Tuesday, 27 October 2015
Those of you who regularly read my weekly articles in the Canterbury Property Blog will know I like to keep abreast of the Canterbury property market. Something attracted my attention this week about the local property market, something I wanted to share with my many readers.
Over the last month, there appears to have been an anomaly in the local property market, whereby asking prices in the city have dropped, yet property values have increased. The average asking price of a Canterbury property, according to Rightmove, fell 1.2% this month yet the average value of a Canterbury property rose by 0.9%.
So how does this relate in monetary terms? This anomaly has driven the average asking price of a Canterbury property down slightly to £271,400 whilst the average value is now £299,200.
So why the difference? Technically an ‘asking price’ can be any price that a homeowner wants to place his or her property on the market for. Unfortunately, many times this is done without research and can result in overpriced properties that don't sell. As the Summer months are normally slightly quieter those left on the market wanting to sell often temper their asking prices in these months to try and generate interest in their property.
On the other side of the coin, the property ‘value’ is the price that a willing buyer is prepared to pay and a willing seller is prepared to sell at. Therefore, in a nutshell, Canterbury property values are continuing to rise and those homeowners in Canterbury who have properties on the market, last month on average, reduced their asking prices .. great news for property owners and buyers alike!
In previous articles, I have spoken about the continued fundamental shortage of property coming on to the market compared to buyer demand. That is especially true for homeowners wanting to upgrade to a better house/better location. I can appreciate Canterbury home owners are reluctant to put their own property on the market speculatively and wait for the right property to become available and some high demand locations can suffer from a property stalemate.
Most homeowners don’t want to sell their house and then have nothing to buy.
But that’s the beauty of the much maligned English and Welsh house buying process. You can find a purchaser for your property, then ask them to wait. By agreeing a sale (subject to contract) before you try to buy sounds concerning to many, but with fewer properties for sale you need to have a buyer for your property or you will be treated as a less serious buyer yourself. If you cannot find the right home for you, you can slow the deal with your purchaser until it comes along. If nothing suitable does comes along and you lose your buyer then the worst outcome is that you have to find another purchaser or take your property off the market and stay put for now, and as long as you mention this at the start they must not commit to any costs until you have agreed your onward purchase.
However, for the landlord/buy to let investors, these potential problems are nothing further from the truth. As I write this article, there are over 140 flats for sale, over 60 terraced houses and 30 semis for sale in Canterbury. Landlord/Buy to let investors can normally pick up some bargains in the Autumn months, as sellers who are selling their homes often have a pressing need to sell by this time.
The types of houses a Canterbury landlord typically buys, are not the same types as the homeowners wanting to move to a posher area of the city as they are attracted by larger semis and detached properties. The best types of properties for buy to let are the smaller flats, terraced and semis (not the big detached ones). There are in fact too many of these smaller properties for sale .. just look at the numbers of properties for sale (mentioned in the previous paragraph).
If you are a landlord or thinking of becoming one for the first time, and you want to read more articles like this about the Canterbury Property Market together with regular postings on what I consider the best buy to let deals in Canterbury, out of the many properties on the market, irrespective of which agent is selling it, then you might like to visit the Canterbury Property Blog www.canterburypropertyblog.com
Friday, 23 October 2015
I was having a chat with a Canterbury property investor the other day, when he asked if schools, especially primary schools, affected the local property market in terms of demand from buyers and tenants to a property. Anecdotally, I have always known this to be true, a good school creates good demand and good demand does affect house prices. So, I asked my colleagues on the front line, who take the phone calls from people putting themselves on our mailing list and they confirmed that most people cite location as their number one factor.
After looking through our mailing list, it confirms there is a close correlation between the high demand areas of Canterbury and the close proximity to a good primary school. Talking to my team in a recent morning meeting, they agreed many people would look to increase their budget quite significantly, whilst others would consider downgrading their property requirements to be close to a good primary school.
Those of you who regularly read this blog will know I like a challenge, so I decided to look at the science behind these assumptions. According to the SchoolGuide website, St Thomas Catholic Primary School is one of the best primary schools in Canterbury. Its figures are certainly impressive. Their last Ofsted Report classified it as Good, 100% of 11-year pupils achieving Level 4 or above in maths, reading and writing whilst 38% of them achieved level 5. Finally, the schools’ KS2 rating was classed as Excellent.
Looking at property sales within half a mile of St Thomas, property values have risen in value since 2000 by 122.22%, whilst according to recent figures, the Canterbury average as a whole has risen in the same time frame by 113.19%.
That means the parents of St Thomas have seen the values of their properties rise proportionally 7.98% more than the Canterbury average (that equates to £23,880 extra over the last 15 years for those local homeowners!)... interesting don’t you think?
