I am genuinely concerned about the Canterbury property
market, but in a way that might surprise you.
Rightmove announced that average ‘asking prices’ fell slightly last
month by 0.4% in the South East, leaving them 5.8% higher than a year ago. Whilst it could be said that monthly change
is very modest, in the same period a year ago, we saw a monthly fall of 0.6% in
the South East, which is more the norm given the onset of schools breaking up and everyone going on
holiday.
Looking at all the data on the Canterbury property market;
putting aside the need for more houses to be built in the next decade to
balance out the increase in population (helped in part by inward European
migration) but not matched by a similar increase in housing being built; my
research shows there is a widening gap between what property buyers want and
what is available to buy. In a nutshell,
many more buyers are looking for the smaller one and two bed properties (the
typical terraced and smaller semi detached houses/apartments), whilst there are
a larger proportion of the four and five properties, which are the typical
detached properties available.
Demand for smaller properties comes from both first time
buyers and the growing number of buy to let landlords, where it is more cost
effective and efficient to buy smaller properties to let out compared to larger
properties which tend to offer poorer returns.
Also, landlords with larger loans (on those larger more expensive
properties) will also be hit harder with the changes in the way tax is
paid on buy to let investments, which start in 2017.
If you recall, a few weeks ago I did some research on how
different types of properties had performed in Canterbury since the year
2000. I revisited those calculations and
it hit me how different types of properties had performed over the last 15
years. In a nutshell, this mismatch of
demand and supply isn’t a new phenomenon, it’s been happening under our noses
for years!
In the last 15 years, the average terraced house in
Canterbury has risen in value from £83,523 to £236,264 whilst the detached
house has risen in value from £183,550 to £499,313. Nothing seems amiss until you look at the
percentage growth. The terraced has
grown in value by 183% whilst the detached by only 172% meaning the gap between
the inexpensive terrace’s and expensive detached properties has in percentage
terms narrowed (this isn’t just a Canterbury thing, it has happened all across
the Country).
I am concerned because more houses need to be built, not
only in Canterbury, but in the South East and the UK as a whole. In particular, there is specific need for
more affordable starter homes for the growing demand from both tenants (and the
landlords that will buy them) and first time buyers. The Tories need to face up to the fact that
unless they can get the builders, the planners (to release more building land),
the banks (to finance it) and themselves together, to ensure long term plans
can be made, and implemented, this issue will continue to worsen.
The country needs 200,000 houses a year to be built to keep
up with demand, let alone reverse the imbalance between demand and supply. Last year, only 141,040 properties were
built, the year before 135,510 and 146,850 in the year before that. This means only one thing for Canterbury
landlords. Unless David Cameron starts
to rip up huge swathes of the British countryside and build on acres and acres
of green belt, demand will always exceed supply when it comes to property for
the foreseeable future.
Therefore, investment in the local Canterbury property
market as a buy to let investment could be the best move to make as the stock
market investments are possibly on the wane.
Everyone is different and trust me, there are many pitfalls in buy to
let. You must take lots of advice and
seek out the best opinion. One source of
opinion, specific to the Canterbury property market is the Canterbury Property
Blog www.canterburypropertyblog.com
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