the following months (Q2) artificially low when the 3% supplement was introduced, but in Q3 the number of buy to let properties purchased increased by 85%.

It just goes to show you shouldn’t believe everything you read in the newspapers! I can assure you the Warminster property market is doing just fine.

Friday, 25 November 2016

Average Rent Paid by Tenants in BA12 rise to £828 per month

Back in the Spring, there was a surge in Warminster landlords buying buy to let property in Warminster as they tried to beat George Osborne’s new stamp duty changes which kicked in on the 1st April 2016. To give you an idea of the sort of numbers we are talking about, below are the property statistics for sales either side of the deadline in BA12.

Jan 2016 – 36 properties sold
Feb 2016 – 37 properties sold
March 2016 – 65 properties sold
April 2016 – 20 properties sold
May 2016 – 19 properties sold

Normally, the number of sales in the Spring months is very similar, irrespective of the month. However, as one can see, this year was a completely different picture as landlords moved their purchases forward to beat the stamp duty increase. You would think that even with a basic knowledge of supply and demand economics, rents would be affected in a downwards direction?

However, there appears to be no apparent effect on the levels of rent being asked in Warminster - and more importantly achieved - and this direction of rents is not likely to inverse any time soon, particularly as legislation planned for 2017 might reduce rental stock and push property values ever upward. The decline of buy to let mortgage interest tax relief will make some properties loss making, forcing landlords to pass on costs to tenants in the form of higher rents just to stay afloat. Even those who can still operate may be deterred from making further investments, reducing rental stock at a time of severe property shortage.

.. but it’s not all bad news for tenants. Whilst average rents in Warminster since 2005 have increased by 19.6%, inflation has been 38.5% over the same time frame, meaning Warminster tenants are 18.9% better off in real terms when it comes to their rent (which is a sizeable chunk of most people’s monthly household budgets)

I found it particularly interesting looking at the rent rises over the last five years in Warminster, as it was five years ago we started to see the very early green shoots of growth of the Warminster economy.  As a whole, following the Credit crunch (2011), rents in Warminster have risen by an average of 1.7% a year – fascinating don’t you think?

The view I am trying to portray is that while renting is often portrayed as the unfavorable alternative to home ownership, many young Warminster professionals like renting as it gives them adaptability with their life. Rents will continue to rise which is good news for landlords as buy to let is an investment but, as can be seen from the statistics, tenants have also had a good deal with below inflation increases in rents in the past. It’s a win-win situation for everyone although on a very personal note, it’s imperative in the future that tenants are not thwarted from saving for a deposit by excessive rental hikes – there has to be a balance.

Thursday, 17 November 2016

Warminster Property Values increase by 2.15% ... good or bad news?

“How's the Warminster housing market doing?” asked an upbeat Warminster landlord last week.  “Quite strange”, I replied. Our landlord was perplexed! Let me explain...

Even the Brexit vote has not hindered Warminster’s steady rise in property value, as Warminster property values went up 2.15% last month alone, leaving Warminster values 10.57% higher than a year ago. An increase in demand from buyers and an uninspiring level of supply (i.e. the number of properties on the market) has driven up the value of the Warminster’s housing.

...And that is where the issue is. With Brexit, the coalition of the 2010-15, a double-dip recession and post credit crunch fallout – I was perplexed that the Warminster property market (and values) has remained so strong, still 16.8% higher than 20 months ago. That is until you start to look into the real reasons why we find ourselves in such a great place.

The Warminster (and the UK) housing market is built on the foundations of basic economic rules that any GCSE Economics student should understand. However, at a time when, as a country, we seem eager to uncouple ourselves from all manner of proven facts, anything is up for grabs.

Even the wary RICS said throughout the UK, most of its Chartered Surveyors anticipated house prices to increase in the next six months, which seems contradictory given economic cautions from Mr Hammond and HM Treasury. Even though inflation will rise to around 2% to 3% in 2017 and perhaps a little more in 2018 because of Sterling’s devaluation, together with a high probability of a decelerating GDP and a slight rise in unemployment, how can RICS and most of my landlords be so confident about the value of our homes?

