Wednesday, 2 January 2019

As OAP’s set to rise to 1 in 3 of Thanet’s population by 2037 – Where are they all going to live?

With constant advances in technology, medicine and lifestyles, people in the Thanet area are, on average, living longer than they might have a few decades ago. As Thanet's population ages, the problem of how the older generation are accommodated is starting to emerge. We, as a district, have to consider how we supply decent and appropriate accommodation for Thanet’s growing older generation’s accommodation needs while still offering a lifestyle that is both modern and desirable. 

In 1997 in Thanet, around one in every four people (23%) were aged 65 years and over (and the local authority area as a whole), this remained around one in every four people (23%) in 2017 but it is projected to increase to reach nearly one in every three people (31%) by 2037, meaning..

Over the next 19 years, the growth of the over 65 population in Thanet will grow by 34.8% - a lot more than the overall growth population of Thanet of 17.7% over the same time frame.

In fact, the number of those over 90 is expected to nearly double in our local authority from 1,666 (1.2%) in 2017 to 3,223 (1.9%) by 2037.


And looking at the proportional percentage changes over those years..


Looking at Thanet and the local authority as a whole, there is a distinct under supply of bungalows and retirement living (i.e. sheltered) accommodation. The majority of sheltered accommodation fit for retirement is in the ex-local authority sector whilst the majority of private sector bungalows were built in the 1960s/70s/80s and are beginning to show their age (although that means there is often an opportunity for Thanet investors and Thanet buy to let landlords to buy a tired bungalow, do it up and flip it/rent it out).
In the medium to longer term, we need to build more bungalows and sheltered accommodation and, if we do that, that won’t only be of benefit to the elderly population of Thanet – it will have a direct knock-on effect to the younger and middle-aged population by unlocking those family homes the older generation homeowners live in.  
There have been 17 Housing Ministers since 1997. No one ever seems to stay in the job long enough to create a consensus and direction in Government Policy on the vital issue of the country’s housing shortage, yet the sound bites and White Papers seem only to focus exclusively on first-time buyers when there is an even more severe and disregarded shortage in suitable housing for the older generation.

This scantiness affects both mature homeowners trapped in unsuitably big family properties, unable to find smaller bungalows or suitable retirement apartments, whilst the waiting list for Council sheltered accommodation is putting a strain on other aspects of social care. In both circumstances, policy coming (or not coming) out of Government is repressing the supply and type of accommodation mature people desire, need and want, whilst at the same time, increasing the cost (and taxes) for social and NHS care.

Maybe we need tax breaks for people to downsize or planning permissions that stipulate bungalows only. Whichever way you look .. there are challenging times ahead for us all.

Friday, 14 December 2018

Margate ‘Home Owning’ Movers and Shakers in 2018


It’s now commonly agreed amongst economists and the general public that the dramatic rise in Thanet property prices of the last six years has come to an end.

Read the National newspapers, and they talk of doom and gloom in the British housing market with such things as strained buyer affordability (as property prices have increased over the past six years at a far faster pace than average salaries), a lack of new properties being built and the Brexit uncertainties over the last two and half years being blamed for the slow down - yet in the last 12 months, people have still been moving, buying and selling in Thanet at levels similar to the last six years - something tells me we have a case of ‘bad news selling newspapers’.

So instead, let me share with you what, exactly, is happening in the Margate property market, and more specifically, who is moving and why in Margate. The majority of sales in Margate during the last twelve months were flats, selling for an average price of £143,900. Terraced properties sold for an average of £225,400, with semi-detached properties fetching approximately £276,700.In Margate, in the homeowner sector in 2018 (i.e. owner occupation), 272 households moved within the tenure (i.e. sold the home they owned and bought another one) and 53 new households were created (i.e. they moved from living with family/friends and bought their first home without privately renting).




