It is feeling very autumnal across Rotherham. Alongside this, some interesting statistics have come to light on about our local property market. I think they will be thought provoking to both homeowners and buy-to-let landlords.
One headline that has stuck out is this: over the last 12 months 2,196 households have changed hands in Rotherham. This is slightly below the average for the last 10 years, which is numbered at 2,216 households per year.
Yet, for the purpose of this article, I want to discuss the pricing of the current crop of Rotherham’s property sellers. What interests me is the price people are asking for their homes compared with the prices that they are actually achieving (or not, as the case may be!) It is so important for all property owners to know the real story, so they can judge for themselves where they stand in the current housing market. This will enable you to make suitable and informed decisions. I always aim to give the real answers, not simply the answers what people want to hear.
The problem with over-valuing a house
The national average of homes selling at or above the asking price currently stands at around 10%, so around 90% go below the asking price – but by how much? Well according to Rightmove, in the Rotherham area, the average difference between the ‘FINAL asking price’ to the price agreed is 3.5% … yet note I highlighted the word FINAL in the last statement.
You see some Estate Agents will deliberately over inflate the suggested initial asking price to the house seller, because it gives them a greater chance to secure the property on that agent’s books, as opposed to a competitor. This practice is called overvaluing. Now of course, each homeowner wants to get the most for their property, it is quite often their biggest asset – yet some agents know this and prey on those house sellers.
You might ask, what is the issue with that?
Well, you only get one chance of hitting the market as a new property. Everyone has access to the internet, Rightmove and Zoopla etc, and your potential buyers will know the market like the back of their hand. If you have a 3 bed semi that is on the market for a 3 bed detached house price… those buyers will ignore you. Your Rotherham property sticks on the market, potential buyers will keep seeing your Rotherham property on Rightmove each week, then start to think there is something wrong with it and dismiss it even further, until you, as the house seller have to reduce the asking price so much (to make it appear inexpensive) to sell it.
According to our own research, the average house buyer only views between 4 and 5 houses before buying – so don’t assume viewers will come round your optimistically priced (i.e. overvalued) property, thinking they will knock you down – no quite the opposite!
So how widespread is overvaluing in Rotherham?
The results might surprise you… 42.0% of properties in Rotherham, currently on the market, have reduced their asking price by an average reduction of 6.4% (which equates to £10,500 each)
So, all I ask is this.. be realistic and you will sell at a decent price to a decent buyer. First time – every time – enabling you to move on to the next chapter of your life.
If you need my advice I am happy to help. Please get in touch here.
The number of residential property transactions in Rotherham will be 4.9% lower in 2018, compared to 2017.
According to my research, the seasonally adjusted statistics for our local authority area suggest that with the number of properties already sold in 2018 and the number of properties currently under offer or sold subject to contract (allowing for property sales to fall through before exchange of contracts), we, as an area, will end the year 4.93% lower compared to 2017.
Why are transaction numbers so important to homeowners, landlords and potential first-time buyers?
Many economists and property market commentators believe transaction numbers give a more precise and truthful indicator of the health of the property market than just using house values. In the six years before the global financial crisis in 2007/8, the average number of completed property transactions in the local area (the local authority covered by Rotherham) stood at 4,756 per year… yet in the three years following the Credit Crunch, on average, only 2,195 homes were changing hands per year in the area.
Roll the clock forward to more recent times and last year, in 2017, 3,607 homes changed hands (i.e. transacted and sold) in the area, just about matching the local authority’s 23 year overall average of 3,649 homes per year.
In the past, a reduction in the number of properties selling has often been believed to be the first signal of a downturn in the housing market as a whole. Although, the down turn of 2007/2008 was more a free-fall than a subtle downturn. Look at the graph and the ‘so-called’ halcyon days of the 2000 to 2006 property market were a roller coaster when it came to the number of transactions. House prices were rising in the six or seven years prior to the financial crisis (2000 to 2006), albeit, the rate of growth of Rotherham house prices did slow in late 2005 and 2006 (which does fit in nicely with the graph).
In other articles, I have mentioned the change in the number of houses for sale today compared to last year and further back. Although, the market has seen in recent months (i.e. the short term) an increase in the number of properties for sale, fundamentally, in the medium term, there has been an underlying trend in the reduction of properties coming onto the market for sale in Rotherham (and nationally) and this has been one of the main drives behind the lack of properties selling… Rotherham people aren’t moving as much as they were 30 years ago meaning fewer houses are selling each year.
