Friday, 26 August 2016

Population in the Thanet area set to rise to 167,800 by 2036





Thanet faces a predicament. The population is growing and the provision of new housing isn’t keeping up. With the average age of a Thanet person being 41.9 years (compared to the South East average of 40.0 years old and the national average of 39.4 years of age), the population of Thanet is growing at an alarming rate. This is due to an amalgamation of longer life expectancy, a fairly high birth rate (compared to previous decades) and high net immigration, all of which contribute to housing shortages and burgeoning house prices.

My colleagues and myself work closely with Durham University and they have kindly produced some statistics specifically for the Thanet District Council area. Known as the UK’s leading authority for such statistics, their population projections make some startling reading…

For the Thanet District Council area ... these are the statistics and future forecasts

2016 population    140,937
2021 population    147,724
2026 population    154,773
2031 population    161,527
2036 population    167,844

The normal ratio of people to property is 2 to 1 in the UK, which therefore means...

We need just under 13,500 additional new properties to be built
in the Thanet District Council area over the next 20 years.

Whilst focusing on population growth does not tackle the housing crisis in the short term in Thanet, it has a fundamental role to play in long-term housing development and strategy in the area. The rise of Thanet property values over the last six years since the credit crunch are primarily a result of a lack of properties coming onto the market, a lack of new properties being built in the area and rising demand (especially from landlords looking to buy property to rent them out to the growing number of people wanting to live in Thanet but can’t buy or rent from the Council).

Although many are talking about the need to improve supply (i.e. the building of new properties), the issue of accumulative demand from population growth is often overlooked. Nationally, the proportion of 25-34 year olds who own their own home has dropped dramatically from 66.7% in 1987 to 43.8% in 2014, whilst 78.2% of over 65s own their own home. Longer life expectancies mean houses remain in the same hands for longer.

The swift population growth over the last thirty years provides more competition for the young than for mature population.  It might surprise some people that 98% of all the land in the UK is either industrial, commercial or agricultural, with only two percent being used for housing, which means one could propose expanding supply to meet a expanding population by building on green belt – that most Politian’s haven’t got the stomach to tackle, especially in the Tory’ strongholds of the South of England, where the demand is the greatest. People mention brownfield sites, but recent research suggests there aren’t as many sites to build on, especially in Thanet that could accommodate 13,500 properties in the next 20 years.

In the short to medium term, demand for a roof over of one’s head will continue to grow in Thanet (and the country as a whole). In the short term, that demand can only be met from the private rental sector (which is good news for homeowners and landlords alike as that keeps house prices higher).

In the long term though, local and national Government and the UK population as a whole, need to realise these additional millions of people over the next 20 years need to live somewhere. Only once this issue starts to get addressed, in terms of extra properties being built in a sustainable and environmentally friendly way, can we all help create a socially ecological prosperous future for everyone. For more thoughts on the Thanet Property market, please visit the Thanet Property blog. www.thanetpropertyblog.com

Monday, 15 August 2016

164% increase in Property Values in Thanet since the Millennium









Thanet house prices since the Millennium have risen by 164.75%, whilst average salaries in Thanet have only grown by 51.27% over the same time frame. This has served to push homeownership further out of reach for many Thanet people as they have to battle against raising considerable deposits and meet sterner lending criteria, as a result of new mortgage regulations introduced in 2014/5.  The private rental market in Thanet has grown throughout the last twenty years with buy-to-let investors purchasing a high proportion of newly built residential properties that were built and designed for the owner occupier sales markets.  For example, in the North Thanet Constituency, roll the clock back 20 years and there were 40,189 properties in the Constituency, whilst the most recent set of figures show there are 40,720 properties - a growth of 531 properties.
However, anecdotal evidence suggests that a large majority of those 531 were bought by Thanet buy-to-let landlords, as over the same 20-year time frame, the number of rental properties has grown from 3,647 to 7,967 in the Constituency - a rise of 4,320 properties.
Nevertheless, some say this historic growth of the Thanet rental market might start to change with the new tax rules for landlords introduced by Mr. Osborne over the last seven or eight months. Yet the numbers tell another story. Across the board, mortgage borrowing climbed to a 9 year zenith in March this year as the British property markets traditional Easter rush corresponded with landlords hurrying to beat George Osborne’s new stamp duty changes – buy-to-let landlords borrowed £7.1bn in March 2016 (the latest set of figures released) which was 163% up on the £2.7bn borrowed in the previous March.

You see, from my point of view, I don’t think things will get worse in the buy-to-let market in Thanet and these are the reasons why I believe that:

Firstly, what else are Thanet landlords going to invest in if it isn’t property - the stock market? Since the Millennium, the stock market has risen by an unimpressive total of 5.54%, quite different to the 164.75% rise in Thanet property prices?

Secondly, its true the 3% stamp duty is the first blow on top of a number of other tax changes to be phased in between 2017 and 2021, such as landlords facing a constraint in their ability to offset mortgage interest and, if sizeable numbers of landlords do take the decision to sell their portfolios, this will lead to a substantial amount of second hand properties being put up for sale. Yet that might not be a bad thing, as I have mentioned in previous articles there is a serous shortage of properties to buy at the moment in Thanet: the stock of property for sale being at a six year all time low.

.. Thirdly, if there are fewer rental properties in Thanet, as supply drops and demand remains the same (although ask any letting agent in Thanet and they will say demand is constantly rising) this will create a squeeze in the Thanet rental market and as a result rents will rise. In fact, I predict even if landlords don’t sell up, Thanet rents will rise as Thanet landlords seek to compensate for increased costs, which means more landlords will be attracted back.

For more thoughts on the Thanet Property market to read articles like this, you might find the Thanet Property Market blog of interest www.thanetproeprtyblog.com