Margate Home Movers in 2018
Moved from Owner Occupation to Private Rented
100
Moved from Private Rented to Owner Occupation
127
Owner Occupation to Social Housing
13
Straight to Owner Occupation
53
Left Owner Occupation (i.e. Household Ended)
66
Owner Occupation to Owner Occupation
272



What does this mean for Margate buy to let landlords? Well looking at the graph, it appears bad news for landlords. There were 127 households that moved into the home owning (owner occupation) tenure from the private rented sector, whilst on the other side of the coin, 100 Margate households moved to the private rented sector from owner occupation … which appears on the face of it, a reduction in the private sector.

My research has calculated that in 2018, an additional 132 new households in the Margate private rental sector were created

...and it will continue to grow at those levels for the foreseeable future.
 

I have one final thought and opportunity for you Thanet property investors. 66 owner occupied households in Margate sold in last year where the homeowners had passed away. These properties can be a potential goldmine and offer great returns. The reason being is some members of the older generation who have owned these homes for decades have spent money on high capital items (double glazing / central heating etc.) but not spent money on more superficial low-ticket items such as up to date carpets, kitchen, bathroom and decorating (vital if you want to sell your property for top dollar). These properties can often be bought cheaply because most buyers can’t see past the avocado or brown bathroom suite from the 1970’s and the dated decor, so if you were to buy wisely and do the works, you could sell it on for a healthy profit.
 

So, whatever is happening in the world with Brexit, Trump, China, and the Stock Market … the Thanet housing market is in decent shape for the medium to long term. If we do have small corrections in values in the next 12 to 18 months, in the long term, house prices have always returned ... and returned with vengeance. Like I say to anyone buying a property, be they a first time buyer, landlord or homeowner ... property is a long game ... and if you play the long game, you will always win (although isn’t that true in most aspects of life?).


Friday, 23 November 2018

Thanet First Time Buyers Need 10.0 Times Annual Salary to Get on Housing Ladder


What is it to be British? Our stubbornness, long-suffering stoicism, our vexation at injustice, our obsession with football and rugby, we are weather obsessed external awkward noncommittal modest people whilst underneath seething like a volcano because someone jumped the queue….. and our No.1 obsession is with the property ladder.

This ‘love affair’ with owning our own home has been both good and bad for the UK as a whole; giving people financial freedom in their later years whilst also reducing the quantity (and quality) of housing provision whilst adding the extra pressure of a ‘them and us’ society. Strong words I know .. but let me explain more.

I honestly believe that most Governments since the end of the 1970’s, Conservative and Labour, have attempted to nourish our addiction to home ownership (to keep the housing market on track) with the Council House Right to Buy sell off in the 1980’s, tax relief of mortgages, relaxation of the mortgage rules in the late 1990’s/early 2000’s and most recently, the Help to Buy scheme.

But the Brits haven’t always had this obsession.

Roll the clock back 100 years and, in 1918, just under a quarter of all Brits owned their own homes and the other 77% rented. Go back 50 years to 1968, and only 46% of people owned their own home, the rest rented. This homeownership thing is quite a recent phenomenon.

According to my research, anyone looking to get a foot onto the property ladder as a first-time buyer in Thanet today, AS A SINGLE PERSON, would need to spend 10.0 times their earnings on a Thanet first time buyer property.



Using the numbers from the Office of National Statistics (ONS), the average value of a first-time buyer property in Thanet today is £160,000, compared to £132,500 in 2007. If we divide those property values by the average annual earnings of first time buyers - in 2007, that was £12,882 pa and that has risen to £15,988 pa .. giving us the ratio of 10.0 to 1.

However, what must be remembered is that these are raw statistics from the ONS and don’t take into account other factors, like most people buy their first home as a couple. Also, mortgage rates are at an all-time low and who can remember mortgage rates of 15%+ in the 1990’s, meaning borrowing today is relatively cheap. Also, 95% Loan to Value first time buyer mortgages have been available since the end of 2009  (i.e. you only need to save a 5% deposit) and first time buyer rates of 2.19% fixed for 5 years can be obtained (correct at time of writing this article)… it is cheaper to buy than rent .. fact!

