There is no escaping the fact that over the last couple of decades, the rise in the number buy to let properties in Bexhill has been nothing short of extraordinary. Many in the “left leaning” press have spoken of a broken nation, the fact many youngsters are unable to buy their first home with the rise of a new cohort of younger renters, whom have been daubed ‘Generation Rent’ as landlords hoover up all the properties Continue reading “7 Reasons Why Bexhill Buy To Let Landlords Shouldn’t Be Criticised”
Whether you are a Bexhill landlord looking to liquidate your buy to let investment or a homeowner looking to sell your home, finding a buyer and selling your property can take an annoyingly long time. It is a step-by-step process that can take months and months. In fact, one of the worst parts of the house selling process is not knowing how long you might be stuck at each step. Continue reading “49 Days to Sell a Property in Bexhill”
The combined value of Bexhill’s housing market has risen by £81,160,560 in the last 6 months, meaning the average value of a Bexhill property has increased in value by an average of £6,084.
This is great news for Bexhill first time buyers and Bexhill buy to let landlords, as property prices have risen despite a slight hesitation in the market because of the uncertainty over Brexit. Continue reading “Value of Bexhill Property Market rises £81.2m”
The current average value of a property in Bexhill currently stands at £286,450 and the base rates at 0.5%. In many of my articles, I talk about what is happening to property values over the short term (i.e. the last 12 months or the last 5 years), but to answer this question we need to go back over 40 years, to 1975.
The average value of a Bexhill property in 1975 was £13,867
However, since 1975, we have experienced in the UK, inflation of 807.5%.
Back in 1975, the average salary was £2,291 and average car was £1,840. A loaf of bread was 16p, milk was 28p a pint and a 2lb bag of sugar was 30p. Inflation has increased prices, so comparing like for like, we need to change these prices into today’s money. In real spending power terms, an average value of a Bexhill house in 1975, expressed in terms of today’s prices is £125,864.
That means in real terms, property costs a lot more today, than in the mid 1970’s, but has it always been that way? Looking at the important dates of the UK property market, you can see from this table, the last two property boom years of 1989 and 2007, show that there was a significant uplift in the cost/value of property (when calculated in today’s prices).
Before we move on, hold onto the thought that you can quite clearly see from the table, in real terms, properties are cheaper today in Bexhill than they were in 2007!
So, it made me wonder if there was a link between house prices, inflation and other external economic factors, such as interest rates? Interest rates have a strong influence on inflation and property values, principally because changes in the interest rate affect the cost of mortgage payments for homeowners and they affect the flow of foreign currency in (or out) of an economy, thus changing the exchange rate and prices we can sell our goods and services abroad and prices we pay on imports.
So how exactly do interest rates affect property values?
When interest rates rise, it has a substantial effect on increasing the monthly cost of mortgages. Higher mortgage payments will discourage prospective homebuyers or people looking to move up market (meaning their mortgage payments go up) – thus making it comparatively cheaper to rent.
Furthermore, the high cost of mortgage payments sometimes also pushes some existing home owners to sell, meaning there is an increase in house sellers and a decline in house purchasers, and as the law of economics state, when supply is increased and demand falls, (house) prices fall. Another fallout of a rise in mortgage payments is a rise in repossessions. Interestingly, repossessions in the UK rose from 15,000 per annum in the late 1980’s to over 75,000 per annum in the early 1990’s, meaning even more properties came onto the market, exasperating the issue of over supply – pushing property values even lower.
High interest rates caused property values to fall in mid 1970’s, early 1980’s and most recently, the early 1990’s (who can remember the 15% mortgage rate!) Conversely though, the drop in property values in 2008/2009 – was not due to interest rates, but due to the credit crunch and global recession.
So, what will happen if when interest rates rise?
It is vital to remember that interest rates are not the only factor affecting property values. It is also possible that when interest rates increase (which they will from the current 0.5%), property values can also continue to rise (it happened throughout the mid to late 1980’s and again between the boom years of 2002 and 2007). When confidence in the economy is good, and we as a Country experience a period of rising real incomes (i.e. after inflation), then the British in the past have continued to buy bricks and mortar, notwithstanding the rise in interest rates.
