Thursday, 30 June 2016
I had an interesting question the other day from a property owner in Hales Place who asked me the difference between asking prices and values and why it mattered. When it comes to selling property, there must be agreement between the purchaser (buyer) and seller (vendor) for a property sale to take place. The value a buyer applies to a property can massively differ from the value a seller or mortgage company places upon it. The seller, the buyer and the mortgage company must find an agreeable value to assign to a property so the sale can proceed.
In many of my articles about the Canterbury property market, I talk about values, i.e. what property in Canterbury actually sells for, but I haven’t spoken about asking prices for while. Now asking prices are important as they are one of the four key matters a potential buyer will judge your property on (the others being location, bedrooms and type). Price yourself too high and you will put off buyers. So let’s take a look at the Canterbury numbers.
Over the last 12 months asking prices (i.e. the price advertised in the paper and on Rightmove) in Canterbury have increased by 17%, taking the average asking price in Canterbury to £331,400 (up from £283,300 twelve months ago).
Interestingly though, when we look at, say detached and semi-detached property, a slightly different picture appears. Twelve months ago, the average asking price for a detached house in Canterbury was £480,400 and today its £548,200 (a rise of 14%); whilst over the same 12-month period, the average asking price of a semi-detached property was £319,100 a year ago, and today its £354,400 (a rise of 11%).
However, my research shows that the supply of property for sale in Canterbury is beginning to increase. In December 2015, there were 273 on the market in Canterbury today there are 303 properties on the market (up 11%). This will mean homeowners looking to sell will need to be conscious of how their property compares against others on the Canterbury property market. The Canterbury property market still has substantial momentum and sufficient demand remains to provoke more modest asking price rises. This noteworthy increase in supply since Christmas is currently providing more choice for buyers and is tempering asking price rises - and here is the devil in the detail - only 3% of the overall 17% annual figure (mentioned in para 3) has appeared since December.
… And here is the second point to make. Asking prices are one thing, but what a property sells for (i.e. value) is a completely different matter. These are the average prices achieved (i.e. what they sold for or the average value) for property in Canterbury over the last 12 months...
Overall Average £283,894
You can quite clearly see, there is a difference between what people are asking for property and what it is selling for. The underlying fundamentals of low interest mortgages and tight supply remain prevalent in the Canterbury property market however, the number one lesson has to be this ... if you want to sell, be realistic with your pricing.
Friday, 17 June 2016
1,544 Canterbury Properties lie empty– An injustice for the 2,269 people on the Canterbury Council House Waiting List?
Easy problems should have easy solutions - shouldn’t they?
Problems like Canterbury’s housing crisis, where we have a rudimentary numerical problem of too few homes for too many people ... the answer is clearly to build more property in Canterbury - but that, unfortunately for those desperately seeking to purchase or let a property, takes a lot of time and huge amounts of money. So what of other solutions?
Whilst at a dinner with friends recently, the subject of property was mentioned (as I am sure it does at most dinner parties up and down the country). Normally someone always mentions empty properties as the solution to the problem. On the face of it, it seems so obvious. Now quite interestingly, I had recently done some research on this topic, which I want to share with you (as I did with those at the dinner table).
The most recent set of figures from 2015 state there are 1,544 empty homes in the Canterbury City Council area. So it begs the question ... why not put them back onto the system and help ease the Canterbury housing crisis? Whilst they stand empty, 2,269 Canterbury households (not people – households) are on the Council House Waiting List for council houses. Surely, we can undoubtedly all agree that property left empty for years and years isn’t morally right with the burgeoning Council House Waiting List, not to also mention the issue of homelessness.
But a different story emerges when you look deeper into the numbers. Of those 1,544 homes lying empty, only 396 properties were empty for more than six months. The local authority has to report a property being empty, even if its for a week. So many of the Canterbury properties are either awaiting new homeowners or, in the case of rental properties, new tenants. Also most certainly, some properties are being refurbished and renovated, while others properties have homeowners who are anxious to sell but cannot find a buyer.
And this is where its gets even more interesting. Of the 396 long-term vacant properties (those empty more than six months), 21 belong to the council. However, before we all go Council-bashing, anecdotal evidence suggests these empty council houses are habitually in need of so much restoration that it’s not worth the Council’s while to do and are in the roughest parts of the council estates, they are properties that even the Council find difficult to fill.
The fact is that the number of genuinely long term empty properties is only a tiny drop in the ocean of the 60,771 properties in the area covered by Canterbury City Council and, even if every one of those empty homes were filled with happy cheerful tenants tomorrow, it would only meet a small fraction of Canterbury housing needs.
So what does this mean for all the homeowners and landlords of Canterbury? Well it means with demand being so high, especially for rental properties, the certainty of the rental market growing is an inevitability because young people cannot buy and councils don’t have the money to build new council houses. This in turn bolsters property prices as landlords continue to buy at the lower end of the market (starter homes, etc), which in turn sustains the rest of the market as those sellers move up the property ladder, releasing others in turn to buy on again.
These are interesting times in the Canterbury property market!
