2.6% of all Properties Sold in Bexhill are New Builds

In this week’s article on the Bexhill property market, I consider the historic effect that new homes make on the whole Bexhill property market, whether we are building enough homes and what that means for existing Bexhill homeowners and Bexhill landlords.

Of the 16,300 houses and apartments sold in Bexhill (TN39) since 1995, 570 of those have been new homes, representing 2.6% of property sold. So, I wondered how that compared to both the regional and the national picture …and from that, the pertinent questions are: are we building too many new homes or are we not building enough?

Roll the clock back a few years and in 2013 the Government expressed its disappointment that, as a Country, builders weren’t building enough new homes to house our citizens. They promised to hasten new homes building to the fastest rate since the 1980’s when the Country was building on average 168,100 private households a year. The Housing Minister stated he wanted the private sector to build in excess of 180,000 households a year, a figure which seemed unachievable at the time. In 2013, private house building was in the depths of a post Credit Crunch dip, with just 96,550 private new homes being built that year. Yet, in the five years since then, private new-build completions have climbed steadily, rising by 59.5% to 154,100 new home completions in 2018…so on appearances alone, whilst the growth is impressive, the new homes builders haven’t met their targets…. or have they?

In addition to the 154,100 new homes completions in 2018, the private sector also provided an additional 29,700 new households gained from change of use between office, industrial and agricultural buildings to residential homes meaning, last year, the private sector created 183,800 new households. When we look at the public sector, there were 30,300 Housing Association new homes and 2,950 Council houses built last year, meaning after making a few other minor adjustments, the total number of new households/dwellings created in the UK in 2018 was 222,190.

Most of the growth can be credited to an improving economic framework, though continued help for first time buyers with the Help to Buy Scheme has enabled some younger buyers to bypass the issue of saving for a large deposit for a mortgage when buying a home, thus supporting confidence among new home builders to commit to large building schemes. Yet there is more to do. The Government wants the Country to return to the halcyon days of the 1960’s where, as a Country, we were building 300,000 additional homes a year… and they want that to happen by 2025, a 36% increase from current levels.

In 2019, the country will create 257,500 households, so we are on our way to meeting that target but maintaining this level of house building will be a test. Even the Governments’ Auditors (the Office of Budget Responsibility) is predicting net additional dwellings will plateau at about 240,000 in the first few years of the next decade.

So, how does Bexhill sit within this framework?

The UK currently has 27.2m households, of which 2.45m (9%) of those have been built since 1995, whereas in Bexhill, of the 14,100 households in TN39, 570 were built since 1995 (representing 4.0% of all households), meaning Bexhill has a lower proportion of new homes building in the last couple of decades than the national figures.

I certainly feel there is an over reliance on the private sector to meet the Country’s housing needs. Local Authority’s need to step up to the plate and build more houses, and its true central government has released more cash for them to do just that, but probably only 20% to 25% of what is required. In the meantime, unless the Country starts to build 300,000 households a year, property prices will retain and improve their value in the medium to long term – which is good news for Bexhill landlords and Bexhill homeowners. What do you think about this subject? Do you agree or disagree? Let me know on patrick@redwell-estates.co.uk
Stats
The stats on new homes are from the Land Registry and Office of National Stats
Regional figures are for your postcode area e.g. TN40 would be TN40 1/ 2 postcodes for TN39 would be TN39 3/4/5 area etc.

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THE BEXHILL LOVE AFFAIR WITH ITS 1,300 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! 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.

The majority of our Bexhill terraced houses, along with the majority of our Town Centre, was 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 liveable accommodation away from the slums. An interesting fact is that the majority of Victorian Bexhill 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 liveable 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 Bexhill – 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), gas central heating in the 1980’s and replacement UPVC double glazing ever since.
Looking at the make up of all the properties in Bexhill, some very interesting numbers appear.

