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.