Slowing Warminster Property Market? Yes and No!

My thoughts to the landlords and homeowners of Warminster…

The tightrope of being a Warminster buy-to-let landlord is a balancing act many do well at. Talking to several Warminster landlords, they are very conscious of their tenants’ capacity and ability to pay the rent and their own need to raise rents on their rental properties (as Government figure shows ‘real pay’ has dropped 1% in the last six months). Evidence does suggest many landlords feel more assured than they were in the spring about pursuing higher rents on their properties.

During the summer months, historic evidence suggests that the rents new tenants have had to pay on move in have increased. June/July/August is a time when renters like to move, demand surges and the normal supply and demand seesaw mean tenants are normally prepared to pay more to secure the property they want to live in, in the place they want to be. This is particularly good news for Warminster landlords as average Warminster rents have been on a downward trend recently. So look at the figures here...

Rents in Warminster on average for new tenants moving in have risen 2.9% for the month, taking overall annual Warminster rents 2.4% higher for the year

However, several Warminster landlords have expressed their apprehensions about a slowing of the housing market in Warminster. I think this negativity may be exaggerated.

Before we get the Champagne out, the other side of the coin to property investing is capital values (which will also be of interest to all the homeowners in Warminster as well as the Warminster buy-to-let landlords).  I believe the Warminster property market has been trying to find some level of equilibrium since the New Year.  According to the Land Registry…

Property Values in Warminster are 7.09% higher than they were 12 months ago, rising by 2.06% last month alone!

Yet, I would take those figures with a pinch of salt as they reflect the sales of Warminster properties that took place in early Spring 2017 and now are only exchanging and completing during the summer months.

The reality is the number of properties that are on the market in Warminster today has risen by 3.41% since the New Year and that will have a dampening effect on property values. As tenants have had less choice, buyers now have more choice ... and that will temper Warminster property prices as we head towards 2018.

Be you a homeowner or landlord, if you are planning to sell your Warminster property in the short term, it is crucial, especially with the rise in the number of properties on the market, that you realistically price your property when you bring it to the market ... with the increase in choice of properties, the balance of power during negotiation generally sways towards the buyer. Given that everyone now has access to property details, including historic stats for how much property have sold for, they will be more astute during the offer and negotiation stages of a purchase.

However, even with this uplift in the number of properties for sale in Warminster, property prices will remain stable and strong in the medium to long term. This is because the number of properties on the market today is still way below the peak of summer of 2008, when there were 246 properties for sale compared to the current level of 91 (if you recall, prices dropped by nearly 20% in Credit Crunch years of ‘08 and ‘09).

Compared to 2008, today’s lower supply of Warminster properties for sale will keep prices relatively high...and they will continue to stay at these levels for the medium to long term.

Less people are moving than a few years ago, meaning less property is for sale. Fewer properties for sale mean property prices remain relatively high and this is because of a number of underlying reasons. Firstly, buy-to-let landlords tend not sell their properties as often than owner-occupiers, consequently removing the property out of the housing market selling cycle. Secondly, Stamp Duty is much higher compared to 10 years ago (meaning it costs more to move). Next, there is a dearth of local authority rental housing so demand for private rented housing will remain high. Then we have the UK’s maturing owner occupier population, meaning these older people are less likely to move (compared to when they were younger). Another reason is the lack of new homes being built in the country (we need 240k houses a year to be built in the UK and we are currently only building 145k a year!) and finally, the new mortgage rules introduced in 2014 about how much a person can borrow on a mortgage has curtailed demand.

Some final thought’s before I go – to all the Warminster homeowners that aren’t planning to sell – this talk of price changes is only on paper profit or loss. To those that are moving ... most people that sell, are buyers as well, so as you might not get as much for yours, the one you will want to buy won’t be as much, (swings and roundabouts as Mum used to say!)

To all the Warminster landlords – keep your eyes peeled – I have a feeling there may be some decent buy-to-let deals to be had in the coming months

The most recent set of data from the Land Registry has stated that property values in Warminster and the surrounding area were 7.09% higher than 12 months ago and 19.39% higher than January 2015.

Despite the uncertainty over Brexit as Warminster (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 Warminster property market can also be seen from those two sides of the story.

Looking at the supply issues of the Warminster 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 rolling Wiltshire countryside, nor blot the landscape with the building of massive 1,000 home housing estates out of town around the beautiful countryside of such villages as Dilton Marsh, Upton Scudamore and Heytesbury.

