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! 

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.

What will the 0.25% Interest Rate do to the Warminster Property Market?

I had an interesting chat with a landlord from the Boreham Road area who owns a few properties in the town. He popped his head in to my office as his wife was shopping in the area (and let’s be honest talking about the Warminster Property Market is a lot more interesting than clothes shopping!). We had never spoken before (because he uses another agent in the town to manage his Warminster properties) yet after reading my blog on the Warminster Property Market for awhile, the landlord wanted to know my thoughts on how the recent interest rate cut would affect the Warminster property market and I would also like to share these thoughts with you……

Well it’s been a few weeks now since interest rates were cut to 0.25% by the Bank of England as the Bank believed Brexit could lead to a materially lower path of growth for the UK, especially for the manufacturing and construction industries. You see for the country as a whole, the manufacturing and construction industries are still performing well below the pre credit crunch levels of 2008/09, so the British economy remains highly susceptible to an economic shock. This is especially important in Warminster, because even though we have had a number of local success stories in manufacturing and construction, a large number of people are employed in these sectors. In Warminster, of the 8,622 people who have a job, 730 are in the manufacturing industry and 616 in Construction meaning

8.5% of Warminster workers are employed in the Manufacturing

sector and 7.1% of Warminster workers are in Construction

The other sector of the economy the Bank is worried about, and an equally important one to the Warminster economy, is the Financial Services industry. Financial Services in Warminster employ 147 people, making up 1.7% of the Warminster working population.

Together with a cut in interest rates, the Bank also announced an increase in the quantity of money via a new programme of Quantitative Easing to buy £70bn of Government and Private bonds. Now that won’t do much to the Warminster property market directly, but another measure also included in the recent announcement was £100bn of new funding to banks. This extra £100bn will help the High St banks pass on the base rate cut to people and businesses, meaning the banks will have lots of cheap money to lend for mortgages .. which will have a huge effect on the Warminster property market (as that £100bn would be enough to buy half a million homes in the UK).

It will take until early in the New Year to find out the real direction of the Warminster property market and the effects of Brexit on the economy as a whole, the subsequent recent interest rate cuts and the availability of cheap mortgages. However, something bigger than Brexit and interest rates is the inherent undersupply of housing (something I have spoken about many times in my blog and the specific affect on Warminster). The severe undersupply means that Warminster property prices are likely to increase further in the medium to long term, even if there is a dip in the short term. This only confirms what every homeowner and landlord has known for decades .. investing in property is a long term project and as an investment vehicle, it will continue to outstrip other forms of investment due to the high demand for a roof over people’s heads and the low supply of new properties being built. 

Only 42.6% of Warminster Rented Property have Children living in them.

A few weeks ago I was asked a fascinating question by a local Councillor who, after reading the Warminster Property Blog, emailed me and asked me – “Are Warminster Landlords meeting the Challenges of tenanted families bringing up their families in Warminster?”

What interesting question to be asked.

Irrespective of whether you are tenant or a homeowner, to bring up a family, the most important factors are security and stability in the home. A great bellwether of that security and stability in a rented property is whether tenants are constantly being evicted. Many tenancies last just six months with families at risk of being thrown out after that with just two months’ notice for no reason.

Some “left leaning Politian’s” keep saying we need to deal with the terrible insecurity of Britain’s private rental market by creating longer tenancies of 3 or 5 years instead of the current six months. However, the numbers seem to be telling a different story. The average length of residence in private rental homes has risen in the last 5 years from 3.7 years to 4 years (a growth of 8.1%), which in turn has directly affected the number of renters who have children. In fact, the proportion of private rented property that have dependent children in them, has gone from 29.1% in 2003 to 37.4% today.

Looking specifically at Warminster compared to the National figures, of the 1,563 private rental homes in Warminster, 666 of these have dependent children in them (or 42.6%), which is interestingly (although expected) above the National average of already stated 37.4%.

Even more fascinating are the other tenure types in Warminster…

·         33.1% of Social (Council) Housing in Warminster have dependent children

·         39.6% of Warminster Owner Occupiers (with a Mortgage) have dependent children

·         5.2% of Owner Occupiers (without a Mortgage) have dependent children

Although, when we look at the length of time these other tenure types have, whilst the average length of a tenancy for the private rented sector is 4 years, it is 11.4 years in social (council) housing, 24.1 years for home owners without a mortgage and 10.4 years of homeowners with mortgages.

Anecdotally I have always known this, but this just proves landlords do not spend their time seeking opportunities to evict a tenant as the average length of tenancy has steadily increased. This noteworthy 8.1% increase in the average length of time tenants stay in a private rented property over the last 5 years, shows tenants are happy to stay longer and start families.

