New House Building in Canterbury slumps by 35.2% in the last year

Let me speak frankly, even with Brexit and the fact immigration numbers will now be reduced in the coming years, there is an unending and severe shortage of new housing being built in the Canterbury area (and the UK as a whole).  Even if there are short term confidence trembles fueled by newspapers hungry for bad news, the ever growing population of Canterbury with its high demand for property versus curtailed supply of properties being built, this imbalance of supply/demand and the possibility of even lower interest rates will underpin the property market.

 

When the Tories were elected in 2015, Mr. Cameron vowed to build 1,000,000 new homes by 2020.  If we as a Country hit those levels of building, most academics stated the UK Housing market would balance itself as the increased supply of property would give a chance for the younger generation to buy their own home as opposed to rent.  However, the up-to-date building figures show that in the first three months of 2016 building starts were down.  Nationally, there were 35,530 house building starts in the first quarter, a long way off the 50,000 a quarter required to hit those ambitious targets.

 

Looking closer to home, over the last 12 months, new building in the Canterbury City Council area has slumped.  In 2014/15, for every one thousand existing households in the area, an additional 3.69 homes were built.  For 2015/16, that figure is now only 2.39 homes built per thousand existing households.  Nationally, to meet that 1,000,000 new homes target, we need to be at 7.12 new homes per thousand.

 

To put those numbers into real chimney pots, over the last 12 months, in the Canterbury City Council area,

 

• 150 Private Builders (e.g. New Homes Builders)
• Nil   Housing Association
• Nil   Local Authority

 

These new house building numbers are down to the fact that not enough is being done to fix the broken Canterbury housing market.  We are still only seeing 150 new homes being built per year in the Canterbury City Council area, when we need 447 a year to even stand still!

I am of the opinion Messer’s Cameron and Osborne focused their attention too much on the demand side of the housing equation, using the Help to Buy scheme and low deposit mortgages to convert the ‘Generation Rent’ i.e. Canterbury ‘20 somethings’ who are set to rent for the rest of their lives to ‘Generation Buy’.  On the other side of the coin, I would strongly recommend the new Housing Minster, Gavin Barwell, should concentrate the Government’s efforts on the supply side of the equation.  There needs to be transformations to planning laws, massive scale releases of public land and more investment, as more inventive solutions are needed.

However, ultimately, responsibility has to rest on the shoulders of Theresa May.  Whilst our new PM has many plates to spin, evading on the housing crisis will only come at greater cost later on.  What a legacy it would be if it was Mrs. May who finally got to grips with the persistent and enduring shortage of homes to live in.  The PM has already referenced the ‘need to do far more to get more houses built’ and stop the decline of home ownership.  However, she has also ruled out any changes to the green belt policy – something I will talk about in a future up and coming article.  Hopefully these statistics will raise the alarm bells again and persuade both residents and Councilor’s in the Canterbury City Council area that housing needs to be higher on its agenda.

In the meantime, for more thoughts and opinion on the Canterbury Property Market, please visit the Canterbury Property Blog www.canterburypropertyblog.com

80.7% of Canterbury Properties have 3 or more bedrooms - Problem or Opportunity?

The orthodox way of classifying property in the UK is to look at the number of bedrooms rather than its size in square metres (although now we are leaving the EU – I wonder if we can go back to feet and inches?). It seems that homeowners and tenants are happy to pay for more space. It’s quite obvious, the more bedrooms a house or apartment has, the bigger it is likely to be. The reason being not only the actual additional bedroom space, but the properties with more bedrooms tend to have larger / more reception (living) rooms. However, if you think about it, this isn’t so astonishing given that properties with more bedrooms would typically accommodate more people and therefore require larger reception rooms.

In today’s Canterbury property market, the Canterbury homeowners and Canterbury landlords I talk to are always asking me which attributes and features are likely to make their property comparatively more attractive and which ones may detract from the price. Over time, buyers’ and tenants’ wants and needs have changed. In Canterbury, location is still the No. 1 factor affecting the value of property, and a property in the best neighbourhoods, say St Stephens or Dane John Gardens can command a price nearly 50% higher than a similar house in an ‘average’ area. However, after location, the next characteristic that has a significant influence on the desirability, and thus price, of property is the number of bedrooms and the type (i.e. Detached / Semi /Terraced/ Flat).

In previous articles, I have analysed the Canterbury housing stock into bedrooms and type of property, but never before now have I cross-referenced type against bedrooms. These figures for the Canterbury City Council area make fascinating reading. It shows 80.7% of all properties in the area have 3 or more bedrooms.

I was genuinely surprised at the low numbers of one and two bed properties, especially 2 bed semis detached houses, especially as tenants like the smaller one and two bed properties in Canterbury. You see, it might interest the homeowners and landlords of Canterbury, that there has been a change in the numbers of properties on the market and the split in bedrooms on the market over the last 12 months

 

• 12 months ago, 44 one bed properties were for sale in Canterbury, today 35, a drop of 20%

• 12 months ago, 99 two bed properties were for sale in Canterbury, today 133, a rise of 34%

• 12 months ago, 56 three bed properties were for sale in Canterbury, today 71, a rise of 27%

• 12 months ago, 36 four bed properties were for sale in Canterbury, today 48, a rise of 33%

• 12 months ago, 28 five + bed properties were for sale in Canterbury, today 28, no change

It can quite clearly be seen more Canterbury properties have become available, which can only be good news for Canterbury first time buyers and Canterbury buy to let landlords looking for a bargain (especially post Brexit) as property prices have stopped rising at the silly rates they were 12/18 months ago.