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 Warminster badly need, aren’t being built in the quantity needed. Now I appreciate that the West Warminster Urban Extension is underway, with the first of the new Tascroft Rise properties being marketed but put simply we still need more housing. 

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 and many people are uncertain about 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 Warminster saw in property values was just 18.18% in the 2008/9 credit crunch.

Despite the slowdown in the rate of annual property value growth in Warminster to the current 7.09%, from the heady days of 11.62% annual increases seen in mid 2010, it can be argued the headline rate of Warminster 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 Warminster (and the UK).

Warminster Buy-To-Let Predictions up to 2037

On several occasions over the last few months, in my Warminster Property Blog, I predicted that the rate of rental inflation (i.e. how much rents are rising by) had eased over the last year. At the same time I felt that in some parts of the UK rents had actually dropped for the first time in over eight years. Recent research backs up this prediction.

Rents in Warminster for new tenancies only grew by 1.8% in the last 12 months (i.e. not existing tenants experiencing rental increases from their existing landlord). When we compare that current rate with the historical rental inflation in Warminster, an interesting pattern emerges ..

·         2016 - Rental Inflation in Warminster was 3.2%

·         2015 - Rental Inflation in Warminster was 13.6%

·         2014 - Rental Inflation in Warminster was 6.6%

The reason behind this change depends on which side of the demand/supply equation you are looking from. On the demand side (from the tenants point of view) there is the uncertainty of Brexit and the fact that salaries are not keeping up with inflation for the first time in three years. Critically this means tenants have less disposable income to pay their rent. As an aside, it is interesting to note that nationally, rent accounts for 29% of a tenant’s take home pay (Denton House).

On the supply side of the equation (landlords point of view) Brexit also creates uncertainty. However, the biggest issue was a massive upsurge of new rental properties coming on to the market in late 2016, caused by George Osborne’s new 3% stamp duty tax for landlords in the first part of 2016. This meant a lot of new rental properties were ‘dropped’ on to the rental market all at the same time. The greater choice of rental properties for tenants curtailed rental growth/inflation. A slight softening of Warminster property prices has compounded this.  Figures from The Bank of England suggested that first time buyers rose over the last 12 months as some were more inclined to buy instead of rent. Together, these factors played a part in the ongoing moderation of rental growth.

The lead up to the General Election in May didn’t help: after all people don’t like doubt and uncertainty. So now that we have a mandate for going forward over the next 5 years hopefully that has removed any stumbling blocks stopping tenants making the decision to move home.

Whether it be ‘hard’ or ‘soft’ Brexit negotiations (and with the Election result the Tory’s might have to be ‘softer’ on those negotiations) the simple fact is, we aren’t building enough properties for us to live in. Both in Warminster, the South West and the wider UK, long-term population trends imply that rents will soon be growing faster than inflation again. Look at the projections by the Office of National Statistics.

Population Estimates for Wiltshire Council over the next 20 years
2016 (actual)	2021	2026	2031	2036
489,784	503,925	515,951	526,169	535,633

Tenants will still require a vibrant and growing rental sector to deliver them housing options in a timely manner. As the population grows in Warminster, and wider afield, any restriction to the supply of rental properties (brought about by poor returns for landlords) cannot be in the long-term best interest of tenants. Simply put rents must go up!

The fact is that I see this as a short-term blip and rents will continue to grow in the coming years. With rents only accounting for 29% of a tenants’ disposable income, the ability for most tenants to absorb a rent increase does exist.

Northwood Warminster Wins British Property Awards For Warmisnter!

On the whole I don’t use my blog or newsletter to promote the business. However this week

Northwood Warminster won The British Property Awards for Warminster, and I am immensely proud and honored to work with such a dedicated team of professionals.

After an extensive judging process which involved all the agents in town being mystery shopped Northwood came out in top! We work tirelessly to maintain high levels of customer service and it’s incredibly rewarding when this is recognised.

Northwood Warminster have now been shortlisted for a number of national awards which will be announced later in the year at ceremony British Property Awards in central London.

379,830 People use Warminster Train Station a year - So what’s that got to do with the Market?

It might surprise you that it isn’t always the villages around Warminster or the perceived desirable Warminster streets where properties sell and let the quickest. Quite often, it’s about access to the best transport links. I mean, there is a reason why one of the most popular property programs on television is called Location, Location, Location!