Of the 12,699 properties in TN39 …
5,688 are Detached properties (44.7%)
2,290 are Semi Detached properties (18.0%)
1,319 are Terraced / Town House properties (10.3%)
3,390 are Apartment/ Flat’s (26.7%)

And quite noteworthy, there are 12 mobile homes, representing 0.09% of all property in Bexhill.
When it comes to values, the average price paid for a Bexhill terraced house in 1995 was £38,410 and the latest set of figures released by the land Registry states that today that figure stands at £198,610, a rise of 417% – not bad when you consider apartments in Bexhill in the same time frame have only risen by 177%.

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 Bexhill! For more thoughts on the Bexhill Property Market – visit the Bexhill Property Market Blog at www.bexhillpropertyblog.com or www.redwell-estates.co.uk or give me a call on 01424 224242 especially if you are a landlord looking to improve your portfolio.

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Bexhill Property Market Do We Have the Right Sort of Bexhill Homes For the 21st Century?

Here I talk about the type of properties that are currently built in Bexhill, whether we’re building the right sort of properties to meet the current levels of demand in Bexhill and what the future holds for both landlords and homeowners in Bexhill with this information.

Would it surprise you to know that in some parts of Bexhill, predominantly prosperous areas with high proportions of mature residents, the housing crisis is not one of supply so much as dispersal of that supply? Theoretically, in Bexhill there are more than enough bedrooms for everyone – it’s just they are disproportionately spread among the population, with some better-off and more mature households living in large Bexhill homes with many spare bedrooms, and some younger Bexhill families being over crowded.

Yet it is not the fault of these well-off mature residents that this is the current situation. Let’s be frank, Bexhill doesn’t have enough housing full stop (otherwise we wouldn’t have the large Council House waiting list and all the younger generations renting instead of buying), but up until now it hasn’t been clear that Bexhill actually also has the wrong types of properties.

We’re not building the smaller homes in Bexhill that are needed for the starter homes and we aren’t building enough bungalows for the older generations, so they can be released from their larger Bexhill homes, thus allowing those growing Bexhill families to move up the ladder.

Looking at the stats for Bexhill, and TN39 in particular…

When I compared Bexhill (TN39) with the regional stats of the TN postcode, the locality has proportionally 53.7% more apartments, yet 45% less terraced/townhouses. Looking nationally, Bexhill (TN39) has proportionally 90.2% more detached homes and quite surprisingly, proportionally 58.2% less terraced/townhouses.

I am finding that there has been a shortage of smaller townhouses and smaller apartments being built in Bexhill over the last 20 years, because most of the new builds in the last couple of decades seem to have been either large executive houses or the apartments that have been built were of the larger (and posher) variety, even though demand for households (as life styles have changed in the 21st Century) have been more towards the lower to middle sized households.

The builders do want to build, but there’s a deficiency of building land in Bexhill, and if there’s a shortage of building land, then of course new homes builders build whatever gives them the biggest profit. The properties that give them the largest profit are the biggest and most expensive properties and they certainly are not bungalows as they take up too much land. So who can blame them?

Yet would it surprise you to know that it’s not a lack of space (look at all the green you see when flying over the UK), it’s the planning system. Green belts must be observed, but only 1.2% (yes 1.2% – that isn’t a typo) is built on in this country as a whole with homes – we need the planners to release more land (and then force/encourage builders to build on it – not sit on it). Another problem is that of the smaller new homes that have been built, most of them have been snapped up for renting, not owning.

So, what’s the answer? Build more Council houses? Yes, sounds great but the local authority haven’t enough money to cut the grass verges, let alone spend billions on new homes in Bexhill. The Government did relax the planning laws a few years ago, for example for changing office space into residential use, yet they could do more as currently new homes builders have no incentive to build inexpensive homes or bungalows that the system needs to make a difference.

So, what does this mean for Bexhill homeowners and Bexhill landlords?

Changing the dynamics of the Bexhill, regional and national property market will only change in decades, not years. The simple fact is we are living longer, and we need 240,000 to 250,000 houses a year to stand still with demand, let alone start to eat into 30 years of under building where the average has been just under 170,000 households a year.