For several years Canterbury buy-to-let investors have been the only buyers at the lower end (starter homes) of the market, as they have been enticed by high tenant demand and attractive returns. Some Canterbury landlords believe their window of opportunity has started to close with the new tax regime for landlords, whilst it already appears to be opening wider for first-time buyers. This is great news for first time buyers ... but one final note for Canterbury landlords ... all is not lost ... you can still pick up bargains, you just need to be a lot savvier and do your homework ... one source of such information with articles like this is the Canterbury property market Blog www.canterburypropertyblog.com

Post Brexit - Canterbury Property Prices set to drop £26,700 in the next 12 months?

Even the sanest person in Britain has to admit the Brexit vote will, in one shape or another, affect the UK Property market. Excluding central London which is another world, most commentators are saying prices will be affected by around 10%. So looking at the commentators’ thoughts in more detail, property values in Canterbury will be 10% lower than they would have been if we hadn’t voted to leave the EU.

As the average value of a property in the Canterbury City Council area is £266,800, this means property values are set to drop for the average Canterbury property by £26,680 … batten down the hatches .. soup kitchens and mega recession here we come ..it’s going to get rough.

.. but before we all go into panic mode in Canterbury .. the devil is always in the detail

Look at the phrase again, and I have highlighted the relevant part “Property values in Canterbury will be 10% lower than they would have been if we hadn’t voted to leave the EU”

Property values today, according to the Land Registry are 8.91% higher than a year ago in the Canterbury City Council area. The 12 months before that they rose by 9.68% and the 12 months before that, they rose by 8.9%. If we hadn’t voted to leave, I believe on these figures, we could have safely assumed Canterbury House prices would have been 9% higher by the Summer of 2017.

… and that’s the point, we won’t see a house price crash in Canterbury, it’s just that house prices in a years time will be 1% lower than they are now (i.e. 9% less the 10% lower figure because of Brexit). Let’s look at the historic figures and how that compares to today’s figures for the Canterbury City Council area and Canterbury as a whole.

Average Value of a property 20 years ago                 £  55,300

Average Value of a property 10 years ago                 £182,400

Average Value of a property 2 years ago                   £223,400

Average Value of a property 1 year ago                    £245,000

Average Value of a property today                            £266,800

Projected Value of a property in 12 months’ time     £264,100

Therefore, I believe the average value of a Canterbury property will be £2,700 lower in 12 months’ time than today.

That’s not to say Canterbury property prices might not dip slightly in the run up to Christmas (in fact they always have done just about every year since the year 2000 and most of those were boom years) .. but in 12 months time this is my considered opinion of where Canterbury property values will be.. and looking at the historic prices, even if I (and many other property market commentators) are wrong and they drop 10% from TODAY’S figure .. in the whole scheme of things, we have been through a Credit Crunch, Black Monday and 15% interest rates over the last 20 to 30 years .. and still Canterbury house prices have always bounced back.

Whilst the UK's vote for Brexit has created an uncertainty in the Canterbury housing market, there is no need to panic and prospective buyers should merely use common sense about their purchases. I always say to people to be prudent and if you are taking out a mortgage, at some stage during the life of that mortgage, circumstances will be difficult. We won’t have a 2008 Credit crunch fire sale of properties because after the Mortgage Market Review which took place in the Spring of 2013, mortgage borrowers are not as highly leveraged this time around.  As a result of this, with any luck there will not be too many distressed sales, which cause widespread price reductions.

.. and Canterbury landlords? They have recently been thrashed by Osborne’s tax changes, but yields could rise if Canterbury house prices fall/stablise and rents grow, and this might also make it easier to obtain mortgages, as the income would cover more of the interest cost. If prices were to level or come down that could help Canterbury landlords add to their portfolio, as rental demand for Canterbury property is expected to stay strong as more people find it more and more difficult to obtain mortgages.

For more thoughts on the Canterbury Property market visit the Canterbury Property Blog at www.canterburypropertyblog.com

 

 

29.7% of Canterbury Homes Are One Person Households

I was having an interesting chat with a Canterbury Buy to Let landlord the other day when the subject of size of households came up in conversation.  For those of you who read my Brexit article published on the morning after the referendum, one of the reasons on why I thought the Canterbury property market would, in the medium to long term, be OK, was the fact that the size of households in the 21st Century was getting smaller – which would create demand for Canterbury Property and therefore keep property prices from dropping.

Looking at the stats going back to the early 1960’s, when the average number of people in a home was exactly 3, it has steadily over the years dropped by a fifth to today’s figure of 2.4 people per household. Doesn’t sound a lot, but if the population remained at the same level for the next 50 years and then we had the same 20% drop in household size, the UK would need to build an additional 5.28 million properties (or 105,769 per year) .. When you consider the Country is only building 139,800 properties a year ... it doesn’t leave much for people living longer and immigration. Looking closer to home...