As an agent in Warminster, I am frequently confronted with queries about the Warminster property market, and most days I am asked, “What is the best part of Warminster, or best village to live in these days?”, chiefly from new-comers.  Now the answer is different for each person – a lot depends on the demographics of their family, their age, schooling requirements and interests etc. Nonetheless, one of the principal necessities for most tenants and buyers is ease of access to transport links, including public transport – of which the railways are very important.

Official figures recently released state that, in total, 522 people jump on a train each and every day from Warminster Train station. Of those, 124 are season ticket holders. That’s a lot of money being spent when a season ticket, standard class, to Bristol is £2,252 a year.

So, if up to £279,250 is being spent on rail season tickets each year from Warminster, those commuters must have good jobs and incomes to allow them to afford that season ticket in the first place. That means demand for middle to upper market properties remains strong in Warminster and the surrounding area and so, in turn, these are the type of people whom are happy to invest in the Warminster buy to let market – providing homes for the tenants of Warminster…

The bottom line is that property values in Warminster would be much lower, by at least 1% to 2%, if it wasn’t for the proximity of the railway station and the people it serves in the town

And this isn’t a flash in the pan. Rail is becoming increasingly important as the costs associated with car travel continue to rise and roads are becoming more and more congested. This has resulted in a huge surge in rail travel.  

Overall usage of the station at Warminster has increased over the last 20 years. In 1997, a total of 206,409 people went through the barriers or connected with another train at the station in that 12-month period. However, in 2016, that figure had risen to 379,830 people using the station (that’s 1,043 people a day).

The juxtaposition of the property and the train station has an important effect on the value and saleability of a Warminster property. It is also significant for tenants - so if you are a Warminster buy to let investor looking for a property - the distance to and from the railway station can be extremely significant.

One of the first things house buyers and tenants do when surfing the web for somewhere to live is find out the proximity of a property to the train station. That is why Rightmove displays the distance to the railway station alongside each and every property on their website. 

Should the 2,808 home owning OAP’s of Warminster be forced to downsize?

This was a question posed to me a few weeks ago, after reading one of my articles. 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 Warminster home owning mature members of our society, ‘Generation Trapped’).

So, should we force OAP Warminster homeowners to downsize?

Well in a previous 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?

Well, one of the biggest reasons OAP’s move home is health (or lack of it).

Looking at the statistics for Warminster, of the 2,808 homeowners who are 65 years and older, whilst 1,661 of them described themselves in good or very good health, a sizeable 894 home owning OAPs described themselves as in fair health and 253 in bad or very bad health.

9.01% of Warminster home owning OAP’s are in poor health

But if you look at the figures for the whole of Wiltshire Council (not just Warminster), there are only 2,482 specialist retirement homes that one could buy (if they were in fact for sale) and 3,259 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’ Warminster downsizers 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 Warminster population, and specialist retirement properties for the ones who aren’t in such good health ... so, we need to build more appropriate houses in Warminster.

The Government's Housing White Paper, published a few weeks ago, could have solved so many problems with the UK housing market, including the issue of homing our aging 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 offer tax breaks for downsizers. Who knows – but something has to happen?

.. and 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 Warminster is ... more houses and apartments need to be built in the Warminster area. But particular attention needs to be given to providing decent sized accommodation for the older generation, especially more bungalows. The Government had a golden opportunity with the White Paper – and were sadly found lacking.

And a message to my Warminster property investor readers whilst this issue gets sorted in the coming decade(s)  – maybe seriously consider adding bungalows to your portfolio – people will pay handsomely for them – be they for sale or even rent.

Warminster rents rise by 19.6% since 2005

The Warminster Property Market is a very interesting animal and has been particularly fascinating over the last 12 years when we consider what has happened to Warminster rents and house prices.

There’s currently much talk of what will happen to the rental property market following Brexit. To judge that, I believe we must look what happened in the 2008/9 credit crunch (and what has happened since) to judge rationale and methodically, and the possible ramifications for long-term investors in the Warminster property market. You see, an important, yet overlooked measure is the performance of rental income vs house prices (i.e. the resultant yields over time). In Warminster (as for the rest of Great Britain), notwithstanding a slight drop in 2008 and 2009, property rentals have been gradually increasing.

