Are landlords to blame for Derby's rising house prices?

East Midlands property asking prices jumped by more than £4,000 to £177,100 in February according to Rightmove, an increase of 2.3% from January and 4.7% higher than a year ago. After the traditionally quiet months of January and February, the property market starts to heat up, but talking to some Derby Estate Agents, they are reporting their lowest ever stocks of quality property for sale. However, asking prices have no relation to what property sells for! With property, the definition of price is what someone is prepared to pay, not what the agent thinks it’s worth!

So, is the issue a lack of supply?

Putting aside Derby’s continual housing supply shortage, (we only built 9,866 properties in the last decade but the population of Derby grew by 27,044), this is now, according to some people, being exaggerated by an increase in homes being owned by buy to let investors, who tend to be buying a property as part of a long term pension plan and are more likely to keep it for longer than an owner occupier would. I have also seen unwillingness among homeowners looking to move, to put their own property on the market as they can find few suitable properties to make it worth their while going through the whole moving process.

What I would say to that is that I believe this is the new norm in the Derby property market, and is the consequence of over 35 years of not enough homes being built to meet the escalating growth in household numbers, resulting in a lack of quality homes for sale in many popular areas of Derby.

When one looks at the historic data, in March 2008, there were 4084 properties on the market in Derby compared to today’s 1579. Should we be worried?  Well in March 2010, there were only 1574 properties for sale in Derby but seven months later in October 2010, this had jumped to 2609 properties, for it to drop to 2176 properties in January 2011. The number of properties on the market is a cyclical thing in Derby, it always has been and always will be. As we go into the Spring of 2015, the number of new properties coming onto the market will increase ... just as the daffodils will flower.

So are landlords to blame? Well, on one side of the coin, yes they are. If they buy a property to rent out, that means someone can’t buy it to live in. However, it doesn’t matter if someone wants to live in a property if they can’t afford the deposit and upkeep.. and the youngsters of Derby still need a roof over their head. So on the other side of the coin, if the Council aren’t building any properties and people can’t afford the large deposit for the mortgage, then Derby landlords have stepped in and bought property to rent out to them. Derby landlords have bought 9,204 properties over the last decade (investing approximately £1.6bn buying those Derby properties) and now house 37,828 Derby people in 15,943 Derby properties. Derby tenants are in fact getting a good deal as well, as average rents in Derby are 4.5% below they were seven years ago.

That sounds like a win-win situation for everyone to me. So, we should stop pointing the finger at landlords and start building more properties in Derby.. that is the only answer!

In the meantime, the demand from Derby tenants for Derby property is only set to rise over the coming years. If you want some advice and opinion on where (or not) to buy, please email me or call me on the number below!