I believe there has been a mind-set change to owning a home. Home ownership was the goal of the youngsters in the latter half of the 20th century. Britain is changing to a more European model of homeownership, where people rent in early to mid-life, wait to inherit the money from their parents when in their 50’s and then buy.. thus continuing the circle - albeit in a different way to the last Century.

This means the demand for privately rented accommodation will, in the long term, only continue to grow. If you would like to know more about where the hot spots are for that growth in Thanet, then one place would be my property blog or if you want to drop me an email or telephone call, feel free to pick my brain on the best places to buy (and not to buy) in Thanet to ensure your rental investment gets you want you want. The choice is yours!

Friday, 16 November 2018

How Would a Hard Brexit Affect Thanet House Prices?


I have been asked a number of times recently what a hard Brexit would mean to the Thanet property market. To be frank, I have been holding off giving my thoughts, as I did not want to add fuel to the stories being banded around in the national press. However, it’s obviously a topic that you as Thanet buy to let landlords and Thanet homeowners are interested in ... so I am going to try and give you what I consider a fair and unbiased piece on what would happen if a hard Brexit takes place in March 2019.

After the weather and football, the British obsession on the UK property market is without comparison to any other country in the world. I swear The Daily Mail has the state of the country’s property market on its standard weekly rotation of front-page stories! Like I have said before on my blog, there are better economic indexes and statistics to judge the economy (and more importantly) the property market. If you recall, I said the number of transactions was just as important, if not more, as a bellwether of the state of the property market.

Worries that the Brexit referendum would lead to a fast crash in Thanet (and national) property values were unfounded, although the growth of property values in Thanet has reduced since the referendum in the summer of 2016. 

Now, it’s true the Thanet property market is seeing less people sell and move and the property values are rising at a slower rate in 2018 compared to the heady days of the first half of this decade (2010 to 2015), but before we all start panicking, let’s ask ourselves, what exactly has happened in the last couple of years since the Brexit vote? 

Thanet house prices have risen by 18.2% since the
 EU Referendum...

...and yes, in 2018 we are on track (and again this is projected) to finish on 2,790 property transactions (i.e. the number of people selling their home) ... which is less than 2017 ... but still higher than the long term 12 year average of 2,603 transactions in the local council area.


So, it appears the EU vote hasn’t caused many major issues so far, however, if there was a large economic jolt, that could be a different game, yet how likely is that? 

The property market is mostly influenced by interest rates and salaries.

A hard Brexit would subdue wage growth to some degree, yet the level of the change will depend on the undetermined type of Brexit deal (or no deal). If trade barriers are imposed on a hard Brexit, imports will become more expensive, inflation will rise and growth will fall, although at least we are not in the Euro, meaning this could be tempered by the exchange rate of the Pound against the Euro. In plain language, a hard Brexit will be worse for house prices than a deal.

So why did the Governor of the Bank of England suggest a disorderly hard Brexit would affect house prices by up to 35%?

I mean it was only nine years ago we went through the global financial crisis with the credit crunch. Nationally, in most locations including Thanet, property values dropped in value by 16% to 19% over an 18-month period. Look at the graph and if we had a similar percentage drop, it would only take us back to the property value levels we were achieving in 2015.

And let’s not forget that the Bank of England introduced some measures to ensure we didn’t have another bubble in any future property market. One of the biggest factors of the 2009 property crash was the level of irresponsible lending by the banks. The Bank of England Mortgage Market Review of 2014 forced Banks to lend on how much borrowers had left after regular expenditure, rather than on their income. Income multipliers that were 8 or 9 times income pre-credit crunch were significantly curtailed (meaning a Bank could only offer a small number of residential mortgages above 4.5 times income), and that Banks had to assess whether the borrower could afford the mortgage if interest rates at the time of lending rose by three percentage points over the first five years of the loan ... meaning all the major possible stumbling blocks have been mostly weeded out of the system. 

So, what next?