However, this short-term increase in properties for sale hasn’t been even across the board. In certain sectors of the Rotherham property market, there is a glut of properties currently on the market and so prices and values are dropping on those types as sellers compete for the limited amount of buyers. Yet there are other sectors of our local property market where there is a dearth of properties and buyers are fighting tooth and nail with silly offers to try and secure the sale. This means there are some bargains for you buy-to-let landlords. If you look hard enough, you could spot the same trends I have seen in Rotherham and find the individual property micro markets that fall into that first sector.
So, if you want the inside track on our local property market, whether you are a landlord of ours or another agent, I am more than happy to guide you in the right direction if you drop me a line or an email (contacts details are easily found on this page – and I don’t bite or do hard sell – promise!) I also post property recommendations here – many of which are suitable for landlords or even first time buyers.
What are my predictions for 2018 and beyond?
To conclude, I predict we will finish on 3,429 housing transactions by the end of the year in the area. That’s not too far off last year’s figure or the long-term 23-year average. Looking at the short term future, now it’s true some (not all) but some potential purchasers of property in Rotherham may be exhibiting more caution because of concerns that the Bank of England will continue to put up interest rates – to which I reply – yes, of course they will when they are only ultra-low at 0.75%. Anyway, that is the reason why 90%+ of new mortgages over the last nine months have been on a fixed rate. If they do go up a few percentage points – they are nothing compared to the 12%, 14%, even 15% mortgage rates many of my landlords saw in the early 1990s.
We can all speculate (and I appreciate the irony of that as I write this article) but all I say to any landlords, homeowners or first time buyers is to act according to your own life cycle. Budget on a modest increase in interest rates in the coming few years, protect yourself by getting a fixed rate if you can and consider your own circumstances and what you can afford.
September is here and it already feels a little bit colder. The sun is definitely setting earlier and our summer season has begun to draw to a close. As we prepare ourselves for more autumnal weather, we thought it would be a great idea to give an update on the Rotherham property market.
What’s happening in the UK?
I was recently reading a report by Rightmove that a North-South divide has started to appear in the UK property market. I wanted to see if Rotherham was falling in line with those thoughts. In the North, there are 7.12% less properties on the market than 12 months ago. In contrast, in the South, there are 14.7% more properties on the market than 12 months ago.
With the decline in the number of properties for sale in the North compared to 12 months ago, that means the North has become more of a sellers’ market. However, on the other side of the coin, there is a significant rise in buyer choice in all of the southern regions, which in some markets is a driving force for a buyers’ market. Expect downwards price pressure there.
What about closer to home?
We’ve examined asking prices and the number of homes on the market in the Yorkshire and Humber region. According to Rightmove, the average asking prices of new to the market properties are 4.0% higher than 12 months ago and 1.3% higher over the last month. Now I must stress, this is asking prices – not what is happening to actual property values. However, regionally, there are 6.3% less properties on the market than 12 months ago.
Even closer to home, overall, the number of properties and building plots for sale in Rotherham has decreased by 5%, going from 777 properties for sale a year ago to 738 properties for sale as I write this article, meaning Rotherham does in fact match the regional trend.
Looking at the individual types of Rotherham property, you can quite clearly see the different markets within Rotherham. The two sets of figures that stand out are the increase in apartments for sale which has risen by 19% and the decrease in terraced/town houses by 16%.
However, these figures don’t tell the whole story. In certain areas of Rotherham some types of properties (in particular locations and primary school catchment areas) are in short supply. This has caused some frustration with buyers of those types of properties, which in turn sparks some very localised asking price growth within those hot spot areas, although sometimes to levels where a seller’s optimism turns into silly over the top asking prices.
This means the property sticks, which isn’t sustainable. Therefore, as a consequence, there are certain parts of the Rotherham housing market with upward asking price movements being offset in part by intermittent asking price reductions where home owners or their estate agents have been over optimistic with their initial marketing asking price.
What does this mean for homeowners and landlords in Rotherham?
