Landlords and homeowners here in Rotherham will be eager to hear if the property market is slowing down.
The Landlord’s Tightrope
The tightrope of being a Rotherham buy-to-let landlord is a balancing act many do well at.
Government figures show that ‘real pay’ has dropped 1% in the last six months and talking to several Rotherham landlords, they are very conscious of the capacity and ability of their tenants to pay the rent versus their own need to raise rents on their rental properties.
Evidence does suggest many landlords feel more assured now than they were a few months ago about pursuing higher rents on their properties.
One of the reasons may be due to the summer months – historic evidence suggests that the rents new tenants have had to pay once they’ve move in have increased during the summer. June-August is a time when renters like to move, which means that demand surges and, thanks to the normal supply/demand seesaw, tenants are usually prepared to pay more to secure the property in the place they want to be.
This is particularly good news for Rotherham landlords as average Rotherham rents have been on a downward trend recently.
Look at the figures:
Rents in Rotherham on average for new tenants moving in have risen 1.6% for the month, taking overall annual Rotherham rents 1.1% higher for the year
Several Rotherham landlords have expressed their apprehensions about a slowing of the housing market in Rotherham. I think this negativity may be exaggerated.
Trying to find an equilibrium
The other side of the coin to property investing is capital values (which will also be of interest to all the homeowners in Rotherham as well as the Rotherham buy-to-let landlords). I believe the Rotherham property market has been trying to find some level of equilibrium since the New Year.
According to the Land Registry…
Property Values in Rotherham are 0.47% higher than they were 12 months ago.
However, they’ve actually risen by 1.34% last month!
The reality is the number of properties that are on the market in Rotherham today has dropped by 8.05% since the turn of the year – this fact will have an interesting effect on short-term Rotherham property values. As tenants have had less choice, buyers now have less choice.
Are you selling? Realistically price your property
Whether you are a homeowner or landlord, if you are planning to sell your Rotherham property in the short-term, it is crucial that whilst you allow room for negotiation, you must still realistically price your property when you bring it to the market.
Given that everyone now has access to property details, including historic stats for how much property has sold for, buyers will be more astute during the offer and negotiation stages of a purchase.
Property prices will remain strong medium to long term
Even with this short-term decrease in the number of properties for sale in Rotherham, property prices will remain stable and strong in the medium to long term. This is because the number of properties on the market today is still way below the peak of summer of 2008, when there were 1,260 properties for sale compared to the current level of 765 (if you recall, prices dropped by nearly 20% in Credit Crunch years of ‘08 and ‘09).
Compared to 2008, today’s lower supply of Rotherham properties for sale will keep prices relatively high… and they will continue to stay at these levels for the medium to long term.
Less people are moving than a few years ago, meaning less property is for sale. Fewer properties for sale mean property prices remain relatively high and this is because of a number of underlying reasons:
- Buy-to-let landlords tend not sell their properties as often than owner-occupiers, consequently removing the property out of the housing market selling cycle.
- Stamp Duty is much higher compared to 10 years ago (meaning it costs more to move).
- There is a dearth of local authority rental housing so demand for private rented housing remains high.
- The UK’s maturing owner occupier population – older people are less likely to move (compared to when they were younger).
- The lack of new homes being built in the country (we need 240k houses a year to be built in the UK and we are currently only building 145k a year!)
- Mortgage rules introduced in 2014 about how much a person can borrow on a mortgage has curtailed demand
Some final thought’s before I go…
To all the Rotherham homeowners that aren’t planning to sell – this talk of price changes is only on paper profit or loss.
To those that are moving… most people that sell are buyers as well, so even though you might not get as much for your house, the one you want to buy shouldn’t be as much either. Swings and roundabouts.
To all the Rotherham landlords – keep your eyes peeled – I have a feeling there may be some decent buy-to-let deals to be had in the coming months. One place for such deals, irrespective of which agent is selling it, is the featured property section on this blog – I post recommendations there.