A lot of Thanet homeowners might wait until 2019 to move, meaning less choice for buyers, especially in the desirable areas of Thanet. For Thanet landlords, Thanet tenants are also likely to hang off moving until next year, although I suspect (as we had this on the run up to the 2015 General Election when it was thought Labour might get into Government), during the lull, there could be some Thanet buy to let bargains to be had from people having to move (Brexit or No Brexit) or the usual panic selling at times of uncertainty. 

Brexit, No Brexit, Hard Brexit … in the whole scheme of things, it will be another footnote to history in a decade. We have survived the Oil Crisis, 20%+ Hyperinflation in the 1970’s, Mass Unemployment in the 1980s, Interest Rates of 15% in 1990’s, the Global Financial Crash in 2009 ... whatever happens, happens. People still need houses and a roof over their head. If property values drop, it is only a paper drop in value ... because you lose when you actually sell. Long term, we aren’t building enough homes, and so, as I always say, property is a long game no matter what happens - the property market will always come good.

Growth in UK property values as well as in Thanet seems fated to slow over the next five to ten years, whatever sort of Brexit takes place.

Monday, 15 October 2018

49 Days to Sell a Property in Ramsgate


Whether you are a Ramsgate 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 the not knowing how long you might be stuck at each step. At the moment, looking at every estate agent in Ramsgate, independent research shows it is taking on average 49 days from the property coming on the market for it to be sold subject to contract.

But trust me ... that is just the start of a long journey on the house selling/buying process. The journey is a long one and therefore, in this article, I want to take you through the standard itinerary for each step of the house selling procedure in Ramsgate.

Step 1 – Find a Buyer

You need to instruct an estate agent (of course we can help you with that) who will talk through a marketing strategy and pricing strategy to enable you to find a buyer that fits your circumstances. 49 days might be the average in Ramsgate, yet as I have said many times, the Ramsgate property market is like a fly’s eye, split up into lots of little micro markets.

Looking at that independent research, (which only focused on Ramsgate), it was interesting to see how the different price bands (i.e. different micro markets) are currently performing, when it comes down to the average number of days it takes to find a buyer for a property in Ramsgate.


Asking Price (Ramsgate)
Average Time to Find a Buyer in Ramsgate (days)
Under £100,000
50
£100,000 to £200,000
50
£200,000 to £300,000
46
£300,000 to £400,000
70
£400,000 to £500,000
62
£500,000 to £1,000,000
63
Over £1,000,000
-



Interestingly, I thought I would see which price band had the highest proportion of properties sold (stc)... again – fascinating!


So, now you have a buyer ... what next?

There are a variety of distinctive issues at play when selling your property in Ramsgate, together with the involvement of a wide and varied range of professionals who get involved in that process. That means there is are enormous differences in how long it takes from one property to another. Moving forward to the next steps, these are the average lengths of time it takes for each step to give you some idea of what to expect. 

Step 2  - Sort Solicitors (and Mortgage)

Again, something we can point you in the right direction to, but it will take a good few weeks for your buyer to apply and sort their mortgage and for your solicitors to prepare the legal paper work to send to the buyer.

Step 3 – Legal Work and Survey

Once you buyer’s solicitor receives the paperwork from your solicitor, then your buyer’s solicitor applies for local searches from the local authority (to ensure no motorways etc., are going to be built in the back garden!).  These Searches can take a number of weeks to be returned to the buyer solicitors from the council, from which questions will be raised by the buyer’s solicitor to your solicitor (trust me – you don’t see a tenth of the work that goes on behind closed doors to get the sale through to completion). Meanwhile, the surveyor will check the property to ensure it is worth the money and structurally sound. Overall, this step can take between 3 and 6 weeks (sometimes more!).

Step 4 – Exchange of Contracts

Assuming all the mortgage, survey and legal work comes back ok, both the buyer and solicitor sign contracts, the solicitors then perform “Exchange of Contracts”. When contracts are exchanged, this is the first time both buyer and seller are tied in. Before then, they can walk away ... and you are probably 4 or 5 months down the line from having put up the for sale board – this isn’t a quick process! BUT hold on ... we aren’t there yet!