Another important factor on property values is the supply of housing. A big reason in the current level of Bexhill house prices is due to the shortage of supply, which has kept property values higher than I would have expected. An additional factor is whether homeowners have a variable or fixed rate mortgage. 90.6% of new mortgages taken in the last Quarter were at a fixed rate, and 66.2% of all mortgaged homeowners are on fixed-rate mortgages, therefore, they will not notice the effects of higher interest rate payments until they re-mortgage in a few year’s time, meaning there is frequently a time-lag between higher interest rates and the effect on property values. Another factor on mortgages is the ability to get one in the first place. Back in 2014, mortgage providers were told to be stricter on their lending criteria when arranging mortgages following the footloose days of 125% loan to value mortgages with the Northern Rock. These new rules are a lot more rigorous on borrowers’ ability to repay the payments (although it makes me laugh, when with starter homes it nearer is always cheaper to buy then rent!).
I think the final point is this … affordability is the key. Look at the graph (the red bars) and you will see in REAL HOUSE PRICE terms – it’s cheaper to buy a home today than it was in 2007, yet why aren’t we seeing people buying property at the levels we were seeing in the 2000’s before the credit crunch? Again, looking at the reasons why, I will talk about in future articles.
In conclusion, interest rates are important – but nowhere near as important on the Bexhill (and British) property market than they were 15 or 20 years ago.
So, before I go, one final thought – how do we measure the success of the Bexhill property market? Well I believe one measure that is a good bellwether is the number of property transactions, as that could show a more truthful picture of the health of the property market than property values. Maybe I should talk about that in an up and coming article?
For more articles about the Bexhill Property Market visit my blog at www.bexhillpropertymarket.com or go to my website www.redwell-estates.co.uk. Enjoy the sunshine. regards Patrick Stappleton. Author of the Bexhill Property Market blog.
My analysis has shown that up to the end of the last quarter, Bexhill first time buyers purchased 277 Bexhill properties. With wages rising at 2.8%, unemployment at a low rate of 4.2% (down from 4.6% from a year earlier and the joint lowest since 1975), national GDP rising at 1.87% and inflation at 2.3%, tied in with indifferent house price growth (compared to a few years ago), this has given first time buyers a chance to get a foot hold on the Bexhill property market.
Over the last year, the average purchase price of a Bexhill first time buyer property has been £175,700 and the average deposit was £28,463. Furthermore, my calculations show the average Bexhill parents contributed £12,453 of that £28,463 figure.
You see “The Bank of Mum and Dad (Bexhill Branch)” is for countless Bexhill twenty something’s, perceived to be the only way they will ever be able to afford their first home. In fact, Bexhill parents put up a substantial £3.44m in the last 12 months to help their nearest and dearest progeny onto the property ladder. This assistance towards the deposit makes a huge difference, enabling Bexhill youngsters who thought they couldn’t get on the housing ladder more able to do so.
With mortgage rates at all-time lows, few Bexhill twenty something’s would struggle to make mortgage repayments, but it is the requirement of the deposit which is the issue, although as parents (and grandparents) are helping out where they can, it does little to address the real problems of the housing market, whether for people renting or buying their first home.
If you think about it, as a Country we have been fortunate that the older generation who control the biggest share of the nation’s wealth are so plentiful to those following after. We need to remember, though, that this generosity is a sign of the issues of the British housing shortage, not its solution.
But before I leave this article … note I used the word PERCEIVED in a previous paragraph. Yes, the average first time buyer deposit is 16.1%, but that is an average. Did you know 95% mortgages returned to first time buyers in late 2009 and have been available ever since? Also, lenders like Barclays and many local Building Society’s now offer 100% mortgages (i.e. no deposit) at 2.75% fixed for three years.