If you are planning to sell your home or buy to let investment, the key for determined sellers is to set your asking price correctly from the start. It’s so vital to be competitive to attract buyers. Everyone has access to three main property portals (Rightmove, On the Market and Zoopla) so can easily compare your property against similar ones. When you do search these portals, make sure you ask the website to show properties that are sold subject to contract as well to check what properties are selling for in your neighbourhood. Unless you have something highly unusual or unique, this perhaps isn’t the best market to set an optimistic asking price in hoping to find someone who would pay that silly price.
And if you are buying in Rotherham?
The numbers of buyers are lower than a few years ago, although those buyers that are in the market have become quite serious. The times of time wasting “carpet treaders” (estate agency slang for the same type of people car dealers call tyre kickers) are long gone. Those buyers that are in the market are real buyers, wanting to buy, but only at the right price. We live in a 21st century society that is “time-poor” so nobody is wanting to even view a house, let alone pay over the odds if they believe the asking price is too high.
So, if you are buying, do your homework, ask plenty of questions of the agent, find out the motivation of the sellers and the real reasons behind why they are moving… if you do, you might just bag a good deal.
Whether you are a buyer, a seller or anything in between, you can always get in touch for assistance. I’m happy to help and speak to people in person if necessary. Visit the contact page for more details!
Whether you are a Rotherham landlord looking to liquidate your buy-to-let investment or a homeowner looking to sell your home, finding a buyer and selling your property can take an annoyingly long time. It is a step-by-step process that can take months and months. Fortunately we’re on hand to help you out.
One of the worst parts of the house selling process is the not knowing how long you might be stuck at each step. At the moment, looking at every estate agent in Rotherham, independent research shows that it is taking an average of 52 days from the property coming on the market for it to be sold subject to contract.
But trust me… that is just the start of a long journey on the house selling/buying process. The journey is a long one and therefore, in this article, I want to take you through the standard itinerary for each step of the house selling procedure in Rotherham.
Step 1: Find a Buyer
You need to instruct an estate agent (of course we can help you with that) who will talk through a marketing strategy and pricing strategy to enable you to find a buyer that fits your circumstances. 52 days might be the average in Rotherham, yet as I have said many times, the Rotherham property market is like a fly’s eye, split up into lots of little micro markets.
Looking at that aforementioned research, (which only focused on Rotherham), it was interesting to see how the different price bands (i.e. different micro markets) are currently performing, when it comes down to the average number of days it takes to find a buyer for a property in Rotherham.
Interestingly, I thought I would see which price band had the highest proportion of properties sold. Again, this was fascinating!
So, now you have a buyer… what next?
There are a variety of distinctive issues at play when selling your property in Rotherham, together with the involvement of a wide and varied range of professionals who get involved in that process. That means there is are enormous differences in how long it takes from one property to another. Moving forward to the next steps, these are the average lengths of time it takes for each step to give you some idea of what to expect.
Step 2 – Sort Solicitors (and Mortgage)
Again, this is something we can point you in the right direction with. However, it will take a good few weeks for your buyer to apply and sort out their mortgage and for your solicitors to prepare the legal paper work to send to the buyer.
Step 3 – Legal Work and Survey
Once your buyer’s solicitor receives the paperwork from your solicitor, then your buyer’s solicitor applies for local searches from the local authority (to ensure no motorways etc., are going to be built in the back garden!) These searches can take a number of weeks to be returned to the buyer’s solicitors from the council. From this questions will be raised by the buyer’s solicitor to your solicitor (trust me – you don’t see a tenth of the work that goes on behind closed doors to get the sale through to completion).
Meanwhile, the surveyor will check the property to ensure it is worth the money and structurally sound. Overall, this step can take between three and six weeks (and sometimes a lot more!)
Step 4 – Exchange of Contracts
Assuming all the mortgage, survey and legal work comes back okay, both the buyer and solicitor sign contracts. The solicitors then perform the “Exchange of Contracts”. When contracts are exchanged, this is the first time both buyer and seller are tied in. Before then, they can walk away… and you are probably 4 or 5 months down the line from having put up the for sale board – this isn’t a quick process! BUT hold on … we aren’t there yet!
Step 5 – Completion
It could take between a week and up to six weeks after exchange of contracts for the this stage. The buyer’s solicitor sends the purchase money to the seller’s solicitor, and once that arrives, the keys will be given to the buyer…!
