Monday, 23 May 2016

Rents in Ramsgate rise by 2.9% in the last year







Rents in Ramsgate rise by 2.9% in the last year

I was reading the Sunday Papers, as is my want and, when reading the financial pages, it was announced UK inflation had increased to its highest level in a year. Inflation, as calculated by the Government’s Consumer Prices Index, rose by 0.3% over the last 12 months.  The report said it had risen to the those ‘heady’ levels by smaller falls in supermarket and petrol prices than a year ago. If you recall, in early 2015, we had deflation where prices were dropping!

So what does this mean for the Ramsgate property market ... especially the tenants?

Back in November, the Office of National Statistics stated average wages only rose by 1.8% year on year, so when adjusted for inflation, Ramsgate people are 1.5% better off in ‘real’ terms.   Great news for homeowners, as their mortgage rates are at their lowest ever levels and their spending power is increasing, but the news is not so good for tenants.

The average rent that Ramsgate tenants have to pay for their Private Rental Properties in Ramsgate (i.e. not housing association or council tenants) rose by 2.9% throughout 2015, eating into most of the growth.  2015 wasn’t a one off either.  In 2014, rents in Ramsgate rose by 2.2% (where salaries only rose by only 0.2%) However, it’s not all bad news for Ramsgate tenants, because in 2013 rents rose by 1.8%, (but salaries rose by 2.2%).

… and it must be noted that the private rents Ramsgate tenants have had to pay for Ramsgate property since 2005 are only 20.1% higher, not even keeping up with inflation, which over the same time frame, rose at 27.8% (although salaries were only 22.3% higher over the same time period)

More and more, talking to 20 and 30 somethings who rent – it’s a choice.  Gone are the days where owning your own property was a guaranteed path to wealth, affluence and prosperity.    I know keep mentioning Europe, but some of the highest levels of home ownership are in Romania at 96.1%, Hungary at 88.2% and Latvia at 80.9% (none of them European economic dynamos) and even West European countries like Spain at 78.8% and Greece at 74% (and we know both of those countries are on their knees, riddled with national debt and massive youth unemployment).

At the other end of the scale, whilst we in the UK stand at 64.8% homeownership, in Europe’s powerhouses, only 52.5% of Germans own a home and only 44% of Swiss people are homeowners.  Looks like eating chocolate, sauerkraut, renting and good economic performance go hand in hand.  Yet, joking aside, home ownership has not always been the rule in the UK.   In 1918, only 23% of people were homeowners, with no council housing, meaning in fact, 77% were tenants.

Tenants have choice, flexibility to move, they don’t have massive bills when the boiler blows up, it’s a choice.  Ramsgate rents are growing, but not as much as incomes. To buy or not to buy is an enormously difficult decision.   For while buying a Ramsgate home is a dream for the majority of the 20 and 30 something’s of Ramsgate have, it might not leave them better off in the long run and it isn’t necessarily the best option for everyone.  That is why, demand for renting is only going in one direction – upwards.

END

Friday, 13 May 2016

Thanet Property Values rise by 0.8% month on month






I do like to have a coffee at The Daily Grind Cafe on Harbour Street in Ramsgate. Whilst in there, a suited gentleman approached me and asked if I was the person who wrote the newsletters about the Thanet property market. We ended up having an interesting chat about the local property market, as he was concerned his daughter would never be able to buy her own property, a place in Thanet she herself can call home.

My latest analysis, using the Land Registry and Office of National Statistics, shows that overall, month on month, Thanet property values increased by 0.8%. The year on year figures showed the value of residential property in Thanet has increased by 9% in the year to the end February 2016, taking the average value of a property in the council area to £227,500.

It gets even more interesting when we look at the last few months’ figures and see the patterns that seem to be emerging.

·         January 2016               - a rise of 0.6%
·         December 2015          - a rise of 0.7%
·         November 2015          - a rise of 0.6%

We have talked in many recent articles about the lack of properties being built in Thanet over the last 30 years. This lack of new building has been the biggest factor that has contributed to Thanet property values still being 246.59% higher than in 1995. At the risk of repeating myself, until the Government addresses this issue, and allows more properties to be built, things will continue to get worse as the UK population grows at just under 500,000 people a year (which is a combination of around 226,000 people because of higher birth rates/people living longer and 259,000 net migration) whilst the country is only building 152,400 properties a year – no wonder demand is outstripping supply.

Another reason intensifying the current level of property values in Thanet, is the fact that people aren’t moving home as much as they used to, meaning fewer properties are coming onto the market for sale, so in consequence, there is a lack of choice of property to buy, meaning people thinking of moving are discouraged from putting their property on the market ... thus perpetuating the problem, as the scarcity of possible properties to buy in order to move also deters people from offering their home for sale. This unevenness between demand from would-be purchasers and the number of properties coming on to the market for sale is causing pressures in Thanet (and the rest of the UK).

