Wednesday 22 July 2015

I HAVE MOVED!

I HAVE UPGRADED MY BLOG TO A MUCH MORE INFORMATIVE, USER FRIENDLY VERSION WHICH CAN BE FOUND AT:

www.derbypropertyblog.co.uk


UNFORTUNATELY, YOU WILL HAVE TO RE-REGISTER TO RECEIVE THE BLOG POSTS BY EMAIL - BUT IT WILL BE WORTH IT!

MANY THANKS

Simon

Monday 13 July 2015

There's a Drought in the Derby Property Market!

Well the dust has settled and the General Election was something that seems to have happened many months ago; a bit like the end of the football season!  So, we can get back to a more normal property market, or that is what the London based ‘Fleet Street’ journalists would lead you to believe. I do find that their opinion is often tainted by the market ‘down south’ so I get my local information from much more reliable sources. I have been talking to many fellow property professionals in Derby; solicitors, conveyancers, mortgage brokers and, one the best sources of information, the chap who puts all the estate agent and letting boards up in the area. Each of them told me the same story - they didn’t see any change in the couple of months that led up to the Election itself on the 7th May.

I am now of the opinion that, maybe in the upmarket areas of Mayfair and Chelsea, the market went into spasm with the prospect of a Labour/SNP pact with their Mansion Tax for properties over £2,000,000, but, in little old Derby and the surrounding villages, there has only been two properties sold above £2,000,000 mark in the last 7 years so we had a somewhat different reaction!
  
In a nutshell, the General Election didn’t really have any impact on people’s confidence to buy property in Derby. As I write this article, of 1,687 properties that have come on to the market in Derby  since the 2nd of April, 504 of them have a buyer and are sold subject to contract, that’s nearly one in three  - 29.87% to be precise.

I actually think that things are starting to change in the way people in Derby (in fact the whole of the country as I talk to other agents around the UK) buy and sell property. Back in the 1970’s, 80’s and 90’s the norm was to buy a terraced house as soon as you left home and do it up. Meanwhile, property prices had gone up, so you traded up to a 2 bed semi, then 3 bed semi and repeated to the process, until you found yourself in  large 4 bed detached house with a large mortgage.
 
Looking into this a little deeper like I have said in previous articles Derby people’s attitude to home ownership itself have changed over the last ten years. The pressure for youngsters to buy when young has gone as renting, not buying, is considered the norm for 20 something’s. This isn’t just a Derby thing, it’s a national thing, as I have noticed that people buy property by trading up (or down) because they need to, not because ‘it’s what people do’. This does means there are a lot less properties on the market compared to last decade.

A by-product of less people moving is less people selling their property. My research shows there are a lot fewer properties each month selling in Derby compared to last decade. For example, in February 2015, only 240 properties were sold in Derby sold. Compare this February 2002, and 423 properties sold and the same month in 2003, 421 properties.  I repeated the exercise on different sets of years, comparing the same month to allow for seasonal variations, and the results were identical if not greater. So what does this all mean?
 

Demand for Derby property isn’t flying away, but with fewer properties for sale, it means property prices are proving reasonably stable too. Stable, consistent and steady growth of property values in Derby, year on year, without the massive peaks and troughs we saw in the late 1980’s and mid/late 2000’s might just be the thing that the Derby property market needs in the long term.


Thursday 9 July 2015

Why are less and less people moving house in Derby?

During my school years, my parents seemed to move every other year, or it certainly seemed that way! In reality, looking back at the house moves, we actually moved three times before I left home. In fact I read on the internet that the average UK person moves 8 times in their life - or every 9 to 10 years. However, whilst my parents kept the removal van people in business whilst I was at school, from research I have carried out it shows things have changed considerably in Derby over the last few decades, and interestingly, the trend is getting worse ... for the removal van people at any rate!

In Derby, there are 104,777 properties. However, after we remove the 20,289 council houses, 17,504 privately rented houses and 1,213 houses where the occupants live rent free, that leaves us with 65,771 owned properties, be that 100% outright, with a mortgage or shared ownership. This means 62.8% of the properties in Derby are occupied by the owner (the national average is interestingly 64.2%) but the number of people who have sold and moved house in Derby, over the last 12 months, has only been 4,282. This means on these figures, the homeowners of Derby are only moving on average every 15.35 years.

There are a couple of reasons for this. Firstly, the cost of moving house has risen dramatically over the last twenty years and, secondly, with many remortgaging their properties in the mid 2000’s before the price crash of 2008, there is a reluctance or inability in a small minority of homeowners to finance a home sale/purchase, due to lack of equity. These are both factors leading to driving fewer moves by existing homeowners.

However, the big effect has been the change in house price inflation. Back in the 1970’s and 1980’s, house prices were doubling every 5 to 7 years. Even in Greater London, with its stratospheric property price increases over the last few years, it has taken 13 years (August 2012 to be exact) for property values to double to today’s levels.

This change to a relatively low inflation Derby property market - Derby property values not rising quickly - is significant because the long term consequences of sustained low house price growth is that it eats into mortgage debt more slowly than when property price inflation is higher. Derby home owners cannot rely on inflation to shrink their debt in real terms as much as they did in say the 1970’s and 1980’s.

So what does this all mean for Derby buy to let landlords? Well, for the same reasons existing Derby homeowners aren’t moving, less ‘twenty something’s’ are buying their first home as well. Derby youngsters may aspire to own their own home, but without the social pressure from their peers and parents to buy their first property as soon people reach their early 20’s, the memory of the 2008 housing crisis and the belief the hard times either aren't over or the worst is yet to come, current and would-be homeowners are warming to the idea of renting. I also believe UK society has changed, with the youngster’s wanting prosperity and happiness; but wanting it all now... instantly... today... without the sacrifice, work and patience that these things take. 

As a society, we now expect things instantly, and if it doesn’t come easy, doesn’t come quick, some youngsters ask if it is really worth the effort to save for the deposit?  Why go without holidays, the newest iPhone, socialising four times a week and the fancy satellite package for a couple of years, to save for that 5% deposit. Why should they if there is no longer a social stigma in renting or pressure to buy as there was say a generation ago?

Even though, in real terms, property prices are 5% cheaper than they were ten years ago (when adjusted by inflation), 16.7% of Derby properties are privately rented, nearly double it was twenty years ago. As a result, the demand for rental properties continues to grow from tenants, meaning those wishing to invest in the buy to let market, over the long term, might be on to a good thing?