That means, today as a country, we have a pent-up demand of 2.25m additional households and we need to build a further 4.2m households on top of that figure for population growth between 2019 and 2039. So, irrespective of whether we have short term blip in the property market in the next 12/18 months, investing in property is, and always will be, a great investment as demand will always outstrip supply.

What do you think? Let me know and Ill pass it on because Bexhill will alter over the next 20 years and become unrecognisable to the Bexhill of today. For more news about the property market in Bexhill go to my website www.redwell-estates.co.uk or www.bexhillpropertyblog.co.uk, theres lots of interesting topics to choose from.

This is Patrick Stappleton Author of the Bexhill Property Market Blog and MD of Redwell Estates. My email is patrick@redwell-estates.co.uk and my phone is 01424 224242. 

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31% more homes for sale in Bexhill than a year ago


One of the key factors of the health of the Bexhill property market is the number of properties for sale at any one time.

The issue with housing is that when demand goes up, unlike with a chocolate bar factory, that can add a couple of hours overtime to increase its supply/production to satisfy demand, it takes a good 18 months to two years from planning permission to someone moving into a new home.

I have talked at length (and proved) in previous articles that we are still not building enough homes in the long term in the Bexhill area. Yet for the short term, a good indicator is the number of properties for sale and how long they have been on the market.

How long a property has been on the market is important as a guide to how the property market is performing – potential buyers can always find this information on the Rightmove and Zoopla listings (if you don’t know where – drop me an email or message and I can let you know).

So, let’s have a look at what is happening in Bexhill, both in terms of the number of properties for sale and how long they have been on the market compared to a year ago, then discuss what that means for the current state of play of the Bexhill property market.

So, to start, let’s look at the number of properties for sale in Bexhill compared to a year ago.

Interestingly, you can see there has been a proportional increase of 89% in terraced properties on the market in Bexhill, yet only a 3% increase in apartments. Overall in the last year there are 31% more properties on the market in Bexhill, compared to a year ago. Now, let’s look how long they have been on the market ..

Interesting to see that the biggest jump in the number of days on the market is terraced houses, from 62 days to 86 days … demand and supply working again. Also, the length of time an average Bexhill property has been on the market has increased by 10% in the last year.

So, what does this all mean for Bexhill Buy To let landlords and Bexhill homeowners looking to buy and sell? Well, if you are thinking of selling, as the number of properties on the market has increased and the length of time Bexhill properties are on the market has also increased – you have to be mindful that realistic pricing is the key to get the property sold. If you are a buyer, that means you find yourself in a better position to negotiate a good deal on your Bexhill property purchase.

There is an argument to suggest that property buyers see excessive days on the market as an indication that the seller is becoming desperate to sell because the property hasn’t sold. Buyers are also mindful to believe that there might be something wrong with the home, a defect that caused other buyers to pass it up. This can concern them when they view the property – if they view it at all, as that possible and perhaps made-up defect is on their minds, even if it is sub-consciously.

Normally, both assumptions are wrong. A property can loiter on the market for several reasons. The most common reason for a property sticking on the market is overvaluing or overpricing. In an effort to get the property on the market, some estate agents may have convinced the seller into believing the property was worth more than the property market will bear.

Don’t get me wrong, if you don’t ask, you don’t get and homeowners naturally want to get the best price for their home, and so test the market. Yet, if you aren’t getting a steady stream of viewers after a few weeks, then that testing can backfire. You see, by setting the asking price too high to see if they can find someone to pay that inflated price, then finding there is nobody in the market that will pay the price, here lies the biggest trap for house sellers on keeping the inflated asking prices for too long.

Sellers can also get stuck on an asking price and they are willing to wait out the market until it catches up to what they want for their property – yet we aren’t in that type of property market now. Consumer champion “Which” said that if you have to reduce your asking price by 5% or more, it adds an extra 64 days to the sales process meaning you might lose the property of your dreams.

Also, I have seen countless times, house sellers insist on an inflated asking price, reduce 12 weeks later, yet buyers think there is something wrong with it so the homeowner gets fed up and accepts a lower offer to get the property sold, whereas if the house seller had gone onto the market at the right asking price, they would get much nearer to what they deserve for their property.