So what of the future of the Thanet property market and this man’s daughter? I firmly believe the property market in Thanet and the country as a whole is changing its attitude about homeownership. Back in the 1960’s, 70’s, 80’s and 90’s, getting on the property ladder was everything. Since the late 1990’s, we as a country (in particular, the young) have slowly started to change our attitude to homeownership. We are moving to a more European model, where people choose to rent in their 20’s and 30’s (meaning they can move freely and not be tied to a property), then inherit money in their 50’s when their property owning parents pass away, allowing them to buy property themselves ... just like they do in Germany and other sophisticated and mature European counties, meaning his daughter will end up owning property, just later in life than we did. So, whatever the vote on the 23rd of June, if you think about it, we might be more European than we think!

If you want to read more articles on the Thanet property market, whether you are Thanet landlord, Thanet homeowner, first time landlord or a first time buyer – then visit the Thanet Property  Blog… www.thanetpropertyblog.com

Friday, 6 May 2016

What would Brexit mean to the 34,000 Thanet Property owners?










I don’t know about you, but I find if you read the Daily Mail, there are only three topics that make the blood boil of ‘Middle England’. Bureaucracy from Brussels, House Prices and the late Princess of Wales. Ignoring the late Princess if I can for this article, but if we as a country were to unshackle ourselves from chains of Brussels (the first topic), could we inadvertently affect the second topic and make UK house values drop?

If you read all the newspapers, the Brexit debate seems to be focused solely on central London. Many commentators have said Brexit would mean central London would have a lower standing in the world, meaning less people would be employed in Central London, with the implication of lower wages, fewer jobs etc., in Central London ... but we are in Thanet, not Marylebone, Mayfair or any part of Zone 1 London.

Now on the run up to the vote on the 23rd of June, I predict the ‘in’ camp will start to scare homeowners with forecasts of negative equity, and the ‘out’ camp will appeal the 20 somethings, who have been priced out of the property market with the prospect of a new era of inexpensive housing, should the fears of central London estate agents and developers, who believe the bottom will fall out of the market if we do leave, become real. The only reason the Mayfair’s, Knightsbridge’s, and Kensington’s of central London are attractive to foreign buyers are political and economic steadiness, an open and honest legal system and a lively cultural life. None of that is threatened by Brexit.

... But again, we are in Thanet and central London is 80 miles away. We are home to Thanet Earth, and were once home to Sir Edward Heath and Vincent van Gogh, and whilst the central London property market exploded after 2009, that explosion really and honestly didn’t affect the Thanet property market. So, putting central London aside, what would an ‘in’ or ‘out’ vote really mean for the 34,000 property owners of Thanet?

Initially, over the coming months, on the run up to referendum, I believe it will be like the run up to last year’s General Election. With the short-term uncertainty in the country, quite often, big decisions are put on ice and people are less likely to make big money purchases i.e. buy a property. However, in the four months up to last year’s Election, property values in Thanet increased by 1.65%, not bad for a country that thought it would get a hung parliament! So that argument doesn’t hold much weight with me.

Post vote, should the UK opt to leave Brussels, there would be a much more noteworthy impact. I believe that a vote to stay in the EU would see the Thanet property market return to a status quo very quickly, but the contrasting result could lead to some changes. The principal menace to the Thanet (and UK) housing market could be variation (in an upwards direction) in interest rates as a result of a Brexit, which could theoretically see the cost of mortgages grow swiftly, pricing many out of the market … but then two thirds of landlords buy without a mortgage, so that won’t affect them. Also, according to the Bank of England, 80.33% of all new mortgages taken out in 2015 were fixed rate. Looking at all mortgages as a whole, according to the Bank of England, 44% of all UK mortgagees have a fixed rate mortgage, but 56% don’t, so if you aren’t on a fixed rate ... talk to your mortgage broker now, because they can only go in one direction!

So in reality, if I really knew what will happen, I wouldn’t be a letting / estate agent in Thanet, but a City Whiz Kid in London earning millions. However, I suspect whatever decision the electorate of Thanet and the country as a whole makes, over the long term it won’t have a major effect on the Thanet property market. We have seen off ‘the end of the world’ credit crunch of 2008/9 and subsequent property crash, the 1988 Nigel Lawson induced post dual-MIRAS property crash, the 1979 Winter of Discontent property crash, the 1974 oil crisis that stimulated another property crash ... hell, we can even go back nearly a century with the 1926 post General Strike slump in property prices...

Today, property prices are 246.59% higher than 21 years ago in Thanet and are 9% higher than 12 months ago. So, make your own decision on 23rd of June 2016 safe in knowledge that whatever the result, there might be some short term volatility in the Thanet property market, but in the long term (and property investment is a long term strategy) there aren’t enough houses in Thanet to live in either to buy or rent … and until the Government allow more properties to be built – the Thanet property market, will be just fine ... even if it has a little blip in the summer, there could be some property bargains on the run up to Christmas to be had!

For more advice and opinion on the Thanet property market, even where those buy to let bargains could be found now ... visit the Thanet Property Blog www.thanetpropertyblog.com