Wednesday, 21 December 2016

Aylesbury OAP’s sitting on £2.17 bn of Property

Aylesbury people aged over 65 currently hold more housing wealth in their homes than the annual GDP of the whole of the Scottish Borders … and this is a problem for everyone in Aylesbury!

Many retiree’s want to move but cannot, as there is a shortage of such homes for mature people to downsize into. Due to the shortage, bungalows command a 10% to 20% premium per square foot over houses of the same size with stairs. To add to the woes, in 2014, just 1% of new builds in the UK were bungalows, according to the National House Building Council - down from 7% in 1996.

Research has found that there are 5,738 households in Aylesbury owned outright (i.e. no mortgage) by over 65 year olds. Taking into account the average value of a property in Aylesbury, this means £2.17 billion of equity is locked up in these Aylesbury homes, compared to the GDP of the whole of the Scottish Borders being £1.7 billion of GDP.

A recent survey by YouGov, found that 36% of people aged over 65 in the UK are looking to downsize into a smaller home. However, the Government seems to focus all its attention on first-time buyers with strategies such as Starter Homes to ensure the youngsters of the UK don’t become permanent members of ‘Generation Rent’. Conversely, this overlooks the chronic under-supply of appropriate retirement housing essential to the needs of the Aylesbury’s rapidly ageing population. Regrettably, the Aylesbury’s housing stock is woefully unprepared for this demographic shift to the 'stretched middle age’, and this has created a new 'Generation Trapped’ dilemma where older people cannot move.

Some OAP’s who are finding it difficult to live on their own, are unable to leave their bungalow because of a lack of sheltered housing and ‘affordable’ care home places. So, older retirees can't leave bungalows, younger retirees can't buy bungalows and younger people can't buy family houses.

Interestingly, adding insult to injury, the problem will only get worse, as in the 50 year old to 64 year old homeownership age range there are an additional 4,021 Aylesbury households that are mortgage free and a further 5,039 Aylesbury households who will be completing their mortgage responsibility. With Government projections showing the proportion of over 65’s will rise by over a third from the current 17.7% to 24.3% of the population in the next 20 years ... this can only add greater pressure to the Aylesbury Property market.

House prices have rocketed over the last 40 years because the supply of property has not kept up with demand. With migration, people living longer and high divorce rates (meaning one family becomes two) we need, as a Country, 240,000 properties to be built a year to just stand still. In the 1990’s and early 2000’s, the Country was building on average 180,000 to 190,000 households a year, but since the Credit Crunch (2009), that has only been between 130,000 and 145,000 households a year.

The solution …. release more land for starter homes, bungalows and sheltered accommodation because land prices are killing the housing market as the large firms dominating the construction industry are more likely to focus on traditional houses and apartments. My opinion – until the Government change the planning rules and allow more land to be built on – Bungalows could be a decent bet for future investment as they continue to attract ever growing premiums?

As always any thoughts are always welcome,

I wish you all a merry Christmas and a prosperous new year.

Tuesday, 13 December 2016

Aylesbury Property Market – Q4 Update

Well, hasn’t 2016 been eventful. The ups and downs of Brexit, the Queen’s 90th, Andy Murray winning Wimbledon, Trump, Bake Off to Channel 4 and something close to the hearts of every buy to let landlord and homeowner in Aylesbury ... the Aylesbury property market.

So, let’s look at the Aylesbury property market...

In the last month, Aylesbury property values dropped by 0.08%, leaving them, year on year 13.69% higher, whilst interestingly, Aylesbury asking prices are down 2.0% month on month. All three statistics go to show the Aylesbury property market has recovered well after the summer lull, which was worsened by the uncertainty surrounding the EU vote back in June. Irrespective of all the issues, the average value of an Aylesbury home now stands at £379,500.

Generally, Aylesbury asking prices continue to hold up well, as asking prices are 4.7% higher year on year. At this time of year, asking prices tend to drop on the run up to Christmas and locally, they had dropped by 2.0% last month (November 2016), although this compares well with last year’s drop in Aylesbury asking prices, as we saw asking prices drop by 1.1% in November 2015.

After chatting with fellow property professionals in Aylesbury, all of us have seen the number of property sales fall slightly, suggesting a slowing market. However looking at what our own sales team have done in December so far, they have seen much improved results when comparing with previous years.

The numbers are limited, so it’s interesting to take note from a recent survey by the Royal Institution of Chartered Surveyors, stating new buyer enquiries and new instructions are falling at the same rate, suggesting that there will not be a downward pressure on property values.

