As the trees turn from green to hues of red and brown, the Rotherham property market has a confident feel to it.
With the underlying fundamentals of a continued lack of properties being built, a shortage of properties (both in terms of quantity and quality) coming to the market and the continued low mortgage rate environment, buyer enquiries from first time buyers and buy-to-let landlords are strong and motivation is even stronger, given those inexpensive lending rates and general demand caused by under supply.
Now of course, there are a few potential hurdles coming towards us in the coming months that could affect the Rotherham (and UK) property market.
Mrs. May has yet to get her teeth into Brexit negotiations and we don’t know what the US Presidential elections might do to the money markets around the world, meaning that on the run up to Christmas, some savvy buyers may take advantage of the lack of certainty by making cheeky offers.
However, I don’t believe these will have a huge impact on property values (like the 2008 Credit Crunch).
You see, property ownership, whether it’s for yourself as a homeowner or buy-to-let landlord, is a long term investment.
In fact, focusing on buy-to-let, a number of landlords who own property in Rotherham have made contact with me recently asking for my thoughts on the future of the market in Rotherham. Well, as the Politician Edmund Burke said in the 18th century, “Those who don’t know history are destined to repeat it.”
In other words, to see the future you must look into the past.
Since the Millennium, the housing market has had everything thrown at it. The recent Brexit, last year’s General Election, the near melt down of the World Economy with the Credit Crunch, The Dot Com boom and bust, the housing market crisis in 2008, the housing boom of 2001 to 2004… the list goes on. In fact here is a graph (courtesy of the Land Registry) of average property values since the Millennium in the Rotherham area.
Even though we had the Dot Com bubble burst in 2000, two years later in January 2002, property values in the area had risen from £46,300 (in Jan 2000) to £52,600. They kept rising to August 2007, when they peaked at £136,000. Then we had the Credit Crunch and property prices continued to fall until June 2009, where they averaged £113,000… but look where they are now… £129,000.
The point I am trying to get across is long term future property values are more helpful to landlord investors than the month-by-month headline grabbing micro-movements in the property market. Look at the graph and you will see the growth in property values is an upward trend BUT the average darts about as each month goes by. So don’t watch the property indexes and panic if values drop next month or the month afterwards, because even in the glory days of 2001 to 2004 and 2012 to 2014, without fail, values always dropped slightly around Christmas, but people will always need a roof over their heads, and if they can’t buy and the council aren’t building anymore… only buy-to-let landlords can meet that demand.
Rotherham landlords are being hit in the pocket with the new up and coming taxation rules and yes, we might have the aforementioned bumpy ride on the run up to Christmas, but the trend will be a slow and steady upward momentum of property values, demand for rental properties and yields in the Rotherham property market into 2017 and beyond.
Do you want regular updates on the property market in Rotherham and South Yorkshire? Follow me on Twitter or Facebook for the latest news and insights.
Well it’s been a few months since Brexit and Autumn is here. The football season is in full swing and we’ve welcomed the Great British Bake Off, Strictly Come Dancing and The Apprentice back to our TVs. The newspapers are also returning to familiar territory… there’s good news, bad news and indifferent news about the Brit’s favourite subject (after the weather)… the property market.
However, we all know that 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 Yorkshire and Humber region, house prices are 5.5% higher.
But what about Rotherham?
Property prices in Rotherham are 1.3% higher than a year ago and 0.7% higher than last month.
So what does this mean for Rotherham landlords and homeowners? In reality, not that much unless you are buying or selling. Most sellers are buyers anyway, so if the one you are buying has gone up, yours has gone up.
Everything is relative and what I would say is this:
If you look hard enough there are still some bargains to be had in Rotherham – even in this market.
However, the most important question you should be asking is not ‘what is happening to property prices?’ but ‘which price band is actually selling?’
I like to keep an eye on the property market in Rotherham on a daily basis because it enables me to give the best advice and opinions on what to buy or not to buy.
If you look at Rotherham and split the property market into four equalled sized price bands, each price band would have around 25% of the property in Rotherham. A look at the percentage of properties on the market that are sold is quite interesting:
- 0-£80k 387 properties for sale and 99 sold (stc) i.e. 20% sold
- £80k-£120k 385 properties for sale and 138 sold (stc) i.e. 26% sold
- £120k-£190k 367 properties for sale and 234 sold (stc) i.e. 38% sold
- £190k+ 302 properties for sale and 102 sold (stc) i.e. 25% sold
Don’t you think that it’s fascinating that the middle market is doing the best?
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 1970s, the 1980s depression, Black Monday in the 1990s, and the credit crunch and the various house price crashes of 1973, 1987 and 2008.
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!
Follow me on Twitter or Facebook for the latest news and insights about property in Rotherham and South Yorkshire.