Phew! It’s a lot of work. So, how long does it take in total? All in all, you are looking at a good four, five or even six months from putting the for-sale board up at the front of your house to moving out.
If you are thinking of selling your Rotherham home or if you are a Rotherham landlord, hoping to sell your buy to let property (with tenants in), you will want to talk to us to ensure you get a decent price with minimal fuss. Send me a message or visit Bricknells Rentals or Fenton Board.
Our focus is obviously on the Rotherham property market and when we live in our own homes or only own buy-to-let properties in the local area, it’s often easy to forget the regional and national picture. As a homeowner or landlord in Rotherham, consideration must be given to these markets, as directly and indirectly, they do have a bearing on us in Rotherham. We’ve written this article in order to compare the Rotherham property market to the wider Yorkshire & Humber region, as well as the national market.
Locally, the value of property in Rotherham and the number of people moving remains largely steady overall. However, looking across at the different regions, there are certainly many variations. Talking to fellow property professionals in the posh upmarket central London areas of Mayfair and Kensington, the number of people looking to buy and registering interest with agents is continuing to climb after 18 months in the doldrums, whilst in other parts of the UK, there is restraint amongst both buyers and sellers.
The things that impact the national property market are the big economic numbers. Nationally, over the last few months, the economic forecast and predictions have improved – thankfully! But this is notwithstanding the Brexit uncertainties. Inflation has mercifully throttled back its high growth seen in 2016 to the current level of 2.1% (from 2.7% average last year), coupled with marginally stronger wage growth at 2.5%. Unemployment is at a 42-year low at 4.2% and UK consumer spending power rose to an all-time high last month to £331.04bn – all positives for consumer sentiment.
Looking further afield, a resilient property market depends on the UK’s economic health with the outside world. If our currency weakens, imports become more expensive, meaning inflation increases. I talked about this a few weeks ago in my last article. Interest rates could be raised to bring inflation under control, which in turn could have a serious impact on the property market. On the assumption Brexit negotiations are successful, economic growth should continue to be upward and positive, meaning confidence would be increased… which is the vital element to a good housing market.
How has the housing market performed over the last 20 years?
Looking closer to home now, Rotherham landlords and Rotherham homeowners might be interested in the how the regional and Rotherham markets have performed over the last 20 years (compared to the national picture). Let’s look at the regional picture first:
Yorkshire and Humber has outperformed the Rotherham housing market by 7.34%.
the country has outperformed the Rotherham market by 8.3%
I found it interesting to see the ups and downs of the Rotherham, Yorkshire and Humber and national markets in the graph below. Points to note include:
- How the lines of graphs roughly go in the same direction, with Rotherham following the regional trend more closely than the national trend to a certain point (as one would expect)
- How the 2007/08 property crash timings and effects were slightly different between the three lines
- How the property markets performed in the post-crash years of 2011 to 2014
So, what does this all mean for Rotherham homeowners and Rotherham landlords?
Well, house prices going up or down are only an issue when you sell or buy. In the last 12 months, only 1,076,288 properties changed hands out of 27.2 million households in the UK in 2017, meaning only 3.7% would have been affected if property values had dropped in the last year.
Property values in Rotherham are 214.15% higher than the summer of 1998
Yet this has been a long-term gain. The number one lesson in property is that it is a long-term game. The biggest issue in property isn’t house values or prices … it’s the number of homes built, because the number of households nationally has only increased by 6% since 2007, whilst the population has grown by 7.6%. That doesn’t sound a lot, until you express it another way… If the UK population had only grown by the same percentage as the percentage growth in UK households in the last decade, there would be 1,000,000 less people living in the UK today.
The final thought for this article is this: apart from central London, over the last 20 years it hasn’t mattered what part of the UK you were in with regards to the property market. Whether you are a landlord or homeowner, property is a long game. Therefore, look long term and you will win because until the Government start to build more homes, demand will outstrip supply for owning and renting!
As always, if you have any questions, please do not hesitate to get in touch. I’m happy to offer my advice over a cup of Yorkshire tea!
The average value of a property in Rotherham currently stands at £145,700 and the base rates is 0.5%. In many of my articles, I talk about what is happening to property values over the short term (i.e. the last 12 months or the last 5 years), but this time I want to examine what will happen in the future if interest rates rise. How will this impact property values in our area? To answer this question we need to go back over 40 years to 1975.