The income from rentals has been progressively increasing over the last 12 years. Today, they are 19.6% higher than they were at the beginning of 2005. In fact, over the last five years, the average growth has been 1.7% per annum. From a landlord’s point of view, increase in average rental income is not to be sneered at. However, the observant readers will be noting that we are ignoring an important factor – our friend inflation.

Turn the clock back to 2005, and we have a property being rented for say £900 a month and that is still being rented at £900 a month today, in Spring of 2017. While the landlord is not getting any less income, this £900 is no longer worth as much. Let me explain, in 2005, £900 may have bought a two-week 4* holiday in Italy. Yet, holidays have increased in line with inflation (which has been 38.5% since 2005), so our holiday would cost today £1,246 (£900 + 38.5% inflation = £1,246). Therefore, the landlord could no longer afford the same holiday, even though having the same amount in pound notes from their rental property.

This means when we compare rents in Warminster to inflation since 2005, Warminster landlords are worse off today, when they receive their monthly rental income, than they were in 2005 by 18.9% in real terms (rents increased by 19.6% since 2005, less the 38.5% inflation since 2005 – net affect 18.9% drop) 

However, rental income is not the only way to generate money from property as property values can increase. Although in the short term, cash flows are diminishing, many Warminster landlords may be content to accept that for a colossal increase in capital value.

Property values in Warminster have risen by 30.7% since 2005

This equates to a reasonably salubrious 2.56% per annum increase over the last 12 years. Even more interesting that this includes the 2008/9 property crash, this will make those Warminster landlords and investors feel a little better about the information regarding rents after inflation.

Moving forward, the prospects of making easy money on buy to let in Warminster have diminished, when compared to 2005. Last decade, making money from buy to let was as easy as falling off a log – but not anymore.

It would be true to say, my rental income verses property prices study does lead to noteworthy thoughts. I am often asked to look at my landlord’s rental portfolios, to ascertain the spread of their investment across their multiple properties. It’s all about judging whether what you have will meet your needs of the investment in the future. It’s the balance of capital growth and yield whilst diversifying this risk.

If you are investing in the Warminster property market, do your homework and do it well. While some yields may look attractive, there are properties in many areas that do not have the solid rudiments in place to sustain them. If you are looking for capital growth, you might be surprised where the hidden gems really are. Take advice, even ask your agent for a portfolio analysis like I offer my landlords. 

What will the General Election do to 4,927 Warminster Homeowners?

In Warminster, of the 7,543 households, 2,606 homes are owned without a mortgage and 2,321 homes are owned by a mortgage. Many homeowners have made contact me with asking what the General Election will do the Warminster 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

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).

Next, I 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).

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.

So finally, what does this mean for the landlords of the 1,471 private rented properties in Warminster? Well, as I have discussed in previous articles (and just as relevant for homeowners as well) property value growth in Warminster 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 Warminster, making it imperative that Warminster landlords are realistic with their market rents. But, 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. 

‘Flipping’ Heck - Warminster Property Values Rise by £33.18 a day

Investing in Warminster buy to let property is different from investing in the stock market or depositing your hard-earned cash in the Building Society. When you invest your money in the Building Society, this is considered by many as the safe option but the returns you can achieve are awfully low (the best 2-year bond rate from Nationwide is a whopping 0.75% a year!). Another investment is the Stock Market, which can give good returns, but unless you are on the phone every day to your Stockbroker, most people invest in stock market funds, making the investment quite hands off, and one always has the feeling of not being in control.

However, with buy to let, things can be more hands on. One of the things many landlords like is the tactile nature of property - the fact that you can touch the bricks and mortar. It is this factor that attracts many of Warminster’s landlords – they are making their own decisions rather than entrusting them to city whizz kids in Canary Wharf playing roulette with their savings.

I always say investing in property is a long-term game. When you invest in the property market, you can earn from your investment in two ways. When a property increases in value over time, it is known as 'capital growth'. Capital growth, also known as capital appreciation, has been strong in recent times in Warminster, but the value of property does go up as well as down just like shares do but the initial purchase price rarely decreases.  

Rental income is what the tenant pays you - hopefully this will also grow over time. If you divide the annual rent into the value (or purchase price) of the property, this is your yield, or annual return. So, over the last 5 years, an average Warminster property has risen by £60,550 (equivalent to £33.18 a day), taking it to a current average value of £289,800. Yields range from 5% a year and can reach double digits’ percentages (although to achieve those sorts of returns, the risks are higher).