What has the plight of the Rotherham savers to do with the Rotherham property market…? The answer is “everything”.
Read the newspapers and you will see that every financial wizard is stating that the decision taken by the Bank of England’s Monetary Policy Committee in early August to cut the base interest rate to an all time low of 0.25% will mean most likely mean that they will stay low well into the early 2020s.
Savers must prepare themselves.
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%. 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 Rotherham house prices and princely buy to let yields have made property investment in Rotherham an appealing option for many.
According to my research…
The average yield over the last five years for Rotherham buy-to-let property has been 5.2% a year and average property values over the same period have risen by 16.3%.
Using these averages, the Rotherham landlord’s property would be worth £232,600 and they would have received a total of £52,000 in rent – making the total return £284,600.
Meanwhile, whilst the 10,438 savers in Rotherham, (using the average savings rates for the last 5 years, even if they had reinvested the interest) their £200,000 would only grow to £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 & Shares ISA.
One last thought though…
You cannot buy an unloved ‘stock market income based investment fund’ and set about renovating it and adding value yourself. It isn’t bricks and mortar and that is why my fellow Rotherham homeowners and Rotherham landlords is why the British love affair with property will continue.
If you are considering becoming a new buy-to-let landlord in Rotherham, I can help you out. Get in contact with me and follow me on Facebook and Twitter for the latest Rotherham property market news.
I had an interesting chat with a Moorgate landlord who owns a few properties in the town. He popped his head in to my office as his wife was shopping in the area. We had never spoken before (because he uses another agent in the town to manage his Rotherham properties) yet after reading the Rotherham Property Blog for a while, the landlord wanted to know my thoughts on how the recent interest rate cut would affect the Rotherham property market.
I would also like to share these thoughts with you.
It’s been a few weeks now since interest rates were cut to 0.25% by the Bank of England as the Bank believed Brexit could lead to a materially lower path of growth for the UK, especially for the manufacturing and construction industries. You see for the country as a whole, the manufacturing and construction industries are still performing well below the pre-credit crunch levels of 2008/09, so the British economy remains highly susceptible to an economic shock.
This is especially important in Rotherham, because even though we have had a number of local success stories in manufacturing and construction, a large number of people are employed in these sectors.
In Rotherham, of the 46,524 people who have a job, 6,384 are in the manufacturing industry and 4,071 in Construction meaning
13.7% of Rotherham workers are employed in the Manufacturing Sector and 8.8% of Rotherham workers are in construction.
The other sector of the economy the Bank is worried about, and an equally important one to the Rotherham economy, is the Financial Services industry. Financial Services in Rotherham employ 1,346 people, making up 2.9% of the Rotherham working population.
Together with a cut in interest rates, the Bank also announced an increase in the quantity of money via a new programme of Quantitative Easing to buy £70bn of Government and Private bonds. Now that won’t do much to the Rotherham property market directly.
However, another measure also included in the recent announcement was £100bn of new funding to banks. This extra £100bn will help the banks pass on the base rate cut to people and businesses, meaning the banks will have lots of cheap money to lend for mortgages…
This will have a huge effect on the Rotherham property market.
That £100bn would be enough to buy half a million homes in the UK.
It will take until early in the New Year to find out the real direction of the Rotherham property market and the effects of Brexit on the economy as a whole, the subsequent recent interest rate cuts and the availability of cheap mortgages.
However, something bigger than Brexit and interest rates is the inherent undersupply of housing (something I have spoken about many times on this blog and the specific impact on Rotherham). The severe undersupply means that Rotherham property prices are likely to increase further in the medium to long term, even if there is a dip in the short term. This only confirms what every homeowner and landlord has known for decades…
Investing in property is a long term project. As an investment vehicle, it will continue to outstrip other forms of investment due to the high demand for a roof over people’s heads and the low supply of new properties being built.
For more thoughts and insights into the Rotherham Property Market you can visit our Facebook page or follow us on Twitter.
A few weeks ago I was asked a fascinating question by a local Councillor who, after reading the Rotherham Property Blog, emailed me and asked whether Rotherham landlords are meeting the challenges of tenanted families bringing up their families in Rotherham.
What interesting question to be asked.
Irrespective of whether you are tenant or a homeowner, the most important factors are security and stability in the home when bringing up a family. A great bellwether of that security and stability in a rented property is whether tenants are constantly being evicted. Many tenancies last just six months with families at risk of being thrown out after that with just two months’ notice for no reason.
Some politicians keep saying we need to deal with the terrible insecurity of Britain’s private rental market by creating longer tenancies of 3 or 5 years instead of the current six months.
However, the numbers seem to be telling a different story.
The average length of residence in private rental homes has risen in the last 5 years from 3.7 years to 4 years (a growth of 8.1%), which in turn has directly affected the number of renters who have children.