So, if you are looking for a bargain to buy – all the Portals (Rightmove, Zoopla and On the Market) allow you to search and sort by the length of time on the market as well as the asking price. Who knows – there could be a bargain waiting for you!

If you would like to discuss the worth of your property and how my team can help you, call us on 01424 224242. For more articles go online to www.bexhillpropertyblog.com. Kind regards Patrick Stappleton.

END

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Unemployment – the Secret Driver of the Bexhill Property Market?

If you have been reading my articles on the Bexhill property market recently, you will see that in the three years since the referendum of the ‘B’ word (that word is banned in our household), we have proved beyond doubt that it (whose name shall remain nameless) has had no effect on the Bexhill property market (or the UK as a whole).

So, one might ask, what does affect the property market locally? Well many things on the demand side include wages, job security, interest rates, availability of mortgages, confidence in the economy, inflation, speculative demand … the list goes on. Yet as my blog readers will note, I like to delve deeper into the numbers and I have found an interesting correlation between unemployment and the number of properties sold (i.e. transactions).

Why transaction levels and not house prices? Well just looking at Bexhill house prices as a bellwether has flaws. Many property market commentators and economists believe transaction numbers (the number of properties sold) give a more accurate and candid indicator of the health of the property market than just house values alone.

The reason is twofold. First most people when they sell also buy, so if property values have dropped by 10% or risen by 10% on the one you are selling, it would have done the same on the one you are buying – meaning to judge the health of a property market is very one dimensional. Secondly, the act of moving is very much a human thing. Property habitually conveys a robust emotional connection with homeowners – a connection that few would attribute to their other investments like their savings or stock market investments.

Moving home could be described as a human enterprise, moving from one chapter of one’s life to another. When people move home, it shows they are moving forward in their lives and so this gives a great indicator of the health of the property market.

Looking at Rother’s figures on the graph, you can see an inverse relationship between unemployment and housing transaction levels.

Property transactions in Bexhill dropped by 44.81%, whilst unemployment in Bexhill rose by 28.81% during the 2007 to 2009 Global Financial Crash.  There is clearly a relationship between conditions in the Bexhill job market and the number of people who move home … interesting don’t you think?

Now I am not saying unemployment is the only factor influencing the Bexhill property – but it must be said there is a link.

As a country (and indeed here in Bexhill) over the last 40 years, we have seen a shift in the outlook over the purpose of housing and the development of the religion of following house prices (and I appreciate the irony of me writing these articles on Bexhill – feeding that habit!) Yet, when did owning a home turn from buying a roof over your head to an out and out investment vehicle?

I do wish people would stop fretting about their intrinsic value being associated with their Bexhill home. Now of course, I am not dismissing the current levels of Bexhill house prices – we just must take into consideration other metrics alongside them when judging the health of the property market locally.

One final thought, looking on a broader scale in the UK, those towns and cities whose property markets bounced back after the Global Financial Crash had high levels of employment and low unemployment whilst places with high unemployment and relatively low employment have, on the other hand, typically underperformed.

So, the next time you are considering a house move or buying a buy to let property in Bexhill … don’t make your judgement on house price growth alone.

Now if you would like to discuss this topic in more details give me a call on 01424 224242 or send me an email on patrick@redwell-estates.co.uk. Hope you enjoyed reading it.  Best wishes Patrick Stappleton Author of the Bexhill Property Blog.com
END

Statistics taken from.
Unemployment stats – ONS.

Property Sales – Land Registry

 

 

 

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Which Bexhill Properties are Selling the Best?

Moving home is said to be the third most stressful life event, following a member of your family dying or getting divorced. So it is always best to keep your stress levels down by investigating and doing your homework on both the particular area of Bexhill (or nearby conurbations) where you live (i.e. where you are selling) and where you want to search for your next Bexhill home. Being mindful of how fast (or slow) the different aspects of the Bexhill property market is moving is key.. because it could save you much heartache and many thousands of pounds.