In the Canterbury City Council area, the average

number of occupants per household is 2.3 people

When we look at the current picture nationally and split it down into tenure types (i.e. owned, council houses and private renting, a fascinating picture appears.

The vast majority of homeowners who don’t have a mortgage are occupied by one or two people (81% in fact), although this can be explained as residents being older, with some members of the family having moved out, or a pensioner living alone.  People living on their own are more likely to live in a Council house (43%) and the largest households (those with 4 or more people living in them are homeowners with a mortgage – but again, that can be explained as homeowners with families tend to need a mortgage to buy. What surprised me was the even spread of private rented households and how that sector of population is so evenly spread across the occupant range – in fact that sector is the closest to the national average, even though they only represent a sixth of the population.

When we look at the Canterbury City Council figures for all tenures (Owned, Council and Private Rented) a slightly different picture appears...

But it gets even more interesting when we focus on just private rental properties in Canterbury, as it is the rental market in Canterbury that really fascinates me. When I analysed those Canterbury City Council private rental household composition figures, a slightly different picture appears. Of the 10,665 Private rental properties in the Canterbury City Council area,

 

27.6% of Private Rental Properties are 1 person Households

28.8% of Private Rental Properties are 2 person Households

17.5% of Private Rental Properties are 3 person Households

15.9% of Private Rental Properties are 4 person Households

10% of Private Rental Properties are 5+ person Households

As you can see, Canterbury is not too dissimilar from the national picture but there is story to tell. If you are considering future buy to let purchases in the coming 12 to 18 months, I would seriously consider looking at 1 and 2 bed apartments. Even with the numbers stated, there are simply not enough 1 and 2 bed apartments to meet the demand. They have to be in the right part of Canterbury and priced realistically, but they will always let and when you need to sell, irrespective of market conditions at the time, will always be the target of buyers. To read more articles on the Canterbury Property Market and where I consider best buy to let deals are in Canterbury, please visit the Canterbury Property Market Blog www.canterburypropertyblog.com

The Canterbury Love Affair with its 5,500 Terraced Houses

Call me old fashioned, but I do like the terraced house.   In fact, I have done some research that I hope you will find of interest my Canterbury property market blog reading friends!

In architecture terms, a terraced or townhouse is a style of housing in use since the late 1600’s in the UK, where a row of symmetrical / identical houses share their side walls. The first terraced houses were actually built by a French man, Monsieur Barbon around St. Paul’s Cathedral within the rebuilding process after the Great Fire of London in 1666.  Interestingly, it was the French that invented the terraced house around 1610-15 in the Le Marais district of Paris with its planned squares and properties with identical facades. However, it was the 1730’s in the UK, that the terraced/townhouse came into its own in London and of course in Bath with the impressive Royal Crescent.

However, we are in Canterbury, not Bath, so the majority of our Canterbury terraced houses were built in the Victorian era.  Built on the back of the Industrial Revolution, with people flooding into the towns and cities for work in Victorian times, the terraced house offered decent livable accommodation away from the slums. An interesting fact is that the majority of Victorian Canterbury terraced houses are based on standard design of a ‘posh’ front room, a back room (where the family lived day to day) and scullery off that.  Off the scullery, a door to a rear yard, whilst upstairs, three bedrooms (the third straight off the second).  Interestingly, the law was changed in 1875 with the Public Health Act and each house had to have 108ft of livable space per main room, running water, its own outside toilet and rear access to allow the toilet waste to be collected (they didn’t have public sewers in those days in Canterbury – well not at least where these ‘workers’ terraced houses were built).

It was the 1960’s and 70’s where inside toilets and bathrooms were installed (often in that third bedroom or an extension off the scullery) and gas central heating in the 1980’s and replacement Upvc double glazing ever since.

Looking at the breakdown of all the properties in Canterbury, some very interesting numbers appear.  Of the 20,748 properties in Canterbury …

3,283 are Detached properties (15.8%)

6,042 are Semi Detached properties (29.1%)

5,550 are Terraced / Town House properties (26.7%)

5,770 are Apartment/ Flat’s (27.8%)

And quite noteworthy, there are 103 mobile homes, representing 0.5% of all property in Canterbury. 

When it comes to values, the average price paid for a Canterbury terraced house in 1995 was £53,940 and the latest set of figures released by the land Registry states that today that figure stands at £283,940, a rise of 426% - not bad when you consider apartments in Canterbury in the same time frame have only risen by 265%.

But then a lot of buy to let landlords and first time buyers I speak to think the Victorian terraced house is expensive to maintain.  I recently read a report from English Heritage that stated maintaining a typical Victorian terraced house over thirty years is around sixty percent cheaper than building and maintaining a modern house- which is quite fascinating don’t you think!

Don’t dismiss the humble terraced house – especially in Canterbury!  For more thoughts on the Canterbury Property Market – visit the Canterbury Property Market Blog www.canterburypropertyblog.com