The perception is you need 15%, 20% even a 25% deposit to be a first-time buyer – you don’t! You don’t need any deposit, but (there is always a but!)…
Over the last decade, many renters have upgraded themselves into homes that they (or any generation before them) could never have ever afforded as a first time buyer in the past. You see the British housing market started to change with the dawn of the new Millennium and I am seeing a slow but steady attitude change when it comes to renting. Those tenants have found the price difference of upgrading from the typical 1970’s TV show Rigsby “Rising Damp” style rental property to plush terraced house or even semi-detached home, with all the mod cons, comparatively inexpensive (when compared to the increase in mortgage payments if they had to make the move as buyers).
Renting isn’t seen as the poor man’s choice, as many young (and increasing older) people are becoming more at ease and comfortable with the flexibility offered by private renting a property rather than jumping ‘lemming like’ into home ownership. Bexhill landlords will continue to see growth in sector, and like Germany, todays renters will become homeowners in 20 years’ time – when they will inherit the wealth of their parent’s home. Let me know how your plans are going especially if you are a first time buyer, call me at my Little Common Office on 01424 844081 or email me at email@example.com. Kind regards, Patrick Stappleton. END
I am of the opinion that buy to let investment in Bexhill, in the long-term, will bring substantial returns for landlords, irrespective of latest regulation and tax changes.
Taking a very conservative (with a small ‘c’) view, I believe landlords will see a projected net profit of £565,066 per property over the next 25 years through capital gains and rental. When inflation is taken into account that works out at £332,824 (in today’s money) or around £13,313 per year. The breakdown applies to a basic tax-paying landlord placing a characteristic 25% deposit on a £225,400 terraced/town house property.
Capital gains make up a substantial part of a landlord’s returns. Again, being conservative, I have assumed that Bexhill house prices over the next quarter century (between 2018 and 2043) will rise at half the rate they did between 1993 and 2018 (the preceding 25 years), therefore the following Bexhill property in the previous paragraph would grow in value to £686,456, providing gross capital gains of £461,056.
A typical Bexhill landlord receives, on average, rent of £9,900 per annum per terraced/town house property and so, over a 25-year period, that example property would generate a total rental income of £378,428 (again – very conservatively assuming a compound annual growth rate in the rent of 1.71% per annum).
Nevertheless, there are costs to running a buy to let property (mortgages, void periods, repairs, agents fees etc) .. and over those same 25 years, I have estimated that to be £274,417 .. giving the net profit levels mentioned in the second paragraph.
Now of course I have had to make assumptions to reach these figures, yet I hope you would agree, I have been very unadventurous with my assumptions.
The Bexhill (and UK as a whole) buy to let property market is experiencing a massive sea of change. Regulation and tax changes have altered the dynamic in the property market, diminishing its appeal to inexperienced and amateur landlords, and these new tax changes mean higher tax bills for higher rate tax landlords. Yet, despite these rising costs, there are still healthy returns to be found in Bexhill buy to let investment for knowledgeable and steadfast landlords. Nonetheless, the days of anything making money and idle speculation are long gone.
Buy to let is a long-term business undertaking, necessitating commitment and expertise. Don’t put your head in the sand and think it doesn’t affect you. Bexhill buy to let landlords must be equipped to start business and tax planning, take portfolio management advice to ensure their investments will meet their investment goals, appreciate the risks as well as the rewards, and, most crucially, the obligations they have towards their tenants.
If you are a Bexhill landlord, irrespective of whether you are a client of mine or another agent in Bexhill (or even you do it yourself), feel free to drop me a line or pop into the office for an informal chat on the future direction of the Bexhill rental market and where opportunities may lie.
And if it does … who will be the winners and losers?
Those Bexhill people wanting property values to drop would be the 30 or 40 something’s, sitting on a sizeable amount of equity and hoping to trade up (because the percentage drop of your current ‘cheaper’ property will be much less than the same percentage drop of the more expensive property – and trading up is all about the difference). Continue reading “Will the Bexhill Property Market Crash?”
Nearly 5 babies have been born for every new home that has been built in Rother since 2012, deepening the Bexhill housing shortage.