Well, look at from where we are starting. Nationally, a base of low unemployment, low inflation and preposterously low interest rates, while in Warminster, the local economy is doing quite well for itself. Confidence also plays a part. Confidence can supersede basic economic facts for a short time at least, which is why actual property market changes tend to be more exaggerated, as confidence can turn both positive and negative very quickly. The fact is, there is a long-term relationship between property values, wages and unemployment.

For example, looking at the graph below, you can quite clearly see the ratio of property values to earnings is nowhere near as high as it reached in 2008 and currently is in the middle of the range for the last 30 years. As a country, we are in a good place.

By April 2017, Article 50 will be invoked. This will bring additional political tomfooleries and economic ups and downs. With both purchasers and vendors predisposed by the 24-hour news cycle, which let’s face it, gets more haphazard by the day, it is likely to prove a challenging couple of years … and yes, Warminster property values are likely to 2017, but based on what we know of the UK plc now, the UK and Warminster property values are not projected to move that much over 2017 or 2018.  Going into the next two years, we are in much better financial shape as a country compared to the last two crashes of 1987 and 2008.

But, on the other side of the coin, what we also know is that we don't know much about the form of our economic future or indeed many other facets of our lives. Confidence will continue to be the key player in the Warminster housing market for a while longer - yet this may spur some much needed second-hand market activity? Now, where is my crystal ball?

Friday, 11 November 2016

Warminster Housing Crisis? Only 1% of Homes Are For Sale

The Warminster Property Market continues to disregard the end of the world prophecies of a post Brexit fallout with a return to business as usual.

The challenge every Warminster property buyer has faced over the last few years is a lack of choice – there simply hasn't been much to choose from when buying (be it for investment or owner occupation). Levels are still well down on what would be considered healthy levels from earlier in this decade, as there is still a substantial demand/supply imbalance. Until we start to see consistent and steady increases in properties coming on to the market in Warminster, the market is likely to see upward pressure on property values continue.

For example, last month BA12 saw 60 new properties coming on to the market, not bad when you consider for some months in the last year the figure has been as low as the 20-40 range. With the average property value hitting a record high, reaching almost £277,800 according to my research, this shortage of properties on the market over the last two years has contributed to this ‘fuller' average property figure.

As I write this article, 1.03% of Warminster properties are up for sale. In terms of actual chimney pots, that equates to 66 properties on the market in Warminster (within 2 miles of the centre of Warminster) – which, when compared to only a year ago when that figure stood at 89, is a serious decrease in the number of properties available to buy. Split down into the type of property, it makes even more fascinating reading...

·         Detached Properties in Warminster  - 54 on the market a year ago compared to 25 on the market now – a decrease of 54%
·         Semi Detached Properties in Warminster - 14 on the market a year ago compared to 10 on the market now – a decrease of 29%
·         Terraced Properties in Warminster - 7 on the market a year ago compared to 6 on the market now – a decrease of 14%
·         Flats / Apartments Properties in Warminster  - 10 on the market a year ago compared to 16 on the market now - an increase of 60%

This is evidence of strength in the Warminster housing market that many didn't expect.

However, all this will mean property values won't continue to grow at the same extent they have been over the last 12 to 18 months, and in some months (especially on the run up to Christmas and early in the New Year), values will steady. This won't be down to Brexit but a re-balancing of the Warminster Property Market.

Friday, 4 November 2016

Private Renting set to grow by 600 Warminster households by 2025

I was having a most interesting chat the other day with a Warminster landlord when we were looking at a property. As I am sure you are aware, I am always happy to cast my eye over any potential buy to let purchase in Warminster, be that you emailing me a Rightmove link, a brochure in the post or even treading the carpet and seeing it together. I don't charge for that, and you don't even need to be a client of mine. We got talking about the Warminster Property Market and this landlord brought up the subject of a report he had read from the Royal Institution of Chartered Surveyors (RICS) and PricewaterhouseCoopers (PwC) that stated almost 1.8m new rental homes are needed by 2025 to keep up with current demand from tenants. He wanted to know what this meant for Warminster.

