Thursday, 29 September 2016

What is really happening in the Aylesbury Property Market?

Well it has been a few months since Brexit and as we settle into the Autumn with the Great British Bake Off, Strictly and the Football season ... the newspapers are returning to their mixed messages of good news, bad news and indifferent news about our favourite subject after the weather ... the property market.

The thing is 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 the scale is Kensington and Chelsea, which has seen average prices drop in the last twelve months by 6.2% whilst in our South East region, house prices are 12.3% higher. But, what about Aylesbury?
Property prices in Aylesbury are 17.3% higher than a year ago and 1.9% higher than last month.
So what does this mean for Aylesbury landlords and homeowners? Not that much unless you are buying or selling in reality. Most sellers are buyers anyway, so if the one you are buying has gone up, yours has gone up.  Everything is relative but what I would say is, if you look hard enough, there are still some good buys to be had in Aylesbury.
However, an important question you should be asking though is not only what is happening to property prices, but exactly which price band is selling? Where is the activity? I like to keep an eye on the property market in Aylesbury on a daily basis because it enables me to give the best advice and opinion on what (or not) to buy in Aylesbury.
If you look at Aylesbury and split the property market into four equal sized price bands, each price band would have around 25% of the property in Aylesbury, from the lowest in value band (the bottom 25%) all the way through to the highest 25% band (in terms of value).
·         Nil to £230k                         137 properties for sale and 183 sold (stc) i.e. 57% sold
·         £230k to £300k                  146 properties for sale and 160 sold (stc) i.e. 52% sold
·         £300k to £375k                  156 properties for sale and 119 sold (stc) i.e. 43% sold   
·         £375k +                                 136 properties for sale and 75 sold (stc) i.e. 35% sold
Perhaps not surprising that it is the lower Aylesbury market that is doing the best? Investors are still active and first time buyers are taking advantage of some great mortgage packages.
The next few months’ activity will be crucial in understanding which way the market will go but people will always need a roof over their head
And why? Because 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! Give me a call 01296 398555 or pop in when you are passing to discuss your investment plans.

Monday, 19 September 2016

The 6,677 Aylesbury Savers batten down the hatches with low interest rates set to continue into the 2020’s

You might ask, what has the plight of the Aylesbury savers to do with the Aylesbury Property Market … everything in fact.  Read the newspapers, and every financial wizard is stating that with the decision of the Bank of England’s Monetary Policy Committee in early August to cut the Bank of England base rate to an all time low of 0.25 per cent, savers should prepare themselves for interest rates to stay low well into the early 2020’s.  

... And this is not 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 around 0.61 per cent. 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 looong 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 Aylesbury house prices and buy to let yields have made property investment in Aylesbury an appealing option for many. According to my research, the... 

Average Yield over the last five years for
Aylesbury Buy to let property has been 4.6% a year 

… and average Property Values in Aylesbury over the same period have risen by 29.2%.  

Using these averages, the Aylesbury landlord’s property would be worth £258,400 and they would have received a total of £46,000 in rent – making the total return £304,400. Meanwhile, whilst our 6,677 Aylesbury Saver’s, using the average savings rates for the last 5 years, even if they had reinvested the interest, their £200,000 would only be £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 and Shares ISA. Although you can only add £15,240 a year into an ISA, but you would also have the ability to sell up quickly if you want ... but one last thought… 

The other side of the coin is that you cannot buy an unloved ‘stock market income based investment fund’ and set about renovating it and adding value yourself. The investment fund isn’t something that you can touch and feel, isn’t something tangible, isn’t something physical, isn’t something concrete, it is not bricks and mortar ... and that is why   the love affair of the British with Property will continue. 

If you are considering becoming a buy to let landlord in Aylesbury, do you know enough about the Aylesbury property market to be able to buy with confidence sure that the product will suit your investment objectives now and in the future? Do know what strategies to employ to reduce exposure to capital Gains Tax? Are you able to make your portfolio more tax effective? How should you tackle Inheritance tax? Do what many Aylesbury landlords do and visit the Aylesbury Property Blog where there is a host of articles like this


Monday, 12 September 2016

What will the 0.25% Interest Rate do to the Aylesbury Property Market?

I had an interesting chat with an Aston Clinton landlord who owns a few properties in the town. He popped his head in to my office as his wife was shopping in town (and let’s be honest talking about the Aylesbury Property Market is a lot more interesting than clothes shopping with the wife!). We had never spoken before (because he uses another agent in the town to manage his Aylesbury properties) yet after reading my blog on the Aylesbury Property Market he wanted to know my thoughts on how the recent interest rate cut would affect the Aylesbury property market. 

Well it has 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 Aylesbury, because even though we have had a number of local success stories , a large number of people are employed in these sectors. In Aylesbury, of the 37,988 people who have a job, 3,103 are in the manufacturing industry and 2,806 in Construction meaning  

8.2% of Aylesbury workers are employed in the Manufacturing
sector and 7.4% of Aylesbury workers are in Construction 

The other sector of the economy the Bank is worried about, and an equally important one to the Aylesbury economy, is the Financial Services industry. Financial Services in Aylesbury employ 1,603 people, making up 4.2% of the Aylesbury 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 will not do much to the Aylesbury property market directly, but another measure also included in the recent announcement was £100bn of new funding to banks. This extra £100bn will help the High St banks pass on the base rate cut to people and businesses, meaning the banks will have lots of cheap money to lend for mortgages ... which will have an effect on the Aylesbury property market (as that £100bn would be enough to buy half a million homes in the UK).

It will likely take until early in the New Year to find out the real direction of the Aylesbury 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 in my blog and the specific effect on Aylesbury). The severe undersupply means that Aylesbury 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 and 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.