You see, if you know you are selling a property in a sluggish price range and buying in a faster moving price range in Bexhill then putting your property on the market first is vital, otherwise you will always find the one you want to buy tends to sell before your property sells – there is nothing worse than pondering over a property only to find that someone else has bought it. Being primed with all the knowledge is key. On the other side of the coin, if you are selling in a fast moving market and buying in a sluggish market .. you can probably get a better deal on the one you are buying.

For buy to let landlords in Bexhill, this evidence is particularly critical as purchasing a high-demand property in a well-liked area of Bexhill will safeguard a surfeit of availability of tenants, as well as respectable house price growth. 

Being an agent in Bexhill, I like to keep an eye on the Bexhill property market on a daily basis because it enables me to give the best advice and opinion on what (or not) to buy in Bexhill; be that a buy to let property for a landlord or an owner occupier house.  So, I thought, how could I scientifically split the Bexhill housing market into sections, so I could analyse which part of the Bexhill property market was doing the best (or the worst).

I took the decision that the preeminent way was to fragment the Bexhill property market into roughly four uniform size price bands (in terms of properties for sale). Each price band would have roughly around 25% of the property in Bexhill available for sale .. then add up all the sold (stc) properties and see which sector of the Bexhill property market was performing best? … And these were the results ..

It’s not unexpected that the upper end of the property market (the top 25%) in Bexhill is finding things a little tougher compared to the others. Remarkably for Bexhill landlords, the lower market is doing reasonably well, but it’s not the best, so maybe there could be some property deals out there for buy to let investment? Even though the number of first time buyers in 2018 did increase over the 2017 levels, it was from a low starting point and the large majority of 20 to 30yo’s don’t want to or can’t buy their first home and the local authority has no money to build Council houses meaning an increase in demand as private landlords take up the slack – because everyone needs a roof over their head!

If you would like to pick my brains on the Bexhill Property Market – pop in for a coffee or drop me a line on social media or email.

The best performing price range in Bexhill is the lower to middle market £190,000 to £280,000 where 43.1% of all property in that price range has a buyer and is sold stc. There are plenty of articles here for you to read and catch up on the Bexhill Property Market or if you want a chat, call me on 01424 224242.

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Home Ownership among Bexhill young people has nearly halved in 20 years

The proportion of 25 to 34-year olds who own their home in Bexhill has nearly halved in the last 20 years, so what does this mean for all the existing Bexhill landlords and homeowners together with all those youngsters considering buying their first home?

Well, looking at the numbers in greater detail, in Bexhill there has been a 43.5% proportional drop in the number of 25 to 34-year olds owning their own home between 1999 and 2019 .. and a corresponding, yet smaller drop of 21.2% of 35 to 44-year olds owning their own home over the same time frame.

So, if you were born in the late 1980’s or early 1990’s, the dream of owning a home in Bexhill has reduced dramatically over the past 20 years as young adults’ wages and salaries are now much lower in relation to Bexhill house prices. Nationally, average property values have grown by 186.9%, whilst average incomes have only risen by 44.8%, yet that doesn’t allow for inflation. However, whilst not over the same 20 years (it’s close enough though), the Institute of Fiscal Studies said recently the average British home was just over 2.5 times higher in 2015/6 than in 1995/6 after allowing for inflation; yet the average household income (after tax) of 25 to 34-year olds grew by only 22% in ‘real-terms’ over those 20 years.

Yet, even though property prices are at record highs, on the other side of the coin, the monthly cost of mortgage payments has actually fallen because interest rates have remained low. In 1999, the average mortgage rate paid by UK homeowners was 6.54% whilst today it’s more than halved to 2.64% – a drop of 59.4%. Many of you reading this will remember the 15% mortgage rates of 1992!

The fact is, mortgage repayments take up a considerably smaller proportion of take home pay, on average, than they did before the Credit Crunch or in the late 1980’s. Although the risk that mortgage rates will increase if the Bank of England put up interest rates might leave some homeowners in a difficult position – hence I might suggest (if you haven’t already) you seriously consider fixing your mortgage rate (remember to take advice from a professional before you do).