Well my blog reading friends, some commentators said last Winter that buy to let was about to die, what with the new stamp duty changes and how mortgage tax relief will be calculated. Others even said 500,000 rental properties would flood the market nationally in the 12 months after the new Stamp Duty rules came into force on the 1st April 2016 as landlords left the rental market. Well, all I can say is, I wish all the landlords of those half a million properties would hurry up and put them on the market – because I have plenty of other potential landlords wanting to buy them!

Back to the matter in hand.. if the RICS and PwC are indeed correct, what does this mean for Warminster? The fact is, as a country, we are facing a precarious rental shortage and need to get building in a way that benefits a cross-section of society, not just the fortunate few. I call on the Prime Minister to drop the higher stamp duty tax on buy to let purchases to ease the pressure on the rental market.

Of the 7,500 households in Warminster, currently 3,700 tenants live in 1,500 private rented properties. If we apportion those 1.8m households equally around the Country, that means in nine years’ time, the number of rental properties in Warminster needs to rise by 600 (i.e. 42.8%) .. taking the total number of rented properties to 2,100.

That means Warminster landlords need to buy around 70 properties a year between now and 2025 to meet that demand – because according to my calculations, an additional 1,600 people will want to live in all those 'additional' Warminster rental properties – so why is the government penalising landlords?

Thankfully the new housing minister Gavin Barwell detached Teresa May's new administration from the Cameron/Osborne laser-like focus of just home ownership to solve our housing issues, saying "we need to build more homes for every single type of person needing a home and not focus on one single tenure". The private rented sector became a stooge under David Cameron's watch and still, with increasingly unaffordable Warminster house prices, the majority of new Warminster households will be relying on the rental sector in the future to house them. I can only say Westminster must put in place the measures that will allow the rental sector to flourish. Any restrictions on the supply of rental property will push up rents (bad news for tenants), thus side-lining those members of Warminster society who are already struggling. Let's hope this new Government continues to see the contribution landlords give to the country as a whole.

Friday, 28 October 2016

4.9% of Warminster People live in Shared Households

I had an interesting chat the other day with a Warminster home owner. He said he had been chatting with an architect friend of his who said back in the mid 2000’s, the developments he was asked to draw were a balance of one and two bed properties, compared to today where the majority of the buildings he is designing are more towards two and three bedrooms.

This is a really important point as I explained to him, as knowing when and where the demand of tenants and buyers is going to come from in the coming years is just as important as knowing the supply side of the buy to let equation, in relation to the number of properties built in Warminster, Warminster property prices, Warminster yields and Warminster rents.

In 2001, there were 176,700 households with a population of 433,000 in the Wiltshire Council area. By 2011, that had grown to 194,200 households and a population of 471,000.

.. meaning, between 2001 and 2011, whilst the number of households in the Wiltshire Council area grew by 9.93%, the population grew by 8.78%

Nothing surprising there then. But, as my readers will know, there is always a but! My analysis of the 2011 Census results, using the most recent in-depth data on household formation (eg ‘one person households’, ‘couples/ family households’ or ‘couple + other adults households and multi -adult households’), has displayed a sudden and unexpected break with the trends of the whole of the 20th Century. There has been a seismic change in household formation in Warminster between 2001 and 2011.
Between 2001 and 2011, the population of Warminster grew, as did the number of Warminster properties (because of new home building). However, the growth rate of new properties built in Warminster was much lower than expected though, but still the population has grown by what was expected, meaning the average household size was larger than anticipated in Warminster. In fact, average household size (ie the number of people in each property) in 2011 was almost exactly the same as in 2001, the first time for at least 100 years it had not fallen between censuses. (Since 1911, household size has decreased by around 20% every decade).
Looking at figures specifically for Warminster itself,

