Are Attitudes to Home Ownership changing in Canterbury?

 

 

Speaking to a Bank Manager the other day in Canterbury, we got talking about the state of the Canterbury property market and whether we, as a Country, are turning more and more to the European style of property ownership, where it is the norm to rent as a opposed to automatically buying once you have a good job etc.

Even though a recent report by the Halifax stated homeownership remains a goal for 85% of twenty to forty five year olds, there is information emerging that attitudes in the UK towards renting your own home as opposed to owning it have softened, showing more and more, that renting is being seen as a life style choice.  In fact it is recognised in learned circles that the cycle of renting is also repeated by the fact that people who grow up primarily in rented accommodation are themselves more likely to rent than buy.

The biggest barrier often mentioned to buying a house is the claim that they are not buying property at the moment because of a lack of sufficient wages and by the high level of deposits, but like we said a few weeks ago, in Canterbury, if a couple, one on say three quarters of the average Canterbury salary of £33,130 pa (so that would be around £25,000 pa) and the other on the Minimum Wage, assuming they had a reasonable credit history they would be showered with lenders offering them a 95% mortgage (a reasonable credit history means they haven’t defaulted on loans, paid all their bills on time nor got any County Court Judgements. Just because you missed just one credit card payment won’t mean you have messed up your credit score and your ability to get a mortgage) and they would only need to find £7,500 as a deposit to buy a decent apartment in an up market area of Canterbury or a good honest 2 bed terraced house in average part of the City (e.g. East Canterbury). ..it comes down to the perceived capability of the youngsters in Canterbury to buy nowadays.

Interestingly, when I looked at the Canterbury figures, the average Canterbury tenant has a younger profile (especially the sub 24 year olds) than the English and Welsh average, as can be seen from the graph below. However, some of this can be explained by the high Student population. What interested me as well was the relatively large number of people renting over the age of 50! I know we have a large number of mature tenants at our agency, but I always thought that was the exception to the rule. Obviously not!  (And that is good news for landlords as they make excellent tenants.)

So what does all this mean for Canterbury landlords and future Canterbury landlords? I honestly believe there is a difference between the hope and perceived capability of the younger generation to buy a home. Although homeownership is seen as advantageous by a majority, many tenants admitted in the Halifax report they are not taking the steps they need to purchase their own home.

As the local authority aren’t building any properties in Canterbury, people still need a roof over the head, and that is why, as I mentioned a few weeks ago in the Canterbury Property Blog, the demand for rental properties will only continue to steadily rise in the coming decade. If want to know where the Canterbury Property market is heading and where you should (and shouldn’t buy), maybe the one place you should visit is the Canterbury Property Blog www.canterburypropertyblog.com or send me an email to canterbury@martinco.com

Rents Paid By Tenants In Canterbury On The Rise

 

 

With May nearly gone and considering we are nearly halfway through 2015, I was talking to landlord from Tyler Hill the other day about what is happening to the level of rents that are being achieved in the Canterbury property market.

In terms of rents in Canterbury, it appears that rents being achieved for new rentals (i.e. when the tenant moves out and new tenant moves in) have risen in the order of 3.8% in the last 12 months on top of the range modern properties, yet remained static for older Victorian terraced houses and converted apartments. However, landlords with existing sitting tenants, irrespective of age are not increasing their rents, as most landlords prefer to keep their existing tenant paying the same rent and have the peace of mind that their tenant remains, paying the rent (thus reducing the risk of a void period).

It must be remembered rents dropped by 2.0% over 2008/9, (due to oversupply in the rental market in 2009.) A lot of the people who couldn’t sell their property in Canterbury in 2008/9 when the ‘Credit Crunch’ hit in 2008, decided to let their house out instead of selling at a loss. In fact, the number of houses on the market in Canterbury dropped by 58% between June 2008 and January 2010, a lot of which came on to the rental market in Canterbury. However, looking at the longer term though, tenants have had it good because since the turn of the Millennium, average wages have grown by 46%, but rents outside London have only grown by 36% rental growth over this period.