However, whilst a good primary school significantly contributes more to house prices, the same can’t be said for secondary schools. There are two reasons for this, firstly, as secondary schools are much larger, so their catchment areas are correspondingly much larger, meaning parents don’t need to live so close to the school. Secondly, in the UK, whilst the difference between the top 25% and bottom 25% of secondary schools is not insignificant, in the primary school sector, the difference between the top 25% and bottom 25%, according to the London School of Economics, is considerably and significantly more.
Many other Canterbury landlords, both who are with us and many who are with other Canterbury agents, like to pop in for a coffee or ring/email us to discuss the Canterbury property market, to consider how Canterbury compares with its closest rivals and hopefully we can answer all their questions. You must take lots of advice and seek out the best opinion. One good source of opinion, specific to the Canterbury property market is the Canterbury Property Blog www.canterburypropertyblog.com . I don’t bite, I don’t do hard sell, and I will just give you my honest and straight talking opinion.
Wednesday, 14 October 2015
Morning all! Well winter feels like it’s on its way and so are the Autumn bargains. It’s been a bit scarce recently with the Buy to Let goodies, but scanning the web this morning, there's one that caught my eye. So today, we are off to Faversham where a property has just come on this morning with Your Move and from a couple of calculations on my note pad, it looks a good investment.
It’s a two bedroom flat in Sommerville Close in Faversham and is on the market for £145K. From the details it looks like it’s already rented and comes packaged with a Tenant.
In the past few months we have seen a really good demand for such properties and we would estimate a rent of circa £650 to £700 per month. This coupled with the purchase price would deliver a respectable yield of 5.38% and 5.79% respectively.
Check it out further at http://www.rightmove.co.uk/property-for-sale/property-36947586.html and give the agent a call.
Tuesday, 13 October 2015
Eight years ago, in the summer of 2007, hardly anyone had heard of the term ‘credit crunch’, but now the expression has entered our daily language and even the Oxford Dictionary. It took a few months throughout the autumn of 2007, before the crunch started to hit the Canterbury Property market, but in November / December 2007, and for the following seventeen months, Canterbury property values dropped each and every month like the proverbial stone. The Bank of England soon realised in the late summer of 2008 that the British economy was stalling under the continued pressure of the Credit Crunch. Therefore, between October 2008 and March 2009, interest rates dropped six times in six months from 5% to 0.5% to try and stimulate the British economy.
Thankfully, after a period of stagnation, the Canterbury property market started to recover slowly in 2010, but really took off strongly in late 2013 / early 2014 as property prices started to rocket. However, the heat was taken out of the market in late 2014/early 2015, with the new mortgage lending rules and some uncertainty, when some people had a dose of pre–election nerves.
With the Conservatives having been re-elected in May, the Canterbury property market regained its composure and in fact, there has been some ferocious competition among mortgage lenders, which has driven mortgage rates to record lows. Whilst I have no actual figures to back this up, I know an awful lot of long serving bank managers, mortgage arrangers and people in the finance industry, all of whom have told me on previous occasions when interest rates rose (1987, 1992, 1997 and 2003), it wasn’t the first rate rise that was the catalyst for many homeowners and landlords to re-mortgage but the second or third increase. The reason being that it was only by the time of the third rate rise, it started to hit the wallet. However, the issue is, by the time of the second or third rate rise the best fixed rates, were in all instances, no longer available as they had been pulled by the banks months before.
But here is the good news for Canterbury homeowners and landlords, over the last few months a mortgage price war has broken out between lenders, with many slashing the rates on their deals to the lowest they have ever offered. I read that the well respected UK financial website Moneyfacts said only a couple of weeks ago, the average two year fixed rate mortgage has fallen from 3.6% twelve months ago to just under 2.8%.
Interestingly, according to the Council of Mortgage Lenders, the level of mortgage lending had soared to a seven year high in the UK. So what about Canterbury? In Canterbury, if you added up everyone’s mortgage, it would total £1.2 billion. Even more interesting is when we look at Canterbury and split it down into the individual areas of the city,
CT1 - Canterbury city centre£338.7m
CT2 - Harbledown, Rough Common, Sturry, Fordwich, Blean, Tyler Hill, Broad Oak, Westbere £341m
CT3 - Wingham £276.4m
CT4 - Chartham, Bridge £340m
Since 1971, the average interest rate has been 7.93%, making the current 0.5% very low. So, if interest rates were to rise by only 2%, according to my research, the 2,330 Canterbury homeowners, who have a variable rate mortgage would, combined, have to pay an approximate additional £13,680,000 a year in mortgage payments. That means every Canterbury homeowner with a variable rate mortgage, will on average have to pay an additional £5,871 a year or £489 a month in interest payments.