This discovery is an important foundation for my concerns about the future of the Bexhill property market – when you consider the battle that todays twenty and thirty somethings face in order to buy their first home and get on the Bexhill property ladder.
This is particularly ironic as these Bexhill youngsters’ are being born in an age when the number of new babies born to new homes was far lower.
This will mean the babies being born now, who will become the next generation’s first-time buyers will come up against even bigger competition from a greater number of their peers unless we move to long term fixes to the housing market, instead of the short term fixes that successive Governments have done since the 1980’s.
Looking at the most up to date data for the area covered by Rother Council, the numbers of properties-built versus the number of babies born together with the corresponding ratio of the two metrics …
It can be seen that in 2016, 3.41 babies had been born in Rother for every home that had been built in the five years to the end of 2016 (the most up to date data). Interestingly, that ratio nationally was 2.9 babies to every home built in the ‘50s and 2.4 in the ‘70s. I have seen the unaudited 2017 statistics and the picture isn’t any better! (I will share those when they are released later in the year).
Our children, and their children, will be placed in an unprecedented and unbelievably difficult position when wanting to buy their first home unless decisive action is taken. You see it doesn’t help that with life expectancy growing year on year, this too is also placing excessive pressure on homes to live in availability, with normal population growth nationally (the number of babies born less the number of people passing away) accumulative by two people for every one home that was built since the start of this decade.
Owning one’s home is a measure many Brits to aspire to. The only long-term measure that will help is the building of more new homes on a scale not seen since the 50’s and 60’s, which means we would need to aim to at least double the number of homes we build annually.
In the meantime, what does this mean for Bexhill landlords and homeowners? Well the demand for rental properties in Bexhill in the short term will remain high and until the rate of building grows substantially, this means rents will remain strong and correspondingly, property values will remain robust. Well what do you think about that? Let me know by email or call into my office Redwell Estates, in Little Common and lets have a chat. My email by the way is firstname.lastname@example.org. Best wishes to all.
The simple fact is we are not building enough properties. If the supply of new properties is limited and demand continues to soar with heightened divorce rates, i.e. one household becoming two, people living longer and continued immigration, this means the values of those existing properties continues to remain high and out of reach for a lot of people, especially the blue collar working families of Bexhill.
Looking at some recent statistics released by the Government, the ratio of the lower quartile house prices to lower quartile gross annual salaries in Rother District Council has hit 10.98 to 1.
What does that mean exactly and why does it matter to Bexhill landlords and homeowners?
If we ordered every property in the Rother District Council area by the value of those properties, the average value of the lower quartile properties (i.e. lowest 25%) would be £196,500. If we then did the same, and ordered everyone’s salary in the same council area, the average of the lowest quartile (lowest 25%), the average salary of the lowest 25% is £17,892 pa, thus dividing one with the other, we get the ratio of 10.98 to 1.
Assuming there is one wage earner in the house, the chances of a Bexhill working family being able to afford to buy their own home, when it’s just under eleven times their annual salary, is very slim indeed. The existing affordability crisis of people wanting to buy their own home is the unavoidable outcome of the decade on decade failure to build enough homes to keep up with demand. Nevertheless, improving affordability is not a case of just constructing more homes. Rother District Council needs to ensure more properties are not only built, but built in the right locations and of the right type and at the right price to ensure the needs of these lower income working families are met, because at the moment, they presently have few options apart from the private rental sector.
Looking at the historic nature of the ratio, it can clearly be seen in the graph below that this has been an issue since the early to mid 2000’s.
However, if one looks at the historic data, those on the bottom rung of the ladder (those in the lower quartile of wage earners) used to be housed by the local authority instead of buying. However, the vast majority of council houses were sold off in the 1980’s, meaning there are much fewer council houses today to house this generation.
Many of the lower quartile working class families were given a lifeline to buy their own homes in middle 2000’s, with 100% mortgages, but the with the credit crunch in 2009, that rug (of 100% mortgages) was rudely pulled from under their feet. You see it is cheaper to buy than rent … it’s the finding of the 5% deposit that is the challenging issue for these Bexhill working class families. So unless the Government allow 100% mortgages back, the fact is, demand for rental properties will outstrip supply.