However, something I haven’t spoken of before is the more specialist area of flipping property to make money. (flipping - buying a property, carrying out some minor cosmetics and re selling it quickly).  I have seen several investors recently who have made decent returns from this strategy. For example …

·         One Warminster Investor paid £140,000 for a 2 bed terrace on Middleton Close in September 2015.  Some cosmetic work was done to the property and it was resold a few months ago (October 2016) for £165,000 … 17.86% return before costs (or compound annual return equivalent of 16.76% AER) http://www.rightmove.co.uk/house-prices/detailMatching.html?prop=61671398&sale=4437082&country=england

This demonstrates how the Warminster property market has not only provided very strong returns for the average investor over the last five years but how it has permitted a group of motivated buy to let Warminster landlords and investors to become particularly wealthy.

As my article mentioned a few weeks ago, more and more Warminster people may be giving up on owning their own home and are instead accepting long term renting whilst buy to let lending continues to grow from strength to strength. 

How The Rented Sector Has Transformed The Property Market In Warminster

The Warminster housing market has gone through a sea of change in the past decades with the Buy-to-Let (B-T-L) sector evolving as a key trend, for both Warminster tenants and Warminster landlords.

A few weeks ago, the Government released a White Paper on housing. I have had a chance now to digest the report and wish to offer my thoughts on the topic. It was interesting that the private rental sector played a major part in the future plans for housing. This is especially important for our growing Warminster population.

In 1981, the population of Wiltshire stood at 375,200

and today it stands at 486,100.

Currently, the private rented (B-T-L) sector accounts for 19.5% of households in the town.  The Government want to assist people living in the houses and help the economy by encouraging the provision of quality homes, in a housing sector that has grown due to worldwide economic forces, pushing home ownership out of the reach of more and more people. Interestingly, when we look at the 1981 figures for homeownership, a different story is told.

57.2% Warminster people owned their own home in 1981

26.13% Warminster people rented from the Council or Housing Association in 1981

 and 16.67% Warminster rented from a Private Landlord

The significance of a suitable housing policy is vital to ensure suitable economic activity and create a vibrant place people want to live in. With the population of Wiltshire set to grow to 537,000 by 2037 – it is imperative that Wiltshire Council and Central Government all work actively together to ensure the residential property market doesn’t hold the area back, by encouraging the building and provision of quality homes for its inhabitants.

One idea the Government has proclaimed is a variety of measures aimed at encouraging the Build-to-Rent (B-T-R) sector (instead of the B-T-L sector). These include allowing local authorities to proactively plan for B-T-R schemes, and making it simpler for B-T-R developers to offer inexpensive private rented homes.

To do this, the government will invent a distinct affordable housing class for B-T-R, called ‘Affordable Private Rent’, which will oblige new homes builders to provide at least 1 in 5 of a new home developments at a 20% discount on open-market rents and three year tenancies for tenants. In return, the new homebuilders will get better planning assurances.

Private landlords will not be expected to offer discounts, nor offer 3-year tenancies – but it is something Warminster landlords need to be aware of as there will be greater competition for tenants.

Over the last ten years, home ownership has not been a primary goal for young adults as the world has changed. These youngsters expect ‘on demand’ services from click and collect, Amazon, Dating Apps and TV with the likes of Netflix. Many Warminster youngsters see that renting more than meets their accommodation needs, as it combines the freedom from a lifetime of property maintenance and financial obligations, making it an attractive lifestyle option.

Private rented housing in Warminster and Wiltshire, be it B-T-L or B-T-R, has the prospective to play a very positive role.

Warminster’s ‘Generation Trapped’ and the £1.48bn legacy

Last week, I wrote an article on the plight of the Warminster 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 Warminster homeowners and Warminster landlords alike, as I discussed a couple of months ago, is our mature members of the population of Warminster. In that previous article, I stated that the current OAP’s (65+ yrs in age) in Warminster were sitting on £719.7m of residential property ... however, I didn’t talk in depth about the ‘Baby Boomers’, the 50yr to 64yr old Warminster 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 Warminster, there are 1,358 households whose owners are aged between 50yrs and 64yrs and about to pay their mortgage off. That property is worth, in today’s prices, £392.7m. There are an additional 1,294 mortgage free Warminster households, owned by 50yr to 64yr olds, worth £374.2m in today’s prices, meaning...