If you want to talk through your investment plans pop in to our office when you are next passing, or the wife is shopping!

Only 35.5% of Aylesbury Rented Property have Children living in them.

A few weeks ago I was asked an interesting question by a local landlord who, after reading the Aylesbury Property Blog, emailed me and asked me – “Are Aylesbury Landlords meeting the Challenges of tenanted families bringing up their families in Aylesbury?” 

Irrespective of whether you are a tenant or a homeowner, to bring up a family, the most important factors are security and stability in the home. A great bellwether of that security and stability in a rented property is whether tenants are constantly moving. Many tenancies last just six months with families at risk of being thrown out after that with just two months’ notice . 

Some say 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 Aylesbury compared to the National figures, of the 5,073 private rental homes in Aylesbury, 1,799 of these have dependent children in them (or 35.5%), which is interestingly below the National average of 37.4%.

Even more fascinating are the other tenure types in Aylesbury… 

·         39.5% of Social (Council) Housing in Aylesbury have dependent children
·         43.9% of Aylesbury Owner Occupiers (with a Mortgage) have dependent children
·         9.8% of Owner Occupiers (without a Mortgage) have dependent children 

Although, 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. 
Finally, there is an extra piece of good news for Aylesbury tenants. The English Housing Survey notes that those living in a private rented property for  long periods of time generally paid less rent than those who chopped and changed.

Friday, 9 September 2016

12,100 People Live In Every Square Mile Of Aylesbury – Is Aylesbury Over Crowded?

Is Aylesbury  in the clutches of a population crisis? Has it now started to affect the quality of life of those living in Aylesbury? There are simply not enough homes in Aylesbury to house the great number of people wanting to live in the town. Is the burden on public services at breaking point? Are parents unable to send their child to their first choice of primary or secondary school and are the chances of getting a decent Dentist or GP Doctor Surgery next to nil? 

Well we know what the papers would say... but let us look at real numbers, and in particular at the subject of Aylesbury Property. To start with, the UK has roughly 1,065 people per square mile – the second highest in Europe. The total area of Aylesbury itself is 5.970 square miles and there are 72,000 Aylesbury residents, meaning …  

12,100 people live in each square mile of Aylesbury, it is 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 Aylesbury, only 17.17 people live in every acre of Aylesbury … not as headline grabbing, but a lot closer to home and relative to everyday life, a figure that doesn’t seem that bad.  

Yet, the issue at hand is, we need more homes building. 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?

I came across this fascinating piece of information 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 an error…. 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%

.. leaving 88.5% as Open Countryside (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 20 storey concrete and glass behemoth apartment blocks next to local beauty spots such as Waddesdon Manor or The Chiltern Hills, but with some clever planning and joined up thinking, we really do 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 Aylesbury. If anyone has  ideas, I would love to hear from you. 

In the meantime, if you would like to read other articles about Aylesbury Property Market, please visit the Aylesbury Property Market Blog

New House Building in Aylesbury drops by 4.8% in the last year

Even with Brexit and the fact immigration numbers will now be reduced in the coming years, there is an unending and severe shortage of new housing being built in the Aylesbury area (and the UK as a whole).  Even if there are short term confidence trembles fueled by newspapers hungry for bad news, the ever growing population of Aylesbury with its high demand for property versus curtailed supply of properties being built, this imbalance of supply/demand and low interest rates will underpin the property market. 

When the Tories were elected in 2015, Mr. Cameron vowed to build 1,000,000 new homes by 2020.  If we as a Country hit those levels of building, most academics stated the UK Housing market would balance itself as the increased supply of property would give a chance for the younger generation to buy their own home as opposed to rent.  However, the up-to-date building figures show that in the first three months of 2016 building starts were down.  Nationally, there were 35,530 house building starts in the first quarter, a long way off the 50,000 a quarter required to hit those ambitious, some would say unrealistic, targets. 

Looking closer to home, over the last 12 months, new building in the Aylesbury Vale District Council area has dropped.  In 2014/15, for every one thousand existing households in the area, an additional 15.53 homes were built.  For 2015/16, that figure is now only 14.78 homes built per thousand existing households.  Nationally, to meet that 1,000,000 new homes target, we need to be at 7.12 new homes per thousand, which means Aylesbury Vale District Council is actually above the National target, the problem is the country is only building at a rate of 4.9 for every thousand exiting households – we can’t just rely on little old Aylesbury to build for the rest of the Country. 

To put those numbers into real chimney pots, over the last 12 months, in the Aylesbury Vale District Council area, 

·         940 Private Builders (e.g. New Homes Builders)

·         150 Housing Association

·         Nil   Local Authority 

Cameron and Osborne focused their attention too much on the demand side of the housing equation, using the Help to Buy scheme and low deposit mortgages to convert the ‘Generation Rent’ i.e. Aylesbury ‘20 somethings’ who are set to rent for the rest of their lives to ‘Generation Buy’.  On the other side of the coin the new Housing Minster, Gavin Barwell, should concentrate the Government’s efforts on the supply side of the equation.  There needs to be transformations to planning laws, massive scale releases of public land and more investment, as more inventive solutions are needed. 

 Whilst our new PM has many plates to spin, evading the housing crisis will only come at greater cost later on.  What a legacy it would be if it was Mrs. May who finally got to grips with the persistent and enduring shortage of homes to live in.  The PM has already referenced the ‘need to do far more to get more houses built’ and stop the decline of home ownership.  However, she has also ruled out any changes to the green belt policy.
Her announcements on proposed changes to the school system show she is not afraid to confront issues...interesting times ahead!
Nala in good form, sunny walks.