So, as landlords are already meeting tenants’ wants and needs when it comes to the length of tenancy, I find it strange some politicians are calling for fixed term 3 and 5 year tenancies. Such heavy handed regulation could stop landlords renting their property out in the first place, cutting off the supply of much needed rental property, meaning tenants would suffer as rents went up. Also, if such legislation was brought in, tenants would loose their ‘Get Out of Jail card’, as under current rules, they can leave at anytime with one months notice not the three or six month tenant notice suggested by some commenters.  

Finally, there is an extra piece of good news for Warminster tenants. The English Housing Survey notes that those living in private rented housing for a long periods of time generally paid less rent than those who chopped and changed.

New House Building in Warminster slumps by 12.2% in the last year

Let me speak frankly, even with Brexit and the fact immigration numbers will now be reduced in the coming years, there is an unending and severe shortage of new housing being built in the Warminster area (and the UK as a whole).  Even if there are short term confidence trembles fueled by newspapers hungry for bad news, the ever growing population of Warminster with its high demand for property versus curtailed supply of properties being built, this imbalance of supply/demand and the possibility of even lower interest rates will underpin the property market.

When the Tories were elected in 2015, Mr. Cameron vowed to build 1,000,000 new homes by 2020.  If we as a Country hit those levels of building, most academics stated the UK Housing market would balance itself as the increased supply of property would give a chance for the younger generation to buy their own home as opposed to rent.  However, the up-to-date building figures show that in the first three months of 2016 building starts were down.  Nationally, there were 35,530 house building starts in the first quarter, a long way off the 50,000 a quarter required to hit those ambitious targets.

Looking closer to home, over the last 12 months, new building in the Wiltshire Council area has slumped.  In 2014/15, for every one thousand existing households in the area, an additional 11.25 homes were built.  For 2015/16, that figure is now only 9.87 homes built per thousand existing households.  Nationally, to meet that 1,000,000 new homes target, we need to be at 7.12 new homes per thousand, which means Wiltshire Council is actually above the National target, the problem is the country is only building at a rate of 4.9 for every thousand exiting households – we can’t just rely on little old Warminster or Wiltshire Council to build for the rest of the Country.

To put those numbers into real chimney pots, over the last 12 months, in the Wiltshire Council area,

·         1,320 Private Builders (e.g. New Homes Builders)

·         680     Housing Association

·         Nil       Local Authority

I am of the opinion Messer’s Cameron and Osborne focused their attention too much on the demand side of the housing equation, using the Help to Buy scheme and low deposit mortgages to convert the ‘Generation Rent’ i.e. Warminster ‘20 somethings’ who are set to rent for the rest of their lives to ‘Generation Buy’.  On the other side of the coin, I would strongly recommend the new Housing Minster, Gavin Barwell, should concentrate the Government’s efforts on the supply side of the equation.  There needs to be transformations to planning laws, massive scale releases of public land and more investment, as more inventive solutions are needed.

However, ultimately, responsibility has to rest on the shoulders of Theresa May.  Whilst our new PM has many plates to spin, evading on the housing crisis will only come at greater cost later on.  What a legacy it would be if it was Mrs. May who finally got to grips with the persistent and enduring shortage of homes to live in.  The PM has already referenced the ‘need to do far more to get more houses built’ and stop the decline of home ownership.  However, she has also ruled out any changes to the green belt policy – something I will talk about in a future up and coming article.  Hopefully these statistics will raise the alarm bells again and persuade both residents and Councilor’s in the Wiltshire Council area that housing needs to be higher on its agenda.

8,300 People Live In Every Square Mile Of Warminster – Is Warminster Over Crowded?

Warminster is already in the clutches of a population crisis that has now started to affect the quality of life of those living in Warminster. There are simply not enough homes in Warminster to house the greater number of people wanting to live in the town. The burden on public services is almost at breaking point with many parents unable to send their child to their first choice of primary school and our secondary school bursting at the seams with circa 1600 students the chances of getting an NHS Dentist next to nil.

Well that’s what the papers would say.. but let’s look at real numbers, and in particular my specialist subject of Warminster Property, with the housing issue in Warminster. To start with, the UK has roughly 1,065 people per square mile – the second highest in Europe. The total area of Warminster itself is 2.087 square miles and there are 17,400 Warminster residents, meaning …

8,300 people live in each square mile of Warminster, it’s no wonder we appear to be bursting at the seams!

… but yet again, newspapers, politicians and property market bloggers quote big numbers to sell more newspapers, get elected or get people to read their blog (I recognise the irony!). A square mile is enormous, so the numbers look correspondingly large (and headline grabbing). Most people reading this will know what an ‘acre’ is, but those younger readers who don’t, it is an imperial unit of measurement for land and it is approximately 63 metres square.

In Warminster, only 11.94 people live in every acre of Warminster … not as headline grabbing, but a lot closer to home and relative to everyday life, and if I am being honest, a figure that doesn’t seem that bad.