Step 5 – Completion

Between a week and up to six weeks after exchange of contracts, the buyer solicitor sends the purchase money to the seller’s solicitor, and once that arrives, the keys will be given to the buyer … phew!

To conclude, all in all, you are looking at a good four, five even six months from putting the for-sale board up to moving out. 

If you are thinking of selling your Ramsgate home or if you are a Ramsgate landlord, hoping to sell your buy to let property (with tenants in), either way, if you want a chat to ensure you get a decent price with minimal fuss ... drop me a message or pick up the phone.

Monday, 8 October 2018

3.5% Drop in the Thanet Property Market



The number of residential property transactions in Thanet will be 3.5 per cent lower in 2018, compared to 2017.

According to my research, the seasonally adjusted statistics for our local authority area suggest with the number of properties already sold in 2018, and the number of properties currently under offer or sold subject to contract (allowing for property sales to fall through before exchange of contracts) we, as an area, will end the year 3.48 per cent lower compared to 2017.

So why are transaction numbers so important to Thanet homeowners, Thanet landlords and potential first-time buyers?

Many economists and property market commentators believe transaction numbers give a more precise and truthful indicator of the health of the property market than just house values. In the six years before the Credit Crunch in 2007/8, the average number of completed property transactions in the local area (the local authority covered by Thanet) stood at 3,630 per year .. yet in the three years following the Credit Crunch, on average, only 1,875 homes were changing hands per year in the area.
Roll the clock forward to more recent times and last year, in 2017, 3,004 homes changed hands (i.e. transacted and sold) in the area, higher than the local authority’s 23 year overall average of 2,855 homes per year.


In the past, a reduction in the number of properties selling has often been believed to be the first signal of a down turn in the housing market as a whole. Although, the down turn of the credit crunch years (2007/2008) was more a free-fall than a subtle down turn. Look at the graph and the ‘so-called’ halcyon days of the 2000 to 2006 property market were a roller coaster when it came to the number of transactions. House prices were rising in the six/seven years before the credit crunch (2000 to 2006), albeit, the rate of growth of Thanet house prices did slow in late 2005 and 2006 (which does fit in nicely with the graph).
In other articles, I have mentioned the change in the number of houses for sale today compared to last year and further back. Although, the market has seen in recent months (i.e. the short term) an increase in the number of properties for sale, fundamentally, in the medium term, there has been an underlying trend in the reduction of properties coming onto the market for sale in Thanet (and nationally) and this has been one of the main drives behind the lack of properties selling .. Thanet people aren’t moving as much as they were 30 years ago meaning fewer houses are selling each year.

However, this short-term increase in properties for sale hasn’t been even across the board. In certain sectors of the Thanet property market, there is a glut of properties on the market at the moment and so prices and values are dropping on those types as sellers compete for the limited amount of buyers… yet, there are other sectors of the Thanet property market where there is a dearth, a shortage of property, and buyers are fighting tooth and nail with silly offers to try and secure the sale. This means, there are some bargains for you Thanet buy to let landlords. If you look hard enough, you could spot the same trends I have seen in Thanet and find the individual property micro markets that fall into that first sector (with its glut). 

So, if you want the inside track on the Thanet property market, whether you are a landlord of ours or another agent, I am more than happy to guide you in the right direction if you drop me a line or an email (contacts details are easily found on this page – and I don’t bite or do hard sell – promise!).

So, to conclude, I believe we will finish on 2,899 housing transactions by the end of the year in the area .. not too far off last year’s figure but higher than the long-term 23-year average. Looking at the short term future, now it’s true some (not all) but some potential purchasers of property in Thanet may be exhibiting more caution because of concerns that the Bank of England will continue to put up interest rates– to which I reply – yes of course they will when they are only ultra-low at 0.75%. Anyway, that is the reason why 90%+ of new mortgages over the last nine months have been on a fixed rate. Also, if they do go up a few percentage points – they are nothing compared to the 12%, 14%, even 15% mortgage rates many of my landlords saw in the early 1990’s. 

