Tuesday, 30 August 2016

Post Brexit - Warminster Property Prices set to drop £25,200 in the next 12 months?

Even the most sane person in Britain has to admit the Brexit vote will, in one shape or another, affect the UK Property market. Excluding central London which is another world, most commentators are saying prices will be affected by around 10%. So looking at the commentators’ thoughts in more detail, property values in Warminster will be 10% lower than they would have been if we hadn’t voted to leave the EU.

As the average value of a property in the Wiltshire Council area is £251,700, this means property values are set to drop for the average Warminster property by £25,170 … batten down the hatches .. soup kitchens and mega recession here we come ..it’s going to get rough.

.. but before we all go into panic mode in Warminster .. the devil is always in the detail

Look at the phrase again, and I have highlighted the relevant part “Property values in Warminster will be 10% lower than they would have been if we hadn’t voted to leave the EU”

Property values today, according to the Land Registry are 11.5% higher than a year ago in the Wiltshire Council area. The 12 months before that they rose by 6.13% and the 12 months before that, they rose by 1.49%. If we hadn’t voted to leave, I believe on these figures, we could have safely assumed Warminster House prices would have been 9% higher by the Summer of 2017.

… and that’s the point, we won’t see a house price crash in Warminster, it’s just that house prices in a years time will be 1% lower than they are now (ie 9% less the 10% lower figure because of Brexit). Let’s look at the historic figures and how that compares to today’s figures for the Wiltshire Council area and Warminster as a whole.

Average Value of a property 20 years ago                             £  63,000
Average Value of a property 10 years ago                             £198,200
Average Value of a property 2 years ago                               £212,700
Average Value of a property 1 year ago                                                 £225,800
Average Value of a property today                                          £251,700
Projected Value of a property in 12 months’ time             £249,200

Therefore, the figures show the average value of a Warminster property will be £2,500 lower in 12 months’ time than today. I actually believe prices will plateau over the next 12 months and we will go through a period of consolidation.

That’s not to say Warminster property prices might not dip slightly in the run up to Christmas (in fact they always have done just about every year since the year 2000 and most of those were boom years) .. but in 12 months time this is my considered opinion of where Warminster property values will be.. and looking at the historic prices, even if I (and many other property market commentators) are wrong and they drop 10% from TODAY’S figure .. in the whole scheme of things, we have been through a Credit Crunch, Black Monday and 15% interest rates over the last 20 to 30 years .. and still Warminster house prices have always bounced back.

Whilst the UK's vote for Brexit has created an uncertainty in the Warminster housing market, there is no need to panic and prospective buyers should merely use common sense about their purchases. I always say to people to be prudent and if you are taking out a mortgage, at some stage during the life of that mortgage, circumstances will be difficult. We won’t have a 2008 Credit crunch fire sale of properties because after the Mortgage Market Review which took place in the Spring of 2013, mortgage borrowers are not as highly leveraged this time around.  As a result of this, with any luck there will not be too many distressed sales, which cause widespread price reductions.

.. and Warminster landlords? They have recently been thrashed by Osborne’s tax changes, but yields could rise if Warminster house prices fall/stablise and rents grow, and this might also make it easier to obtain mortgages, as the income would cover more of the interest cost. If prices were to level or come down that could help Warminster landlords add to their portfolio, as rental demand for Warminster property is expected to stay strong as more people find it more and more difficult to obtain mortgages.

Thursday, 11 August 2016

38.2% Of Warminster Homes Are Two Person Households

I was having an interesting chat with a Warminster buy to let landlord the other day when the subject of size of households came up in conversation.  For those of you who read my Brexit article published on the morning after the referendum, one of the reasons on why I thought the Warminster property market would, in the medium to long term, be OK, was the fact that the size of households in the 21st Century was getting smaller – which would create demand for Warminster Property and therefore keep property prices from dropping.

Looking at the stats going back to the early 1960’s, when the average number of people in a home was exactly 3, it has steadily over the years dropped by a fifth to today’s figure of 2.4 people per household. Doesn’t sound a lot, but if the population remained at the same level for the next 50 years and the we had the same 20% drop in household size, the UK would need to build an additional 5.28 million properties ( or 105,769 per year) .. When you consider the Country is only building 139,800 properties a year ... it doesn’t leave much for people living longer and immigration. Looking closer to home...

In the Wiltshire Council area, the average
number of occupants per household is 2.4 people

When we look at the current picture nationally and split it down into tenure types (i.e. owned, council houses and private renting, a fascinating picture appears.