Yet, the issue at hand is, we need more homes building. In 2007, Tony Blair set a target that 240,000 homes a year needed to be built to keep up with the population growth, whilst the Tory’s new target since 2010 was a more modest 200,000 a year. However, since 2010, as a country, we have only been building between 140,000 and 150,000 houses a year. So where are we going to build these homes .. because we have no space! Or do we?

Well, let me tell you this fascinating piece of information I found out recently in an official Government report. Looking specifically at England (as it is the most densely populated country of the Union), all the 20 million English homes cover only 1.1% of its land mass. That is not a typo, only one point one per cent (1.1%) of land in England is covered by residential property. In more detail, of all the land in the Country -

·         Residential Houses and Flats 1.1%

·         Gardens 4.3%

·         Shops and Offices 0.7%

·         Highways (Roads and Paths) 2.3%

·         Railways 0.1%

·         Water (Rivers /Reservoirs) 2.6%

·         Industry, Military and other uses 1.4%

.. leaving 88.5% as Open Countryside (and if you think about it, add to that the gardens, which are green spaces, and the country is 92.8% greenspace)

As a country, we have plenty of space to build more homes for the younger generation and the five million more homes needed in the next 20 years would use only 0.25% of the country’s land. Now I am not advocating building massive housing estates and 20 storey concrete and glass behemoth apartment blocks next to local beauty spots such as Stourhead House or Longleat Safari Park, but with some clever planning and joined up thinking, we really do need to think outside the box when it comes to how we are going to build and house our children and our children’s children in the coming 50 years in Warminster. If you are a regular reader of my blog or local news papers you will also be more than aware of the West Warminster Urban Extension plans.... 

84.7% of Warminster Properties have 3 or more bedrooms – Problem or Opportunity?

The orthodox way of classifying property in the UK is to look at the number of bedrooms rather than its size in square metres (although now we are leaving the EU – I wonder if we can go back to feet and inches?). It seems that homeowners and tenants are happy to pay for more space. It’s quite obvious, the more bedrooms a house or apartment has, the bigger it is likely to be. 

The reason being not only the actual additional bedroom space, but the properties with more bedrooms tend to have larger / more reception (living) rooms. However, if you think about it, this isn’t so astonishing given that properties with more bedrooms would typically accommodate more people and therefore require larger reception rooms.

In today’s Warminster property market, the Warminster homeowners and Warminster landlords I talk to are always asking me which attributes and features are likely to make their property comparatively more attractive and which ones may detract from the price. Over time, buyers’ and tenants’ wants and needs have changed. 

In Warminster, location is still the No. 1 factor affecting the value of property, and a property in the best neighbourhoods, say Boreham Road can command a price nearly 50% higher than a similar house in an ‘average’ area. However, after location, the next characteristic that has a significant influence on the desirability, and thus price, of property is the number of bedrooms and the type (i.e. Detached/ Semi/Terraced/Flat).

In previous articles, I have analysed the Warminster housing stock into bedrooms and type of property, but never before now have I cross-referenced type against bedrooms. These figures for the Wiltshire Council area make fascinating reading. It shows 84.7% of all properties in the area have 3 or more bedrooms.

	Detached	Semi-detached	Terraced (including end-terrace)	Flat
1 bedroom	106	183	174	665
2 bedrooms	971	4,221	5,869	3,473
3 bedrooms	8,398	22,599	14,235	731
4 bedrooms	17,766	8,401	3,421	126
5 or more bedrooms	8,529	1,984	747	60

I was genuinely surprised at the low numbers of one and two bed properties, especially 2 bed semis detached houses, especially as tenants like the smaller one and two bed properties in Warminster. You see, it might interest the homeowners and landlords of Warminster, that there has been a change in the numbers of properties on the market and the split in bedrooms on the market over the last 12 months

·         12 months ago, 7 one bed properties were for sale in Warminster, today 6, a drop of 14%

·         12 months ago, 17 two bed properties were for sale in Warminster, today 20, a rise of 18%

·         12 months ago, 20 three bed properties were for sale in Warminster, today 16, a drop of 38%

·         12 months ago, 21 four bed properties were for sale in Warminster, today 10, a drop of 20%

·         12 months ago, 15 five + bed properties were for sale in Warminster, today 6, a drop of 60%

For several years Warminster buy-to-let investors have been the only buyers at the lower end (starter homes) of the market, as they have been enticed by high tenant demand and attractive returns. Some Warminster landlords believe their window of opportunity has started to close with the new tax regime for landlords, whilst it already appears to be opening wider for first-time buyers. This is great news for first time buyers ... but one final note for Warminster landlords ... all is not lost ... you can still pick up bargains, you just need to be a lot more savvy and do your homework ...