Warminster Baby Boomers and Warminster OAP’s are sitting

on £1.48bn worth of Warminster Property

These Warminster Baby Boomers and OAP’s are sitting on 5,141 Warminster 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 declutter their possessions and 14% by family reasons such as staying close to children and grandchildren.

Helping mature Warminster (and the Country) homeowners to downsize at the right time will also enable younger Warminster 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 Warminster and the Planning Dept. should play their part, as should landlords and property investors to ensure Warminster’s ‘Generation Trapped’ can find suitable property locally, close to friends, family and facilities. 

‘Generation Rent (Forever)’ – 1,420 Warminster Tenants have no intention of ever buying a property to call home

The good old days of the 1970’s and 1980’s eh … with such highlights lowlights as 24% inflation, 17% interest rates, 3 day working week, 13% unemployment, power cuts ... those were the days (not)… but at least people could afford to buy their own home. So why aren’t the 20 and 30 something’s buying in the same numbers as they were 30 or 40 years ago?

Many people blame the credit crunch and global recession of 2008, which had an enormous impact on the Warminster (and UK) housing market. Predominantly, the 20 something first-time buyers who, confronting a problematic mortgage market, the perceived need for big deposits, reduced job security and declining disposable income, discovered it challenging to assemble the monetary means to get on to the Warminster property ladder.

However, I would say there has been something else at play other than the issue of raising a deposit - having sufficient income and rising property prices in Warminster. Whilst these are important factors and barriers to homeownership, I also believe there has been a generational change in attitudes towards home ownership.

Back in 2011, the Halifax did a survey of thousands of tenants and 19% of tenants said they had no plans to buy a home for themselves. A recent, almost identical survey of tenants, carried out by The Deposit Protection Service revealed, in late 2016, that figure had risen to 38.4%, with many no-longer equating home ownership to success and believing renting to be better suited to their lifestyle.

You see, I believe renting is a fundamental part of the housing sector, and a meaningful proportion of the younger adult members of the Warminster population choose to be tenants as it better suits their plans and lifestyle. Local Government in Warminster (including the planners – especially the planners), land owners and landlords need an adaptable Warminster residential property sector that allows the diverse choices of these Warminster 20 and 30 year olds to be met.

This means, if we applied the same percentages to the current 3,697 Warminster tenants in their 1,471 private rental properties, 1,420 tenants have no plans to ever buy a property – good news for the landlords of those 565 properties. Interestingly, in the same report, just under two thirds (62%) of tenants said they didn’t expect to buy within the next year.

.. but does that mean the other third will be buying in Warminster in the next 12 months?

Some will, but most won’t … in fact, the Royal Institution of Chartered Surveyors (RICS) predicts that, by 2025, that the number of people renting will increase, not drop. Yes, many tenants might hope to buy but the reality is different for the reasons set out above.  The RICS predicts the number of tenants looking to rent will increase by 1.8 million households by 2025, as rising house prices continue to make home ownership increasingly unaffordable for younger generations.  So, if we applied this rise to Warminster, we will in fact need an additional 630 private rental properties over the next eight years (or 79 a year) … meaning the number of private rented properties in Warminster is projected to rise to an eye watering 2,101 households.

Warminster Unemployment At 3.3% and its effect on the Warminster Property Market

It was late May 2016, The Right Hon. Member for Tatton, Mr George Osborne, published an official HM Treasury analysis stating UK house prices would be lower by at least 10% (and up to 18%) by the middle of 2018 compared with what is expected if the UK remained in the European Union. So, eight months on from the Referendum, are we beginning to show signs of that prophecy? The simple answer is yes and no.

Good barometers of the housing market are the share prices of the big UK builders. Much was made of Barratt’s share price dropping by 42.5% in the two weeks after Brexit, along with Taylor Wimpey’s equally eye watering drop in the same two weeks by 37.9%. Looking at the most recent set of data from the Land Registry, property values in Warminster are 0.25% up month on month, but the previous month, property values had decreased by 0.35%  – so is this the time to panic and run for the hills?

Doom and Gloom then? Well, let me consider the other side of the coin.