The vast majority of homeowners who don’t have a mortgage are occupied by one or two people (81% in fact), although this can be explained as residents being older, with some members of the family having moved out, or a pensioner living alone.  People living on their own are more likely to live in a Council house (43%) and the largest households (those with 4 or more people living in them are homeowners with a mortgage – but again, that can be explained as homeowners with families tend to need a mortgage to buy. What surprised me was the even spread of private rented households and how that sector of population are so evenly spread across the occupant range – in fact that sector is the closest to the national average, even though they only represent a sixth of the population.

When we look at the Wiltshire Council figures for all tenures (Owned, Council and Private Rented) a slightly different picture appears...

1 person households in Warminster
2 person households in Warminster
3 person households In Warminster
4 person households in Warminster
5+ person households in Warminster

But it gets even more interesting when we focus on just private rental properties in Warminster, as it is the rental market in Warminster that really fascinates me. When I analysed those Wiltshire Council private rental household composition figures, a slightly different picture appears. Of the 22,903 Private rental properties in the Wiltshire Council area,

·         29.9% of Private Rental Properties are 1 person Households
·         36.1% of Private Rental Properties are 2 person Households
·         17.1% of Private Rental Properties are 3 person Households
·         11.6% of Private Rental Properties are 4 person Households
·         5.1% of Private Rental Properties are 5+ person Households

As you can see, Warminster is not too dissimilar from the national picture but there is story to tell. If you are considering future buy to let purchases in the coming 12 to 18 months, I would seriously consider looking at 2 and 3 bedroom houses in Warminster. Even with the numbers stated, there are simply not enough 2 and 3 bedroom houses to meet the demand. They have to be in the right part of Warminster and priced realistically, but they will always let and when you need to sell, irrespective of market conditions at the time, will always be the target of buyers. 

Monday, 1 August 2016

The Warminster Love Affair with its 8,000 Terraced Houses

Call me old fashioned, but I do like the terraced house.   In fact, I have done some research that I hope you will find of interest my Warminster property market blog reading friends!

In architecture terms, a terraced or townhouse is a style of housing in use since the late 1600’s in the UK, where a row of symmetrical / identical houses share their side walls. The first terraced houses were actually built by a French man, Monsieur Barbon around St. Paul’s Cathedral within the rebuilding process after the Great Fire of London in 1666.  Interestingly, it was the French that invented the terraced house around 1610-15 in the Le Marais district of Paris with its planned squares and properties with identical facades. However, it was the 1730’s in the UK, that the terraced/townhouse came into its own in London and of course in Bath with the impressive Royal Crescent.

However, we are in Warminster, not Bath, so the majority of our Warminster terraced houses were built in the Victorian era.  Built on the back of the Industrial Revolution, with people flooding into the towns and cities for work in Victorian times, the terraced house offered decent livable accommodation away from the slums. An interesting fact is that the majority of Victorian Warminster terraced houses are based on standard design of a ‘posh’ front room, a back room (where the family lived day to day) and scullery off that.  Off the scullery, a door to a rear yard, whilst upstairs, three bedrooms (the third straight off the second).  Interestingly, the law was changed in 1875 with the Public Health Act and each house had to have 108ft of livable space per main room, running water, it’s own outside toilet and rear access to allow the toilet waste to be collected (they didn’t have public sewers in those days in Warminster – well not at least where these ‘workers’ terraced houses were built).

It was the 1960’s and 70’s where inside toilets and bathrooms were installed (often in that third bedroom or an extension off the scullery) and gas central heating in the 1980’s and replacement Upvc double glazing ever since.

Looking at the make up of all the properties in Warminster, some very interesting numbers appear.  Of the 8,083 properties in Warminster …

2,180 are Detached properties (26.9%)
2,374 are Semi Detached properties (33.8%)
1,939 are Terraced / Town House properties (23.9%)
1,164 are Apartment/ Flat’s (14.4%)

And quite noteworthy, there are 66 mobile homes, representing 0.8% of all property in Warminster. 

When it comes to values, the average price paid for a Warminster terraced house in 1995 was £53,860 and the latest set of figures released by the land Registry states that today that figure stands at £164,300, a rise of 205% - not bad when you consider detached properties in Warminster in the same time frame have only risen by 106%.

But then a lot of buy to let landlords and first time buyers I speak to think the Victorian terraced house is expensive to maintain.  I recently read a report from English Heritage that stated maintaining a typical Victorian terraced house over thirty years is around sixty percent cheaper than building and maintaining a modern house- which is quite fascinating don’t you think!

Don’t dismiss the humble terraced house – especially in Warminster!