I know over the last couple of posts, I have talked about mortgages a lot however, I am not a mortgage arranger but a letting / estate agent and as regular readers know, I always talk about what I consider to be the most important issues when it comes to the Canterbury Property market and at the moment, in my humble opinion, this is the most important thing!
Buy to let is all about maximising your investment, increasing income and reducing costs. I give advice, opinions, thoughts, concerns, worries, expectations and fears about the Canterbury Property market in my blog on the Canterbury Property Blog. If you are interested in the Canterbury Property Market, you might learn something by visiting the blog. www.canterburypropertyblog.com
Friday, 9 October 2015
Running from 17.30hrs until 20.30hrs on Monday 19th October 2015, is a really good information evening in conjunction with the National Landlords Association (NLA). The evening is chaired by Marion Money of the NLA and various guest speakers deliver relevant and useful information regarding the rental market. The event is open to all and free to attend.
It's a great opportunity to hear from a number of guest speakers, plus network with other landlords and suppliers.
I have been asked to present at the event and will give a view of the Canterbury property market, plus an insight into the student market, demand and availability.
The address of the venue is: Darwin Conference Suite, Darwin College, University of Kent, Canterbury CT2 7NY
Tuesday, 6 October 2015
A couple of weeks ago, I mentioned in this blog about how the Bank of England has been indicating recently that UK interest rates will be going up in the not too distant future. Therefore, if you are one of the 18,529 homeowners in Canterbury, who own your own home with a mortgage, then you need to consider your options and start to budget for an interest rate rise. However, if you are a landlord, who owns one of the 11,876 rental properties in the city, whilst your exposure to interest rate rises is lower, it is most certainly something you should be aware of.
Since the spring of 2009, British interest rates have been at a record low of 0.5%. It’s not a case of if, but when, they will rise. Some people think it will be before Christmas, although I am of the opinion, it will early in the New Year around Easter time, when they do rise. I also expect those rises will be slow, steady and limited. It depends on what is happens to UK wage rises, UK inflation and the general state of the British economy. Nevertheless, as much most of us in Canterbury would love to pull the shutters and stick two fingers up to the world, we have to recognise we are part of a global economy and global economic worries still exist to prevent an abrupt and instantaneous rate rise.
Those Canterbury landlords, who do have a mortgage, need to realise that as interest rates rise, their monthly mortgage costs rise. It’s easy to say you will look at your mortgage next month, then before you know it, Christmas will be here! Don’t forget, mortgage lenders have always removed the juicy low rate mortgage deals a few months before interest rate rise. Speak to a qualified mortgage arranger, there are lots of them in Canterbury and seriously consider fixing your mortgage rate now. You didn’t buy your Canterbury buy to let property for it to become a millstone around your neck. It’s all about mitigating your costs and maximising your income to make your Canterbury buy to let property the investment you want it to be.
However, on the other side of the coin, two in three landlords who have bought property since 2007, have done so without a mortgage. A rise in interest rates might be a good thing. Let me give you some background first, then I’ll explain why. Canterbury landlords have seen their return on investment for their Canterbury buy to let property, over the last couple of years, perform very well indeed with Canterbury property values rising by 28.43% since the Spring of 2009. However, when rates do rise, whilst more expensive mortgage rates will ease the demand for borrowing, on the other hand, it may temper house price growth, making the property market more competitive... and therefore, we should see the return of some bargain property buys in Canterbury!
Finally though, can I ask all Canterbury homeowners and Canterbury landlords, who have a mortgage that isn’t fixed, they need to recognise that rates will rise throughout 2016 to 2018 and will continue to move steadily upwards towards more viable and feasible long term levels. I am not qualified to give that advice and this is my personal opinion, so please speak to a qualified mortgage arranger and, if appropriate, fix your mortgage before interest rates rise. Don’t say I didn’t warn you!
In the meantime, if you are a landlord looking for a bargain now, don’t despair ... there are plenty out there, if you know where to look! One place is Rightmove, another Zoopla and another OnTheMarket. However, sometimes, you can’t see the wood for the trees. At the time of writing, Rightmove had 278 properties for sale in Canterbury, Zoopla 220 properties for sale in the city and OnTheMarket 38 properties ... where do you start? A lot of savvy Canterbury landlords like to visit the Canterbury Property Blog www.canterburypropertyblog.com, where, irrespective of which agent is selling it, I regularly post what I consider out of the hundreds of properties on the market, to be the best buy to let deal in Canterbury.