·         One person households – 29.8%              
·         Couples/family households – 65.1%
·         Couple + other adults/multi-adult households – 4.9%

This decline was reflected in large scale shifts in the mix of household types. In particular, there were far more “couple + other adults households and multi -adult households” than expected. It can be put down to two things; increased international migration and changes to household formation. A particularly important reason for the difference can probably be attributed to the evidence that migrants initially form fewer households (ie two couples share one property) than those who have lived in the UK all their lives. Also, changes to household formation patterns amongst the rest of the population, including adult children living longer with their parents and more young adults living in shared accommodation (as can be seen in the growth of HMO properties (Homes of Multiple Occupation).

So, what does all this mean for Warminster Homeowners and Landlords? Quite a lot in fact. There has been a subtle shift to slightly larger households in the last decade, meaning smart landlords might be tempted to buy slightly larger properties to rent out – again good news for homeowners who will get top dollar for their home as they sell on. But now with Brexit, household formation might swing the other way in the next decade? Who knows? Watch this space!

Monday, 24 October 2016

Buy to let opportunity in Warminster town centre with over 5% Yield

This three bed property in North Row Warminster was listed by Move Estate Agents about 4 weeks ago, and I have to say for any potential landlords this could pose and interesting option. It's close to town in a good location and looks to be very nicely presented. I appreciate that the lack of parking and outside space may have a limited market, however as I have discussed in previous articles tenant demand for two and three bedroom properties is high, and with yield being key this could achieve the magic 5%.

If this property were to achieve £700PCM and based on full asking price being paid it would represent a 5.09% yield. With the house price growth we've seen in in the last 18 months achieving over 5% is certainly more of a challenge and ultimately is likely to effect rents (but that a subject for another time).

I will certainly be watching this one with interest. You can view the full listing on Rightmove here 

Friday, 21 October 2016

House Prices in Warminster rise by more than 14% in the last 18 months

The Warminster property market has seen some interesting movement in house prices over the last couple of months, as property values in the Wiltshire Council area rose by 1.6% in September, to leave annual price growth at 10.5%. These compare well to the national figures where property prices across the UK saw a monthly uplift of 0.42%, meaning the annual property values across the Country are 8.3% higher, this is all despite the constraining factors of Stamp Duty changes in the spring and more recently our friend Brexit.

Looking at the figures for the last 18 months makes even more fascinating reading, whereby house prices are 14.5% higher, again thought provoking when compared to the national average figure of 13.6% higher.

However, it gets more remarkable when we look at how the different sectors of the Warminster market are performing. Over the last 18 months, in the Wiltshire Council area, the best performing type of property was the semi, which outperformed the area average by 0.75% whilst the worst performing type was the apartment/flat, which under-performed the area average by 2.01%.

Now the difference doesn’t sound that much, but remember two things, this is only over eighteen months and the gap of 2.7% (the difference between the semi at +0.75% and apartments at -2.01%) converts into a few thousand pounds disparity, when you consider the average price paid for a semi-detached property in Warminster itself over the last 12 months was £219,100 and the average price paid for a Warminster apartment was £99,100 over the same time frame.

I know all the Warminster landlords and homeowners will want to know how each of the property types have performed, so this is what has happened to property prices over the last 18 months in the area...

•             Overall Average                +14.5%
•             Detached                           +14.5%
•             Semi Detached                  +15.3%
•             Terraced                             +14.5%
•             Apartments                        +12.2%

So what does all this mean to Warminster homeowners and Warminster landlords and what does the future hold? 

When I looked at the month-by-month figures for the area, you can quite clearly see there is a slight tempering of the Warminster property market over these last few months. I have mentioned in previous articles, on my blog, that the number of properties on the market in Warminster has increased this summer, but on the whole demand still seems to outstrip supply.