Yet look at the data in even greater detail and you will see, going back

to the 1960’s, we weren’t always the huge homeowning nation we always thought we were.

Today, 4.5% less 35 to 44-year olds and 33.5% more 45 to 54-year olds own their own home compared to 1969. So as the younger generation in Bexhill has seen homeownership drop in the medium term, they will in fact end up inheriting the homes of their parents. We are turning into a more European (especially German) model of homeownership, where people buy their first home in their 50’s instead of their 20’s.

My message to first time buyers of Bexhill is go and get some mortgage advice!  The cost of renting smaller starter homes is between 20% and 25% more than the mortgage payments would be. 95% mortgages (meaning a 5% deposit is required) have been available since late 2009 and some banks even do 100% mortgages (i.e. no deposit) .. I suggest that you don’t assume you can’t get a mortgage – for the sake of a 45 minute chat with a mortgage adviser – you get a straight answer and all the information you need.

Therefore, what does this mean for homeowners and landlords of Bexhill? Well, for many tenants, renting is a positive choice and as we aren’t building enough homes to meet current demand, let alone eating into the lack of building over the last 35 years, demand will outstrip supply, home values will, over the medium to long term, rise above inflation – meaning it will be a good overall investment as demand for rental properties increases. Good news for Bexhill landlords and Bexhill homeowners alike.

The single biggest issue in the Country (and Bexhill) today is that we aren’t building enough homes. I know it seems the local area is covered with building sites – yet looking at the actual numbers – we still aren’t building enough homes to live in. Residential property only takes up 1.2% of all the land in the Country – and whilst I’m not suggesting we build housing estates on National Trust land or cut down forests, until we realize that we aren’t building enough .. this issue will only continue to get worse.

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Bexhill Property Market vs London Property Market

Anyone would think that national news, especially when it comes to talking about the property market, is just focused on London centric. In fact, over the last 5 years, the London property market has really manipulated the UK on averages to such an extent that many lenders like the Halifax and Nationwide publish two indices, a national one without London and one with.

Now it’s true the London property market has undergone some quite acute property price falls. In the upmarket areas of Mayfair and Kensington, the Land Registry have reported values are 11.3% lower than a year ago, yet in the UK as a whole they are 1.3% higher. Yet look around the different areas and regions of the UK and Northern Ireland, property values are up 5.8% year on year, whilst over the same time frame, the East Midlands is 3.9% up and Yorkshire is 3.7% up. So, what exactly is happening locally in Bexhill and what should Bexhill landlords and homeowners really be concerned about?

Well, to start with, as I have been saying for a while now, property is a long game, and making decisions on the short-term fluctuations is something that could cause a nervous breakdown.

I wanted to look at how Bexhill had performed over the long term, when compared to London and the UK as a whole.  Yet it is hard to compare differing locations when the average value of a property in Bexhill differs greatly to one in the capital.  I decided if I wanted to compare like for like, I needed to see what would happen if I had spent £100 on property in London in 1979 and what would that £100 be worth today, and then do the same exercise for the UK. So, looking over the last 40 years …

See how the growth of that £100 was broadly similar between 1979 and 2007 on all three strands of the graph and then we had the credit crunch drop between late 2007 and 2009? However, after 2009 London went on a different trajectory to the rest of the UK. Whilst Bexhill (and the UK) were generally subdued between 2009 and 2012, London kicked on. All areas of the country had a temporary blip in 2012, yet whilst Bexhill and the UK went up a gear again 2013, London went into overdrive and up like a rocket!

Now you can see London has dipped slightly in the last year, so the hot question for everyone has to be – are price falls likely to spread (as they did in the previous property recessions of 1989 and 2007) to Bexhill and other places in the UK? The Bank of England’s opinion is that a London house price drop is unlikely to be the beginning of a countrywide trend. Looking at the graph again, it can be seen London has been in decline for 2 years, whilst the rest of the country has been moving forward.

So, what does all this mean for Bexhill

homeowners and landlords?