In fact, the proportion of private rented property that have dependent children in them, has gone from 29.1% in 2003 to 37.4% today.
Looking specifically at the S60 area of Rotherham compared to the National figures, of the 2,182 private rental homes in Rotherham, 787 of these have dependent children in them (or 36.1%), which is below the national average of already stated 37.4%.
Even more fascinating are the other tenure types in Rotherham…
- 9% of Social (Council) Housing in Rotherham have dependent children
- 49% of Rotherham Owner Occupiers (with a Mortgage) have dependent children
- 6% of Owner Occupiers (without a Mortgage) have dependent children
When we look at the length of time these other tenure types have, whilst the average length of a tenancy for the private rented sector is 4 years, it is 11.4 years in social (council) housing, 24.1 years for home owners without a mortgage and 10.4 years of homeowners with mortgages.
Anecdotally I have always known this, but this just proves landlords do not spend their time seeking opportunities to evict a tenant as the average length of tenancy has steadily increased. This noteworthy 8.1% increase in the average length of time tenants stay in a private rented property over the last 5 years, shows tenants are happy to stay longer and start families.
So, as landlords are already meeting tenants’ wants and needs when it comes to the length of tenancy, I find it strange some politicians are calling for fixed term 3 and 5 year tenancies.
Such heavy handed regulation could stop landlords renting their property out in the first place, cutting off the supply of much needed rental property, meaning tenants would suffer as rents went up. Also, if such legislation was brought in, tenants would lose their ‘Get Out of Jail card’ – under current rules, they can leave at anytime with one month’s notice not the three or six month tenant notice suggested by some commenters.
Finally, there is an extra piece of good news for Rotherham tenants. The English Housing Survey notes that those living in private rented housing for long periods of time generally paid less rent than those who chopped and changed.
Rotherham is already in the clutches of a population crisis that has now started to impact the quality of life of those living in Rotherham. There are simply not enough homes in Rotherham to house the greater number of people wanting to live in the town.
The burden on public services is almost at breaking point with many parents unable to send their child to their first choice of primary or secondary school and the chances of getting a decent Dentist or GP Doctor Surgery next to nil.
Well that’s what the papers would say… but let’s look at real numbers regarding my specialist subject, property in Rotherham. To start with, the UK has roughly 1,065 people per square mile – the second highest in Europe. The total area of Rotherham itself is 11,900 square miles and there are 10,900 Rotherham residents, meaning …
9,200 people live in each square mile of Rotherham.
It’s no wonder we appear to be bursting at the seams!
… but yet again, newspapers, politicians and property market bloggers quote big numbers to sell more newspapers, get elected or get people to read their blog (I recognise the irony!). A square mile is enormous, so the numbers look correspondingly large (and headline grabbing). Most people reading this will know what an ‘acre’ is, but those younger readers who don’t, it is an imperial unit of measurement for land and it is approximately 63 metres square.
In Rotherham, only 13.13 people live in each acre. This is not as headline grabbing, but a lot closer to home and relative to everyday life. If I am being honest, it’s a figure that doesn’t seem that bad.
Yet the reality is that we still need more homes building. This is the issue at hand.
In 2007, Tony Blair set a target that 240,000 homes a year needed to be built to keep up with the population growth, whilst the Tory’s new target since 2010 was a more modest 200,000 a year. However, since 2010, as a country, we have only been building between 140,000 and 150,000 houses a year. So where are we going to build these homes because we have no space!
Or do we?!
Well, let me tell you this fascinating piece of information I found out recently in an official Government report. Looking specifically at England (as it is the most densely populated country of the Union), all the 20 million English homes cover only 1.1% of its land mass. That is not a typo, only one point one per cent (1.1%) of land in England is covered by residential property. In more detail, of all the land in the country –
- Residential Houses and Flats 1.1%
- Gardens 4.3%
- Shops and Offices 0.7%
- Highways (Roads and Paths) 2.3%
- Railways 0.1%
- Water (Rivers /Reservoirs) 2.6%
- Industry, Military and other uses 1.4%
This leaves 88.5% as Open Countryside…
(and if you think about it, add to that the gardens, which are green spaces, and the country is 92.8% greenspace)
As a country, we have plenty of space to build more homes for the younger generation and the five million more homes needed in the next 20 years would use only 0.25% of the country’s land. Now, I am not advocating building massive housing estates and giant concrete and glass apartment blocks next to local beauty spots such as Wentworth Woodhouse or Ulley Reservoir.
However, we really need some clever planning and joined up thinking. We need to think outside the box when it comes to how we are going to build and house our children and our children’s children in the coming 50 years in this area. If anyone has their own ideas, I would love to hear from you. You can contact us on Facebook or Twitter or get in touch via the contact feature at the top of this page.
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