Some of that growth in Warminster property values throughout early 2016 may have come about because of a surge in house purchase activity, an indirect result of the increase in stamp duty on second homes from April, thus providing a temporary boost to prices.
However, it may be possible the recent pattern of robust employment growth, growing real earnings and low borrowing costs will tilt the demand/supply seesaw in favour of sellers and exert upward pressure on prices once again in the quarters ahead.

...And Warminster property values, assuming that everything goes well with Brexit, I believe in twelve months’ time we should see values in the order of 4% to 8% higher.

Friday, 14 October 2016

846% - Rise in Warminster Property Prices since 1981

Roll the clock back 35 years to 1981, and Mrs. T was in power, we had a Royal Wedding, Britain won the Ashes and Bucks Fizz won Eurovision with ‘Making your Mind up’. Haven’t things changed!? Many homeowners and property investors are saying now they wish they had, in hindsight bought up every house in Warminster all those years ago, especially when you consider what has happened to Warminster property values, as…

Warminster Property Values since 1981 have risen by 846%.

Not bad when you consider inflation over the same time period has been 271.9%, meaning in real terms (i.e. after inflation), property values in Warminster are 574.1% higher.   It’s no wonder people can’t afford to buy property anymore and landlords are attracted by bricks and mortar. Yet the changes to the Warminster Property market run much deeper than property value changes, as no one could have predicted how the property market has changed in Warminster over the last 30 years.

Looking at the Local Authority data for Wiltshire Council in 1981, 26.1% of Warminster people lived in a Council House, whilst today its 14.7% ... a massive drop which can mostly be attributed to Margaret Thatcher allowing Council tenants the right to buy their Council House.  The private rental sector since 1981 has, as one would have expected, also changed. 

Nationally they’ve almost doubled, however, for the proportion of properties privately rented in the Warminster area (i.e. through a private landlord or a letting agency) there has been little movement with a slight drop from 16.6% to 15.4% of property.

So, let us consider those people who own their own home, surely that has had a massive drop?  In 1981, the proportion of people who lived in the Wiltshire Council area who owned their own home was 57.2% … and today its … 67.5%. Not the seismic change most of you were expecting (including myself!).

Homeownership in the 1980’s and 1990’s in Warminster did in fact rise, but as I have discussed in previous articles in my ‘Warminster Property Blog’, that was because nearly every Council tenant was buying their council house. Now there are hardly any Council houses for the younger generation to move into (because of the right to buy scheme) so they have no choice but to privately rent.
.. and this is why the buy to let market in Warminster is an investment sector that will continue to grow as councils aren’t building council houses in their thousands each year (like they were in the 1950’s/60’s and 70’s).  

The Warminster property market is constantly changing and buy to let for too long has been heavily dependent on house price growth, where yield has been almost forgotten.  I see the changes in tax and landlord and tenant law in a different perspective to the sooth-sayers and see it as bringing many opportunities where yield will become more important.  You might need to change your buy to let targets, your methodology to financing, but this will shine a light on investing in properties with healthier yields and create more realistic long term buy to let opportunities, instead of short term growth bets and wagers.

 Like Bucks Fizz said in their song, it’s time to make your mind up. The advice I give to my landlords, and also to you is this; these changes will make some landlords panic, meaning competition for decent Warminster buy to let bargains will reduce as fear of change kicks in and amateur investors flee the market.  These opportunities will provide a more stable platform for knowledgeable and wise Warminster buy to let landlords to thrive in.  

If you want to learn more about the Warminster Property Market, feel free to pop in for a coffee at our office for a chat with me,

Wednesday, 12 October 2016

Warminster buy to let investment with 4.9% Yeild

As I have discussed in recent posts two and three bedroom houses really are hot property in Warminster at the moment! Here at Northwood Warminster we have just listed this two bedroom house that in my opinion would make a fantastic buy to let investment.