I told the landlord that there is a lack of new rental properties in Canterbury coming on the market, in fact according to the Office of National Statistics, there are only 43 new rental properties are coming to the market each month in Canterbury but the population of Canterbury is rising by 132 people a month – something will have to give soon! This is compounded by the fact a number of landlords are looking to sell their rental properties in the coming months, as the property market in Canterbury has improved. This further compounded as tenants in existing rental properties appear to be staying in properties for longer periods of time.

Looking at the rents charged in Canterbury, historic evidence in the UK suggests private market rents have moved in line with general inflation. Government figures only go back as far as the year 2000, but looking at other countries with similar housing markets (America, Australia, Ireland and Holland) the fact is rents paid by tenants tend to rise in line or just ahead of inflation.

As short term wage growth in Canterbury has eased off recently, rising by only 1.3% in the last 12 months, taking average salaries in Canterbury to £33,130pa, with the tax breaks announced by The Chancellor in the Budget, I believe, even though rents have kept pace with inflation in the past, renting as an option has become more affordable, and is increasingly seen as a lifestyle choice. With returning economic growth and expected increases in the rate of growth of wages, above inflation rental growth could rise.

If you want a chat about the local Canterbury property market, pop in for a coffee or email me on canterbury@martinco.com .

Faversham - £175K - Yield just under 5%

Good afternoon readers. Bit of a rainy day out there today, but here's a bit of sunshine on the market. Our predictions re post election are bearing fruit, with properties coming on to the market thick and fast …………….it’s another bargain in Faversham.

It’s just come on the market this afternoon and yet again, it’s ticking all the right boxes with regard to the rental market. It’s the right place, right price and also good condition. Just waiting for a tenant to move in!

As ever, these properties are in great demand with two similar properties being rented by us in the past week in Faversham. With a conservative estimate on the rental figure, I would reckon that this property should rent out at a minimum of £725 per month, which at the asking price of £175,000 will give you a yield of just under 5%.

Check this one out at the following link and give the agent a call http://www.rightmove.co.uk/property-for-sale/property-34660800.html

Should you wish to discuss any other specific properties or just a general chat re the current market, please contact me on 01227 455717 or call in and see me at 23 Watling Street in Canterbury.

What does the General Election result mean for the Canterbury Property Market?

 

After the shock of the Conservatives returning to power with a majority at Westminster, all the potential issues and possible uncertainties of a hung parliament has lifted the cloud from the Canterbury property market.  Talking to other Canterbury agents, surveyors and solicitors in the area over the last few days, there are signs that this has started a new impetus for the Canterbury property market after a subdued six months, when an amalgamation of tougher lending conditions, a natural correction after the strong recovery in Canterbury property prices in 2014, and political uncertainty ahead of the General Election slowed demand.

Against the back drop of Labour’s election promises of rent controls and three year tenancies, some Canterbury buy to let landlords were waiting to see how these new policies would be implemented before they committed themselves to buying more property for their buy to let portfolio. Now that uncertainty has been removed, the long term picture is very positive.

So, with all that uncertainty now removed, where next for the Canterbury property market?  Well with inflation at zero and with the money markets happy David Cameron is still at No.10, the Bank of England have no reason to raise interest rates until 2016 at the earliest. As mortgage rates are at their lowest levels since 2010, landlords with large deposits will now be wooed by the mortgage companies in the coming months with low rates.

You see over the past couple of years, Canterbury landlords have benefitted from a booming Canterbury job market. Unemployment in the city has dropped to 1.6%, as a year ago 1,229 people were claiming unemployment benefit compared to today’s 806. With more jobs and better pay, as the level of rents is directly linked to tenant’s wages, there has been an increase in the rental prices tenants are willing to pay for good quality Canterbury properties.

Some landlords might be nervous about Tory’s plans for the housing market in the next five years in terms of tenant demand for their rental properties. One plan is for Housing Association tenants to have the right to buy their property. These kind of tenants were never in the private rented sector and will actually increase the supply of properties in the housing stock in decades to come. The Government ‘Help to Buy Scheme’ has only helped to buy 31 Canterbury properties since April 2013. Considering 693 properties have changed hands in the last year alone in Canterbury, I don’t think it has made a huge difference to our local property market.