Tuesday, 7 June 2016
There’s a whole legion of wannabe Canterbury first-time buyers keen to get on the property ladder and they now have a 3% price advantage over the previously quicker responding army of Canterbury landlords with cash at the ready. Since the start of April, buy to let landlords have had to pay an additional 3% stamp duty so whilst demand from some Canterbury buy to let landlords has dropped away, in the interim, it offers Canterbury first time buyers (FTB’s) a chance to fill the vacuum with less competition from cash rich landlords (over two thirds of BTL properties were purchased without a mortgage in the last 7 years) who could bid more and complete quicker.
Looking at the average value of a terraced house in Canterbury currently standing at £253,400, that means if our Canterbury FTB went up against a Canterbury landlord, the landlord would have to pay an additional £7,602 in stamp duty. Early antidotal evidence from fellow property professionals in the city is suggesting landlords are reducing their offers slightly on Canterbury properties to reflect the extra stamp duty.
Whilst on the face of it, it appears landlords are being punished by No.11 Downing Street, I actually believe this increase in stamp duty for landlords is a good thing for the Canterbury property market as a whole.
Since 2011/12, the Canterbury property market has performed very well indeed. Over the last 12 months, £338,161,967 has been spent buying 1,201 Canterbury properties. Figures from the Land Registry have just been released and month on month in our council area, property values are 0.8% higher, yet 10.2% higher year on year. These figures are nowhere near the heady days of 2003 (April to be exact), when Canterbury property prices rose by 25.4% in 12 months.
So as property values in Canterbury (and the UK as whole) start to stablise and come back to some kind of balance, I am beginning to see savvy landlords view the Canterbury property market in a different light. Even with the Spring rush, gone are the days where you could make limitless money on anything that had a door, a few windows and roof. This stamp duty change has made more and more landlords, after reading the Canterbury Property Market Blog www.canterburypropertyblog.com take advice on what or not to buy and what to pay, meaning Canterbury landlords are being more calculated with their Canterbury BTL purchases. I am also seeing a variance between relatively brisk current price momentum and softer expectations in terms of property value growth in Canterbury, this in part reflects amplified uncertainty about the short term economic outlook (eg Brexit, Issues in the Far East etc).
Now I know a lot of Canterbury landlords brought forward their BTL purchases to beat the stamp duty deadline. However, it is probable that hunger from Canterbury investors will return for the right Canterbury property later in the year, especially if it’s at the right price and offers a decent yield. However, in the meantime, Canterbury FTB’s could and should, in the short term, make hay whilst the sun shines plug the gap and grab a bargain!
Wednesday, 1 June 2016
April Fool’s Day was no joke for some landlords, as they rushed their buy to let property purchases throughout late March to beat the extra 3% stamp duty George Osborne imposed on buy to let properties after the 31st March 2016. Because some investors brought forward their 2016 property purchases to save the extra tax, speaking to fellow property professionals in Canterbury, all of us have noticed, since the clocks went forward, demand to buy in April and May from these landlords has eased.
Then we have the Brexit issue, which is also having a tempering effect on the Canterbury property market – although if you recall I wrote about this a few weeks ago, and whilst an exit will have an effect – it won’t be the end of the world scenario some commentators are suggesting. In another article I wrote previously, I spoke of the growth rate of Canterbury property values, and whilst the rate of growth is slowing, Canterbury property values are still 9% higher year on year, albeit the growth rate month on month has started to moderate when compared to the heady days of month on month rises of 2014 and 2015. Interestingly though, a very recent members survey of the Royal Institution of Chartered Surveyors states that only 17% of members believed property values would increase over the next Quarter compared to 44% at the end of 2015.
All this had led to increase in the number of properties for sale. For example, in the CT1 postcode, which mainly comprises of Canterbury South and the city centre, there were 278 properties for sale in the postcode in December (of which 49 came on to the market for the first time). In January, February and March, 227 properties came onto the market in the postcode district (or an average of 75 per month), meaning by end of the first Quarter, there were 295 properties available for homeowners and landlords alike to buy in CT1 (i.e. a rise of 6.1% more properties for sale). The reason this is important is because I expected the number to be slightly lower because of the normal Spring rush in the property market. Interestingly, these figures are mirrored in neighbouring postcodes throughout the Canterbury area.
Nevertheless, I believe this easing of the Canterbury property market is a good thing, as investment landlords wont have to pay top dollar to secure a property because of the lower competition. On the face of it, this easing should be bad news for the 20,317 Canterbury homeowners, but nothing could be further from the truth. The majority of homeowners that move, move up market, (i.e. from a flat to terrace/town house, then a semi and then detached), so whilst last year you would have achieved a top dollar figure for your property, you would have had to have paid an even higher top dollar to secure the one you wanted to buy. The Swings and Roundabouts of the Canterbury Property Market!
However, all the signals suggest that whatever the aftermath of the approaching EU referendum, in the long term, the disparity between demand for Canterbury property and the supply (i.e. the number of actual properties) will still exercise a sturdy and definitive influence on the Canterbury property market. It would surprise me that if by 2021, whichever way we vote in late June, assuming we don’t have another credit crunch or issues like a major world conflict, property prices will be between 20% to 23% higher than they are today.