Situated in a popular cul-de-sac location the house benefits form having been decorated throughout, has gas central heating, parking and a manageable rear garden. Based on the property achieving £675pcm and full asking price being paid it would yield 4.9%.

The full listing can bee found here I don't expect this to be available for long so would advise acting quickly.

Friday, 7 October 2016

Warminster Property Market in 2017 and Beyond

With the underlying fundamentals of a shortage of properties coming to the market and the continued low mortgage rates, as well as buyer motivation being high due to those inexpensive lending rates and general demand caused by under supply. So as the trees turn from green to hues of red and brown, the Warminster property market has a confident feel to it.

Now of course, there are a few potential hurdles coming towards us in the coming months that could affect the Warminster (and UK) property market. Mrs. May has yet to get her teeth into Brexit negotiations and we don’t know what the US Presidential elections might do to the money markets around the world, meaning that on the run up to Christmas, some savvy buyers may take advantage of the lack of certainty by making cheeky offers. But I don’t believe these will have a huge impact on property values (like the 2008 Credit Crunch).

You see, property ownership, whether it’s for yourself as a homeowner or buy to let landlord, is a long term investment. In fact, focusing on buy to let, a number of our landlords who own property in Warminster have recently been asking for my thoughts on the future of the buy to let market in Warminster.  Well, as the Politician Edmund Burke said in the 18th century, "Those who don't know history are destined to repeat it." .. in other words, to see the future I believe you must look into the past.

Since the Millennium, the housing market has had everything thrown at it. The recent Brexit decision, last year’s General Election, the near melt down of the World Economy with the Credit Crunch, The Dot Com boom and bust, the housing market crisis in 2008/9, the housing boom of 2001 to 2004 .. the list goes on. In fact here is a graph (courtesy of the Land Registry) of average Property values since the Millennium in the Wiltshire Council area.

Even though we had the Dot Com bubble burst in 2000, two years later in January 2002, property values in the Wiltshire Council area have risen from £101,400 (in Jan 2000) to £129,000 .. and kept rising to September 2007, when they peaked at £227,100. Then we had the Credit Crunch and property prices continued to fall until April 2009, where they averaged £185,800 .. but look where they are now…  £258,100.

The point I am trying to get across is long term future property values are more helpful to landlord investors than the month by month headline grabbing micro movements in the property market. 

Look at the graph and you will see the growth in property values is an upward trend BUT, the average darts about as each month goes by.  So don’t watch the property indexes and panic if values drop next month or the month afterwards, because even in the glory days of 2001 to 2004 and 2012 to 2014, without fail, values always dropped slightly around Christmas, but people will always need a roof over their heads, and if they can’t buy and the council aren’t building anymore  .. only buy to let landlords in the private rented sector can meet that demand.

Warminster landlords are being hit in the pocket with the new up and coming taxation rules and yes we might have a bumpy ride on the run up to Christmas (because of the points raised earlier), Brexit or no Brexit, but the trend will be a slow and steady upward momentum of property values, demand for rental properties and yields in the Warminster property market into 2017 and beyond.

Friday, 30 September 2016

What is really happening in the Warminster Property Market?

Well its been a few months since Brexit and as we settle into the Autumn with Great British Bake Off, Strictly and the Football season ... the newspapers are returning to their mixed messages of good news, bad news and indifferent news about the Brit’s favorite subject after the weather ... the property market.

The thing is the UK does not have one housing market. Instead, it is a patchwork of mini property markets all performing in a different way. At one end of scale is Kensington and Chelsea, which has seen average prices drop in the last twelve months by 6.2% whilst in our South West region, house prices are 8% higher. But what about Warminster?

Property prices in Warminster are 9.3% higher than a year ago.

So what does this mean for Warminster landlords and homeowners? Not that much unless you are buying or selling in reality. Most sellers are buyers anyway, so if the one you are buying has gone down, yours has gone down.  Everything is relative and what I would say is, if you look hard enough, there are, even in this market, still some bargains to be had in Warminster.