The biggest matter, when it comes to tenant demand of rental property going forward, comes from the shift in the mindset and attitudes towards renting itself. Twenty years ago you were seen as a second class citizen if you rented a property. In Canterbury, as in the rest of the UK (apart from Central London), renting continues to offer good value for money for tenants.  If you are an existing landlord in Canterbury or thinking of becoming one (or as we like to call you .. a FTL .. a ‘first time landlord’), then I must suggest you seek out specialist advice and opinion. Like many agents in Canterbury, we will happily give you our opinion on the current state of the market and the advantages/disadvantages to investing in the Canterbury property market if you pop into our offices. However, if time is at a premium, another source of information on the Canterbury Property Market is the Canterbury Property Blog at www.canterburypropertyblog.com

Canterbury Property Market – What is really happening?

I had an interesting conversation with a local Canterbury accountant the other day. He is quite an observant chap (I know this because I have known him for a few years .. but I suppose you have to be, to be an accountant!). Anyway, he mentioned a few things he had noticed recently in Canterbury, one that Canterbury property prices had gone up in the last few years but nowhere near the growth levels that were being achieved in central London, and secondly, that he thought the number of for sale boards in Canterbury (and more importantly ones with sold slips on them) had increased over the last couple of years.

 

The rate of house price inflation in Canterbury continues to slow with growth of 10.4% in the 12 months to February compared to 11% just under six months ago, according to the latest Land Registry data. However, there is considerable local variation with house price growth ranging from 7.7% in East Sussex to 12% in Medway over the last 12 months.

 

Whilst Canterbury hasn’t seen the +20% per year in house price growth of London over the last couple of years,  Canterbury has seen  a sharp uplift in the number of properties sold throughout  2014 as base line demand for housing grows, which suggests there is substance to the recent pick-up in house price growth in the City. Since the Second World War in the UK, when the number of properties sold has grown, property values grew soon after. The 16.9% uplift in property transactions in Canterbury in 2014, compared to 2013, indicates the most significant recovery in house market activity in Canterbury (outside London) since 2007.

 

When you compare Canterbury with London, you could be looking at two different countries. In London, its mid / late teens house price to earnings ratios are impacting demand (i.e. the average property value is often 15 or 17 times the average wage in London .. in fact in Knightsbridge the ratio can be 30 to 1).  However, the number of people wanting to sell has dropped considerably, meaning that falling sales volumes combined with a general slowdown in activity in the run up to the General Election are resulting in lower mortgage approvals for home purchase.

 

Transactions are a great indicator for house prices. The acceleration in house price growth in London in the last two years was preceded by three years of rising transactions. A similar pattern is being registered in the Canterbury area, as pent up demand returns to the market supported by low mortgage rates and an improving economic outlook.

 

But before you get the champagne out, while the uplift in activity is welcome news, the number of Canterbury property sales in 2014 are still 23.1% lower than the level seen in 2007 and property values are 3.2% above the 2007 levels. The ongoing housing recovery is far from broad based and remains focused on middle to higher value areas within Canterbury where households have equity and find it easier to access mortgage finance. If you want to know more about the Canterbury Property Market, please visit the Canterbury Property Blog www.canterburypropertyblog.com or send me an email to canterbury@martinco.com.

2 bed terraced house - Faversham - Yield 5.14%

1st day back to work after the Bank Holiday and a great start to the week! The mornings browse through Rightmove has uncovered another possible gem in Faversham. It's on the market at £175K in Luton Road, Faversham, with Ward & Partners. Therefore, great property in great location, which will be a great rental = RESULT!

These properties are in good demand by tenants and we have a number of similar properties in Faversham which rent out for between £725 and £750 per month, which at £750 will give you a yield of 5.14%. Not only will this one make a good property for your portfolio, but the capital growth will certainly be one to watch in this great market town.

This property will not be on the market long, so give the agent a call.

Check out the details at: http://www.rightmove.co.uk/property-for-sale/property-49827274.html

Should you wish to discuss any other specific properties or just a general chat re the current market, please contact me on 01227 455717 or call in and see me at 23 Watling Street in Canterbury.