The 4,897 Canterbury Savers batten down the hatches with low interest rates set to continue into the 2020’s

You might ask, what has the plight of the Canterbury savers to do with the Canterbury Property Market … everything in fact.  Read the newspapers, and every financial wizard is stating that with the decision of the Bank of England’s Monetary Policy Committee in early August to cut the Bank of England base rate to an all-time low of 0.25 per cent, savers should prepare themselves for interest rates to stay low well into the early 2020’s.

 

... And this isn’t some made up story to capture the headlines of newspaper editors. The yield (posh word for interest rate or return) on 10-year Government bonds is currently 0.61 per cent. This indicates that the money markets believe that the Bank of England’s base rate will, on average over the next ten years, be below the 0.61% rate they are buying the 10 year bonds at (because they would lose money if the average was over 0.61%). UK Interest rates are going to be low for a long time.

 

For those who have saved throughout their working lives and are looking for ways to maximise their savings, tying their money into property could prove advantageous. You see as a saver, I did a search of the internet and the best savings rate I could find was a 5-year fixed rate at 2.5% a year with Weatherbys Bank. Your £200,000 nest egg would earn you £5,000 a year – not much. However, on the other side of the fence, growth in Canterbury house prices and princely buy to let yields have made property investment in Canterbury an appealing option for many. According to my research, the...

 

Average Yield over the last five years for

Canterbury Buy to let property has been 5.6% a year

 

… and average Property Values in over the same period have risen by 23.3%.

 

Using these averages, the Canterbury landlord’s property would be worth £246,600 and they would have received a total of £56,000 in rent – making the total return £302,600. Meanwhile, whilst our 4,897 Canterbury Saver’s, using the average savings rates for the last 5 years, even if they had reinvested the interest, their £200,000 would only be £221,184.

 

There are risks as well as benefits to buy to let though. As my blog readers know, I tell it like it is and investing in buy to let means locking up capital in a property that may fall in value. Another option would be stock market income based investment funds, which are paying around 5%, especially if put your nest egg into a tax free Stocks and Shares ISA. Although you can only add £15,240 a year into an ISA, but you would also have the ability to sell up quickly if you want ... but one last thought…

 

The other side of the coin is that you cannot buy an unloved ‘stock market income based investment fund’ and set about renovating it and adding value yourself. The investment fund isn’t something that you can touch and feel, isn’t something tangible, isn’t something physical, isn’t something concrete, it isn’t bricks and mortar ... and that is why my fellow Canterbury homeowners and Canterbury landlords, the love affair of the British and Property will continue.

 

If you are considering becoming a new buy to let landlord in Canterbury, what do you know about the Canterbury property market? Do what many established landlords do and visit the Canterbury Property Blog where there is a catalogue of articles like this and where the best buy to lets deals are in Canterbury www.canterburypropertyblog.com

What is really happening in the Canterbury Property Market?

Well its been a few months since Brexit and as we settle into the Autumn with Great British Bake Off, Strictly and the Football season ... the newspapers are returning to their mixed messages of good news, bad news and indifferent news about the Brit’s favourite subject after the weather ... the property market.

The thing is the UK does not have one housing market. Instead, it is a patchwork of mini property markets all performing in a different way. At one end of scale is Kensington and Chelsea, which has seen average prices drop in the last twelve months by 6.2% whilst in our South-East region, house prices are 12.3% higher. But what about Canterbury?

Property prices in Canterbury are 7.8% higher than a year ago

and 0.6% lower than last month.

So what does this mean for Canterbury landlords and homeowners? Not that much unless you are buying or selling in reality. Most sellers are buyers anyway, so if the one you are buying has gone down, yours has gone down.  Everything is relative and what I would say is, if you look hard enough, there are even in this market, there are still some bargains to be had in Canterbury.

However, the most important question you should be asking though is not only is what happening to property prices, but exactly which price band is selling? I like to keep an eye on the property market in Canterbury on a daily basis because it enables me to give the best advice and opinion on what (or not) to buy in Canterbury.

If you look at Canterbury and split the property market into four equalled sized price bands. Each price band would have around 25% of the property in Canterbury, from the lowest in value band (the bottom 25%) all the way through to the highest 25% band (in terms of value).