However, the most important question you should be asking though, is not only is what happening to property prices, but exactly which price band is selling? I like to keep an eye on the property market in Warminster on a daily basis because it enables me to give the best advice and opinion on what (or not) to buy in Warminster.

If you look at Warminster and split the property market into three equaled sized price bands. Each price band would have around 33% of the property in Warminster. From the lowest in value band (the bottom 33%) all the way through to the highest 33% band (in terms of value).

·         Nil to £170k                         22 properties for sale and 6 sold (stc) i.e. 21% sold
·         £170k to £325k                  20 properties for sale and 51 sold (stc) i.e. 71% sold        
·         £325k +                                 19 properties for sale and 9 sold (stc) i.e. 32% sold

Fascinating don’t you think that it is the middle Warminster market that is doing the best?
The next nine months’ activity will be crucial in understanding which way the market will go this year after Brexit ... but, Brexit or no Brexit, people will always need a roof over their head and that is why the property market has ridden the storms of oil crisis’ in the 1970’s, the 1980’s depression, Black Monday in the 1990’s, and latterly the credit crunch together with the various house price crashes of 1973, 1987 and 2008.

And why? Because Britain’s chronic lack of housing will prop up house prices and prevent a post spike crash. ... there is always a silver lining when it comes to the property market! 

Tuesday, 27 September 2016

The 1,666 Warminster Savers batten down the hatches with low interest rates set to continue into the 2020’s

You might ask, what has the plight of the Warminster savers to do with the Warminster Property Market … everything in fact.  Read the newspapers, and every financial wizard is stating that with the decision of the Bank of England’s Monetary Policy Committee in early August to cut the Bank of England base rate to an all time low of 0.25 per cent, savers should prepare themselves for interest rates to stay low well into the early 2020’s.

... And this isn’t some made up story to capture the headlines of newspaper editors. The yield (posh word for interest rate or return) on 10-year Government bonds is currently 0.61 per cent. This indicates that the money markets believe that the Bank of England’s base rate will, on average over the next ten years, be below the 0.61% rate they are buying the 10 year bonds at (because they would loose money if the average was over 0.61%). UK Interest rates are going to be low for a long time.

For those who have saved throughout their working lives and are looking for ways to maximise their savings, tying their money into property could prove advantageous. You see as a saver, I did a search of the internet and the best savings rate I could find was a 5 year fixed rate at 2.5% a year with Weatherbys Bank. Your £200,000 nest egg would earn you £5,000 a year – not much. However, on the other side of the fence, growth in Warminster house prices and princely buy to let yields have made property investment in Warminster an appealing option for many. According to my research, the...

Average Yield over the last five years for
Warminster Buy to let property has been 5.2% a year

… and average Property Values in over the same period have risen by 11.3%.

Using these averages, the Warminster landlord’s property would be worth £222,600 and they would have received a total of £52,000 in rent – making the total return £274,600. Meanwhile, whilst our 1,666 Warminster Saver’s, using the average savings rates for the last 5 years, even if they had reinvested the interest, their £200,000 would only be £221,184.

There are risks as well as benefits to buy to let though. As my blog readers know, I tell it like it is and investing in buy to let means locking up capital in a property that may fall in value. Another option would be stock market income based investment funds, which are paying around 5%, especially if put your nest egg into a tax free Stocks and Shares ISA. Although you can only add £15,240 a year into an ISA, but you would also have the ability to sell up quickly if you want ... but one last thought…

The other side of the coin is that you cannot buy an unloved ‘stock market income based investment fund’ and set about renovating it and adding value yourself. The investment fund isn’t something that you can touch and feel, isn’t something tangible, isn’t something physical, isn’t something concrete, it isn’t bricks and mortar ... and that is why my fellow Warminster homeowners and Warminster landlords is why the love affair of the British and Property will continue.