Well what happens in London does have an impact, but there are other issues that will have a bigger impact on the local property market. The simple fact is over the last 40 years, we have had 392.9% inflation, yet looking at a typical Bexhill terraced house…

A Bexhill terraced house has jumped in

value from an average of £21,784 to £234,400

since 1979 – a rise of 1062.2%

Property has in the long term been a good bet. Yes, we might have some short-term blips and as long as you play the long game – you will always win. In the short term, my concern isn’t over monthly up or down property values, Brexit or another General Election. With property values still rising faster than salaries in many parts of the country, what really matters is how much of householder’s take home pay goes into housing costs as opposed to other spending items. If housing gets too expensive – other things will suffer, like holidays and the nice things in life to spend your money on. Only time will tell!

P.S. Wonder what that Bexhill terraced would be worth if it had gone by London house prices? Here’s your answer – £341,143.

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How Did Brexit Affect the Bexhill Property Market in 2018 – and its Future for 2019?

A few weeks ago, I suggested property values in Bexhill would be between 0.8% and 1.6% different by the end of the year. It might surprise some people that Brexit hasn’t had the effect on the Bexhill property market that most feared at the start of 2018.

The basis of this point of view can clearly be seen in the number of property transactions (i.e. the number of property sold) that have taken place locally since 2008. The most recent property recession was the Credit Crunch years of 2008/2009/2010.

In property recessions, the headline most people look at is the average value of property. Yet, as most people that sell also go on to buy, for most home movers, if your property has gone down in value, the one you want to buy has also gone down in value so you are no better or worse off. If you are moving up market – which most people do when they move home – in a repressed market, the gap between what yours is worth and what you will buy gets lower … meaning you will be better off.

Yet, most property commentators, including myself, suggest (and I have mentioned this before in some of my other blog articles) a better measure of the health of the property market is the transaction numbers (i.e. the number of people selling and buying). So, I decided to look at the 2018 statistics, and compare them with the Credit Crunch years (2008 to 2010) and the boom years (2014 to 2017). The results can be seen in the table below.

Then, I looked at the average quarterly figures for those chosen date ranges … and created this graph …

In that 2008 to 2010 property Credit Crunch recession, the average number of properties sold in the Bexhill and Rother area were 120 per month. Interesting when we compare that to the boom years of 2014 to 2017, when an average of 183 properties changed hands monthly … yet in the ‘supposed’ doom laden year of 2018, an impressive average of 151 properties changed hands monthly … meaning 2018 compared to the boom years of 2014 to 2017 saw a drop of 17.6% – yet still 25.6% higher than the Credit Crunch years of 2008 to 2010.

The simple fact is, the fundamental problems of the Bexhill property market are that there haven’t been enough new homes being built since the 1980’s (and I don’t say that lightly with all the new homes sites dotted around the locality). Also, the cost of buying your first home remaining relatively high compared to wages and to add insult to injury, all those issues are armor-plated by the tougher mortgage rules which were introduced in 2014 and the current mortgage market conditions.

It is these issues which will ultimately determine and form the rather unexciting, yet still vital, long term outlook for the Bexhill (and national) housing market, as I feel the Brexit issue over the last few years has been the ‘current passing diversion’ for us to worry about. Assuming something can be sorted with Brexit, in the long term property values in Bexhill will be constrained by earnings increases with long term house price rises of no more than 2.5% to 4% a year.

Fundamentally, the question I am asked by many Bexhill buy to let landlords and Bexhill homebuyers is … “should I wait to buy or not?”

As a Bexhill homebuyer, one shouldn’t be thinking of what is happening in Westminster, Brussels, Irish Backstop, China or Trump and more of your own personal circumstances. Do you want to move to get your child in ‘that’ school or do you need an extra bedroom for your third child? For lots of people, the response is a resounding yes – and in fact, I feel many people have held back, so once we know what is finally happening with Brexit and the future of it, there could a be a release of that pent-up demand to move home as people humbly just want to get on with their lives.