We can all speculate (and I appreciate the irony of that as I write this article) but all I say to any Thanet landlords, Thanet homeowners or Thanet first time buyers is act according to your own life cycle, budget on a modest increase in interest rates in the coming few years (yet protect yourself by fixing it), consider your own circumstances and finally, what you can afford.

Friday, 28 September 2018

Margate Property Market – How Does It Compare Historically to the South East and National Property Market’s?

Living in our own homes or owning buy to let property in Margate and the surrounding areas, it’s often easy to ignore the regional and national picture when it comes to property. As a homeowner or landlord in Margate, consideration must be given to these markets, as directly and indirectly, they do have a bearing on us in Margate.
Locally, the value of property in Margate and the number of people moving remain largely steady overall, although looking across at the different regions, there are certainly regional variations. Talking to fellow property professionals in the posh upmarket central London areas of Mayfair and Kensington, the number of people looking to buy and registering interest with agents is continuing to climb after 18 months in the doldrums, whilst in other parts of the UK, there is restraint amongst both buyers and sellers in some locations. The things that affect the national property market are the big economic numbers. Nationally, over the last few months, thankfully, the economic forecast and predictions have improved, notwithstanding the Brexit uncertainties. Inflation has mercifully throttled back its high growth seen in 2016 to the current level of 2.1% (from 2.7% average last year), coupled with marginally stronger wage growth at 2.5%. Unemployment is at a 42-year low at 4.2% and UK consumer spending power rose to an all-time high last month to £331.04bn – all positives for consumer sentiment. Look further afield, a resilient property market depends on the UK's economic health with the outside world, so if Sterling weakens, that makes imports more expensive, meaning inflation increases, and this matter I talked about a few weeks ago in my blog article ... interest rates could be raised to bring inflation under control, which in turn could seriously affect the property market. On the assumption Brexit negotiations are successful, economic growth should continue to be upward and positive, meaning confidence would be increased ... which is the vital element to a good housing market. Looking closer to home now, Margate landlords and Margate homeowners might be interested in the how the regional and Margate markets have performed over the last 20 years (compared to the National picture). Let’s look at the regional picture first,
That means a Margate homeowner has profited by an additional £89,512 over the last 20 years compared to the average homeowners across the country.
Thanet has outperformed the South East housing market by 18.65% and nationally, Thanet has actually outperformed the country by 39.26%

I found it interesting to see the ups and downs of the Margate, South East and National markets in this graph. How the lines of graphs roughly go in the same direction, with Margate following the regional trend more closely than the national trend (as one would expect), how the 2007/08 property crash timings and effects were slightly different between the three lines and finally how the property markets performed in the post-crash years of 2011 to 2014 ... fascinating!


So, what does this all mean for Margate homeowners and Margate landlords?

Well, house prices going up or down are only an issue when you sell or buy. In the last 12 months, only 1,076,288 (let’s call it’s a straight million between friends!) properties changed hands out of 27.2 million households in the UK in 2017, meaning only 3.7% would have been affected if property values had dropped in the last year. 

Property values in Margate are 377.08% higher than the summer of 1998

Yet this has been a long-term gain. The number one lesson in property is that it is a long-term game.  The biggest issue in property isn’t house values or prices ... it’s the number of homes built, because the number of households nationally has only increased by 6% since 2007, whilst the population has grown by 7.6%. That doesn’t sound a lot, until you express it another way…

If the UK population had had only grown by the same percentage as the percentage growth in UK households in the last decade, there would be 1,000,000 less people living in the UK today

The final thought for this article is this, apart from central London, over the last 20 years it hasn’t mattered what part of the UK you were in with regards to the property market. Be you a landlord or homeowner, property is a long game, so look long term and you will win because until they start to build more homes, from the current levels of 180,000 new homes built per year to at least 250,000 households built per year, demand will, over the long term, outstrip supply for owning and renting!