In the long term, to alleviate that, I would suggest the Bexhill community hold their local politicians at Rother District Council to account for the actions they could take to ensure the affordability of housing and the extent to which they work with private developers and housing associations and aggressively use the planning tools at their disposal to safeguard the local community getting the new households we need. Rother District Council could make certain parcels of residential building land for private rented development only, eliminating the opportunity of the land being bought to develop large executive homes, which do not solve the current problem.
Yet in the short term, all this means is demand for rental properties will continue to grow, keeping Bexhill house prices high and Bexhill rents high. For any Landlords who would like to discuss this article or discuss the rental market in Bexhill, call in and see me at my Little Common office or email me at email@example.com or call me on 01424 224242. Hope you enjoy the read. Kind regards, Patrick.
In my blog about the Bexhill Property Market I mostly only talk about two of the three main sectors of the local property market, the ‘private rented sector’ and the ‘owner occupier sector’. However, as I often stress when talking to my clients, one cannot forget the third sector, that being the ‘social housing sector’ (or council housing as some people call it).
In previous articles, I have spoken at length about the crisis in supply of property in Bexhill (i.e. not enough property is being built), but in this article I want to talk about the other crisis – that of affordability. It is not just about the pure number of houses being built but also the equilibrium of tenure (ownership vs rented) and therein, the affordability of housing, which needs to be considered carefully for an efficient and effectual housing market.
An efficient and effectual housing market is in everyone’s interests, including Bexhill homeowners and Bexhill landlords, so let me explain ..
An average of only 58 Affordable Homes per year have been built by Rother District Council in the last 9 years
The requirement for the provision of subsidised housing has been recognised since Victorian times. Even though private rents have not kept up with inflation since 2005 (meaning tenants are better off) it’s still a fact there are substantial numbers of low-income households in Bexhill devoid of the money to allow them a decent standard of housing.
Usually, property in the social housing sector has had rents set at around half the going market rate and affordable shared home ownership has been the main source of new affordable housing yet, irrespective of the tenure, the local authority is simply not coming up with the numbers required. If the local authority isn’t building or finding these affordable homes, these Bexhill tenants still need housing, and some tenants at the lower end of the market are falling foul of rogue landlords. Not good news for tenants and the vast majority of law abiding and decent Bexhill landlords who are tarnished by the actions of those few rogue landlords, especially as I believe everyone has the right to a safe and decent home.
Be it Tory’s, Labour, SNP, Lib Dems, Greens etc, everyone needs to put party politics aside and start building enough homes and ensure that housing is affordable. Even though 2017 was one of the best years for new home building in the last decade (217,000 home built in 2017) overall new home building has been in decline for many years from the heady days of the early 1970s, when an average of 350,000 new homes were being built a year. As you can see from the graph, we simply aren’t building enough ‘affordable’ homes in the area.
The blame cannot all be placed at the feet of the local authority as Council budgets nationally, according to Full-Fact, are 26% lower than they have been since 2010.
So, what does this mean for Bexhill homeowners? Well, an undersupply of affordable homes will artificially keep rents and property prices high. That might sound good in the short term, but a large proportion of my Bexhill landlords find their children are also priced out of the housing market. Also, whilst your Bexhill home might be slightly higher in value, due to this lack of supply of homes at the bottom end of the market, as most people move up the market when they do move, the one you want to buy will be priced even higher.
Problems at the lower end of the property market will affect the middle and upper parts. There is no getting away from the fact that the Bexhill housing market is all interlinked .. it’s not called the Property ‘Ladder’ for nothing! Interesting stuff when you think about it. Anyway, if you would like to discuss this article or any other of my pieces, then email me on firstname.lastname@example.org or call into Redwell Estates in Little Common where I will be delighted to see you. Kind regards, Patrick Stappleton, Author of the Bexhill Property Blog.