• Nil to £220k             90 properties for sale and 65 sold (stc) i.e. 41% sold
• £220k to £260k         79 properties for sale and 54 sold (stc) i.e. 40% sold
  
• £260k to £350k       103 properties for sale and 70 sold (stc) i.e. 40% sold
  
• £350k +                    77 properties for sale and 58 sold (stc) i.e. 42% sold

Fascinating don’t you think that it is the whole Canterbury market that is doing well?
The next nine months’ activity will be crucial in understanding which way the market will go this year after Brexit ... but, Brexit or no Brexit, people will always need a roof over their head and that is why the property market has ridden the storms of oil crisis’ in the 1970’s, the 1980’s depression, Black Monday in the 1990’s, and latterly the credit crunch together with the various house price crashes of 1973, 1987 and 2008.

And why? Because of Britain’s chronic lack of housing will prop up house prices and prevent a post spike crash. ... there is always a silver lining when it comes to the property market!

942% - Rise in Canterbury Property Prices since 1981

Roll the clock back 35 years to 1981, and Mrs. T was in power, we had a Royal Wedding, Britain won the Ashes and Bucks Fizz won Eurovision with ‘Making your Mind up’.   Haven’t things changed.  The number of homeowners and property investors who said they wish they had hindsight and bought up every house in Canterbury all those years ago, especially when you consider what has happened to Canterbury property values, as…

 

Canterbury Property Values since 1981 have risen by 942%.

 

Not bad when you consider inflation over the same time period has been 271.9%, meaning in real terms (i.e. after inflation), property values in Canterbury are 670.1% higher.   It’s no wonder people can’t afford to buy property anymore and landlords are attracted by bricks and mortar. Yet the changes to the Canterbury Property market run much deeper than property value changes as no one could have predicted how the property market has changed in Canterbury over the last 30 years.

 

Looking at the Local Authority data for Canterbury City Council in 1981, 19.6% of Canterbury people lived in a Council House, whilst today its 12.2% ... a massive drop which can mostly be attributed to Margaret Thatcher allowing Council tenants the right to buy their Council House.  The private rental sector since 1981 has, as one would have expected, also changed.  The proportion of properties privately rented in the Canterbury area (i.e. through a private landlord or a letting agency) have almost doubled, rising from 12.1% to 19.5% of property.

 

So, let us consider those people who own their own home, surely that has had a massive drop?  In 1981, the proportion of people who lived in the Canterbury City Council area who owned their own home was 68.1% … and today its … 66%. Not the seismic change most of you were expecting (including myself!).

 

Homeownership in the 1980’s and 1990’s in Canterbury did in fact rise, but as I have discussed in previous articles in the ‘Canterbury Property Market Blog’, that was because nearly every Council tenant was buying their council house. Now there are hardly any Council houses for the younger generation to move into (because of the Right to Buy scheme) so they have no choice, but to privately rent.

 

.. and this is why the buy to let market in Canterbury is an investment sector that will continue to grow as councils aren’t building council houses in their thousands each year (like they were in the 1950’s / 60’s and 70’s).  The Canterbury property market is constantly changing and buy to let for too long has been heavily dependent on house price growth, where yield has been almost forgotten.  I see the changes in tax and landlord and tenant law in a different perspective to the sooth-sayers and see it as bringing many opportunities where yield will become more important.  You might need to change your buy to let targets, your methodology to financing or even consider places other than Canterbury in which to invest your money, but this will shine a light on investing in properties with healthier yields and create more realistic long term buy to let opportunities, instead of short term growth bets and wagers.

 

Like Bucks Fizz said in their song, it’s time to make your mind up. The advice I give to my landlords, and also to you my blog reading friends is this; these changes will make some landlords panic, meaning competition for decent Canterbury buy to let bargains will reduce as fear of change kicks in and amateur investors flee the market.  These opportunities will provide a more stable platform for knowledgeable and wise Canterbury buy to let landlords to thrive in.  If you want to learn more about the Canterbury Property Market, feel free to pop in for a coffee at our office for a chat with me, or failing that, visit the Canterbury Property Blog, where you will find many more articles like this solely on the one topic of the Property Market in Canterbury www.canterburypropertyblog.com .

Landlords Information Evening - Monday 24th October 2016 - Canterbury

Running from 17.30hrs until 20.30hrs on Monday 24th October 2016 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.


Of interest will be a presentation from Phil Eckersley, from the Bank of England, who will be giving an update of the UK Economy




The address of the venue is: Darwin Conference Suite, Darwin College, University of Kent, Canterbury CT2 7NY