There is little to be lost in postponing a house purchase until there is better clarity on the situation. If it isn’t Brexit it will something else – so just get on with your lives and start living. We got through the global financial crisis/Credit Crunch in ‘08/’09, Black Wednesday in ’92 where mortgage interest rates went from 8.5% to 15% in one day, we got through the worst stock market crash with Black Monday in ’87, hyperinflation, power shortages, petrol quadrupling in price in less than a year and a 3 day week in the ‘70’s … need I go on?

Bexhill Landlords? Well, where else are you going to invest your money? Like I said earlier in the article, we aren’t building enough homes to keep up with demand … so as demand outstrips supply, house values will continue to grow. Putting the money in the building society will only get you 1% to 2% if you are lucky. In the short term though, there could be some bargains to be had from shortsighted panicking sellers and in the long term … well, the same reasons I gave to homeowners also apply to you.

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Bexhill House Prices up 29.3% in the last 5 Years

Over the last 5 years, we have seen some interesting subtle changes to the Bexhill property market as buying patterns of landlords have changed ever so slightly.

The background to this story was the recently published set of buy-to-let (BTL) lending statistics. Roll the clock back 12 months and 6,700 BTL mortgages were granted (in the same month) for £900m, meaning the average BTL mortgage was £134,200. Looking at last month’s figures, and as one might expect with the Brexit issue overhanging the property market, the lending figures were down, yet not by the amount I originally thought. Last month, just over 6,100 new buy-to-let mortgages were granted for a total sum of £800m (meaning the average landlord mortgage was a respectable £131,100). Yet, when I looked back to the boom year of the 2014 property market, in the corresponding same month, only £1,030 million was borrowed on 8,300 buy-to-let properties (meaning the average buy-to-let mortgage was £124,100). It seems Brexit is having no effect on landlords buying habits.

Looking closer to home in Bexhill, throughout 2018, I have been regularly chatting to more and more landlords, be they seasoned professional Bexhill BTL landlords or FTL’s (first time landlords) and their attitude is mostly positive. Instead of reading the scare-papers (oops sorry newspapers), those Bexhill landlords that look with their eyes, will see the Bexhill property market is doing reasonably well, with medium term rents and property values rising; as quite obviously from the mortgage figures .. landlords are still buying.

The question I get asked all the time is .. “What type of buy-to-let property should I buy?  You can make money from property through both the rent (expressed as a yield when compared to the value of the property) and how the actual value of the home itself changes.

Since 2014, property values in Bexhill have risen by 29.3%.

We have records of what each type of property (i.e. Detached/Semi/Terraced/Apartments) has achieved per square metre going back 20 years … and looking back over the last 5 years, these are the numbers ..

They all look to have similar percentage uplifts, however as you can see from the table there is in fact some variation throughout and although only slight this can equate to thousands of pounds in monetary terms.

This has proved that semis and terraced houses have performed the best .. although like the £/Sq.M figures, these are just averages. When investing, whilst Bexhill apartments haven’t been the best performers in terms of capital growth, they do tend to generate a slightly better yield than houses, probably because several sharers can afford to pay more than a single family. But houses tend to appreciate in value more rapidly and may well be easier to sell, simply because there are fewer being built.

Now these are of course averages, but it gives you a good place to start from. The bigger picture here though is this – irrespective of what is happening in the world, be it Brexit/no Brexit, China, Trump, whatever, Bexhill people still need a roof over their heads and we as a Country haven’t built enough homes to keep up with the demand since the late 1980’s. This means even if we have a short term wobble in 2019 when it comes to property values ..in the medium term, demand will always outstrip supply and prices and rents will increase – because, I doubt the local authority, let alone Westminster, have the billions of pounds required to build the one hundred thousand Council houses per year nationally for the next decade to fix this issue – meaning as the population increases, the only people who can fulfil the demand for accommodation in the medium term is the private BTL landlord.

Before I go …on average, housing associations and local authorities have built around 26,500 houses each year since 2010. The Labour government had a lower average, building about 19,000 homes per year, yet in the 1960’s, under both administrations, 180,000 councils were built per year!

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