Well, as I have spoken about many times in my blog, it is dangerous to look at short term. I have mentioned in several recent articles, the heady days of the Warminster property prices rising quicker than a thermometer in the desert sun between the years 2011 and late 2016 are long gone – and good riddance. Yet it might surprise you during those impressive years of house price growth, the growth wasn’t smooth and all upward. Warminster property values dropped by 1.38% in November 2012 and 1.22% in December 2014 – and no one batted an eyelid then.

You see, property values in Warminster are still 9.39% higher than a year ago, meaning the average value of a Warminster property today is £277,950. Even the shares of those new home builders Barratt have increased by 43.3% since early July and Taylor Wimpey’s have increased by 37.3%. The Office for Budget Responsibility, the Government Spending Watchdog, recently revised down its forecast for house-price growth in the coming years - but only slightly.

The Warminster housing market has been steadfast partly because, so far at least, the wider economy has performed better than expected since Brexit. There is a robust link between the unemployment rate and property prices, and a flimsier one with wage growth. Unemployment in the Wiltshire Council area stands at 8,400 people (3.3%), which is considerably better than a few years ago in 2013 when there were 12,900 people unemployed (5.4%) in the same council area.

However, inflation is the only thing that does worry me. Looking at all the pundits, it will get to at least 3% (if not more) in the latter part of 2017 as the drop in Sterling in late 2016 renders our imports with higher prices. If that transpires then the Bank of England, whose target for inflation is 2%, may raise interest rates from 0.25% to 2%+. However, that won’t be so much of an issue as 81.6% of new mortgages in the UK in the last two years have been fixed-rate and who among us can remember 1992 with Interest rates of 15%!

Forget Brexit and yes inflation will be a thorn in the side – but the greatest risk to the Warminster (and British) property market is that there are simply not enough properties being built thus keeping house prices artificially high. Good news for those on the property ladder, but not for those first-time buyers that aren’t! In the coming weeks in my articles on the Warminster Property Market, I will discuss this matter further! 

£1.61bn – The total value of all Warminster Property Market

“How much would it cost to buy all the properties in Warminster?”

This fascinating question was posed by the 14-year-old son of one of my Warminster landlords when they both popped into my office. So I thought to myself, I would sit down and calculate what the total value of all the properties in Warminster are worth … and just for fun, work out how much they have gone up in value since his son was born back in the autumn of 2002.

In the last 14 years, since the autumn of 2002, the total value of Warminster property has increased by 54% or £565.5 million to a total of £1.61 billion. Interesting, when you consider the FTSE100 has risen by 68.9% and inflation (i.e. the UK Retail Price Index) rose by 38.7% during the same 14 years.

When I delved deeper into the numbers, the average price currently being paid by Warminster households stands at £200,775.… but you know me, I wasn’t going to stop there, so I split the property market down into individual property types in Warminster; the average numbers come out like this ..

Warminster Property Market
Average Value of a Detached Property	Average Value of a Semi-Detached Property	Average Value of a Terraced/Town House Property	Average Value of a Flat / Apartment
£304,000	£215,786	£186,163	£78,093

... yet it got even more fascinating when I multiplied the total number of each type of property by the average value. As detached houses are more expensive, when you compare them with the much cheaper terraced/town houses and apartments, you can quite clearly see how valuable detached properties are in terms of total pound note value, when compared to the value of the terraced/town houses and apartments.

Total Value of all the Warminster Detached Properties	Total Value of all the Warminster Semi-Detached Properties	Total Value of all the Warminster Terraced/Town House Properties	Total Value of all the Warminster Apartments
£626,240,000	£571,401,328	£344,960,039	£70,049,421

So, what does this all mean for Warminster?  Well as we enter the unchartered waters of 2017 and beyond, even though property values are already declining in certain parts of the previously over cooked Central London property market, the outlook in Warminster remains relatively good as over the last five years, the local property market was a lot more sensible than central London’s.

Warminster house values will remain resilient for several reasons. Firstly, demand for rental property remains strong with continued immigration and population growth.  Secondly, with 0.25 per cent interest rates, borrowing has never been so cheap and finally the simple lack of new house building in Warminster not keeping up with current demand, let alone eating into years and years of under investment – means only one thing – yes it might be a bumpy ride over the next 12 to 24 months but, in the medium term, property ownership and property investment in Warminster has always, and will always, ride out the storm.

In the coming weeks, I will look in greater detail at my thoughts for the 2017 Warminster Property Market.