In 1975, the average value of a Rotherham property was £7,054. Inflation since that point has been 807.5%. Back in 1975, the average salary was £2,291 and average car was £1,840. A loaf of bread was 16p, milk was 28p a pint and a 2lb bag of sugar was 30p. Inflation has increased prices, so comparing like for like, we need to change these prices into today’s money. In real spending power terms, an average value of a Rotherham house in 1975, expressed in terms of today’s prices is £64,019.
That means in real terms, property costs a lot more today, than in the mid 1970s, but has it always been that way?
Looking at the important dates of the UK property market, you can see from the table below that the last two property boom years of 1989 and 2007, show that there was a significant uplift in the cost/value of property (when calculated in today’s prices):
Before we move on, hold onto the thought that you can quite clearly see from the table, in real terms, properties are cheaper today in Rotherham than they were in 2007!
Is there a link between house prices, inflation and other external economic factors (such as interest rates)?
Interest rates have a strong influence on inflation and property values, principally because changes in the interest rate impact the cost of mortgage payments for homeowners as well as the flow of foreign currency in (or out) of an economy. This in turn changes the exchange rate and the prices we can sell our goods and services abroad and the prices we pay on imports.
So how exactly do interest rates impact property values?
When interest rates rise, it has a substantial effect by increasing the monthly cost of mortgages. Higher mortgage payments will discourage prospective homebuyers or people looking to move up market (meaning their mortgage payments go up) – thus making it comparatively cheaper to rent.
Furthermore, the high cost of mortgage payments sometimes also pushes some existing home owners to sell, meaning there is an increase in house sellers and a decline in house purchasers, and as the law of economics state, when supply is increased and demand falls, (house) prices fall.
Another fallout of a rise in mortgage payments is a rise in repossessions. Interestingly, repossessions in the UK rose from 15,000 per annum in the late 1980s to over 75,000 per annum in the early 1990s, meaning even more properties came onto the market, exasperating the issue of over supply – pushing property values even lower.
High interest rates caused property values to fall in mid-1970s, early 1980s and most recently, the early 1990s (who can remember the 15% mortgage rate!) Conversely though, the drop in property values in 2008/2009 – was not due to interest rates, but due to the credit crunch and global recession.
So, what will happen
if when interest rates rise?
It is vital to remember that interest rates are not the only factor affecting property values. It is also possible that when interest rates increase (which they will from the current 0.5%), property values can also continue to rise (it happened throughout the mid to late 1980s and again between the boom years of 2002 and 2007). When confidence in the economy is good, and we as a country experience a period of rising real incomes (i.e. after inflation), then the British in the past have continued to buy houses.
Another important factor on property values is the supply of housing. A big reason in the current level of Rotherham house prices is due to the shortage of supply, which has kept property values higher than I would have expected. An additional factor is whether homeowners have a variable or fixed rate mortgage. 90.6% of new mortgages taken in the last quarter were at a fixed rate, and 66.2% of all mortgaged homeowners are on fixed-rate mortgages, therefore, they will not notice the effects of higher interest rate payments until they re-mortgage further down the line – therefore, there is frequently a time-lag between higher interest rates and the effect on property values.
Another factor on mortgages is the ability to get one in the first place. Back in 2014, mortgage providers were told to be stricter on their lending criteria when arranging mortgages following the footloose days of 125% loan to value mortgages with the Northern Rock. These new rules are a lot more rigorous and scrutinise the borrower’s ability to repay the payments (although it makes me laugh, when with starter homes it is nearly always cheaper to buy then rent!)
Affordability is the key
I think the final point is this… affordability is the key.
Look at red bars on the graph above and you will see that in REAL HOUSE PRICE terms that it’s cheaper to buy a home today than it was in 2007. Yet why aren’t we seeing people buying property at the levels we were seeing in the 2000’s before the credit crunch?
In conclusion, interest rates are important – but nowhere near as important on the Rotherham (and British) property market than they were 15 or 20 years ago.
So, before I go, one final thought: how do we measure the success of the Rotherham property market? Well, I believe one measure that is a good bellwether is the number of property transactions, as that could show a more truthful picture of the health of the property market than property values. Maybe I should talk about that in an up and coming article?
In the meantime, if you do need any property advice please get in touch – I’m happy to help.
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