Looking at the figures for the UK, property values are generally rising slower than a few years ago, but on a positive note, there's still growth across the UK. You see, slowing property value growth isn't solely Brexit related, but after a number of years of double digit rises in property values, affordability has weakened and cooling price growth is widely seen to be a natural correction of the market.

On the other hand, interest rates being at a record low of 0.25% are helping the property market. The cut in interest rates in the late summer was the medicine for the post-Brexit worry and will, as a consequence, ensure that the UK economy continues to be underpinned by buoyant property prices.

 So, what will happen in 2017 in the Aylesbury property market?

Some say until we know what type of exit the UK will make from the EU it is hard to evaluate the outcome. Although, I believe, the whole Brexit issue is a sideshow to the main issue in the UK (and Aylesbury) housing market as a whole. As I have mentioned time and time again over the last few months, the biggest issue is demand outstripping supply when it comes to the number of households required to house us all. Aylesbury has an ever-growing population: with immigration (we still have at least two years of free movement from EU members into the UK), people living longer and the fact we need thousands of additional households as the country has nearly 115,000 divorces a year (where one household becomes two households).

As always, you can find me in my Temple Street office and I welcome your thoughts when you are next in town.
I'm looking forward to Christmas Turkey.



Monday, 12 December 2016

Aylesbury Semi Detached House Prices rise by 411% in 20 years

The semi-detached house with its bay windows and net curtains has long been ridiculed as an emblem of safe, lacklustre and desperately uncool suburban life; the homes of the likes of Hyacinth Bucket in Keeping up Appearances and more latterly Alan Partridge – but they could have the last laugh - having enjoyed the highest price growth of any property type in Aylesbury, up by an average 411% increase in the last twenty years.

The semi can now laugh in the face of its posher detached counterpart, which saw a rise of only 298% in the same 20-year period. Looking at smaller properties, flats/apartments only rose 260%, whilst terraced houses did better at 349% (although they were starting from a lower base and demand from buy to let landlords has had a big part in driving the values on that type of house (i.e. the price a buy to let landlord is prepared to pay is driven by the rent the landlord can achieve). 

In 1996 the average value of an Aylesbury semi stood at £61,100,
today it stands at £312,200 

Such is the attractiveness of semis, which are less expensive than detached houses but have most of the same benefits for families. Semi-detached houses were built in their hundreds of thousands by the Victorians and Edwardians between the wars and through to the present day. Interestingly in the late 19th Century and early 20th century – they often were not referred to as semi-detached – but as villas! 

So whilst Europeans live on top of each other in apartments us British chose, in the late Victorian and early Edwardian times, suburban comfort, being near … but not too near, the neighbours! I once heard someone say the semi-detached house was a peculiar crossbreed that doesn’t stand on its own — it is inseparable from its neighbour — yet somehow still embodies a dream of suburban independence. 
Over one in four houses in Aylesbury is a semi-detached house 

There are 9,327 semi-detached properties in Aylesbury and they represent 32.48% of all the households in Aylesbury. Aylesbury has such a mix of semi-detached properties with the older semis to more modern ones built in the last couple of decades. Especially with the older ones, the semi offered a hall to provided separation between the reception rooms and privacy for their occupants. Also the downstairs offered larger rooms to accommodate dining tables, whilst upstairs, bedrooms were smaller, yet cosy.  

However, probably the most overlooked aspect of popularity for semis is the garden. The front garden, designed to separate the house from the world, and the back garden designed for private relaxation. The semi in the suburbs was relaxing, well presented, plumbed and enhanced by a garden so that when a window was opened the air had a chance of being genuinely fresh… and it’s for all those reasons why 316 semi-detached houses have been sold in Aylesbury in the last 12 months alone.  Still as popular today as they were with the Victorians all those years ago – some things just stand the test of time!
Whatever property type you are thinking of adding to your portfolio next year I am sure it will let readily as the market remains strong with a lack of supply continuing to feed strong rental prices. If you are in town stroll in to my office to discuss any plans you may have whenever you wish or email me

Thursday, 1 December 2016

Aylesbury First Time Buyers Are Paying 17.4% More Than 12 Months Ago

Figures just released by the Bank of England, show that for the first half of 2016, £128.73bn was lent by UK banks to buy UK property - impressive when you consider only £106.7bn was lent in the first half of 2015. Even more interesting, was that most of the difference was in Q2, as £68.12bn was lent by UK banks in new mortgages for house purchase, which is the highest it has been for two years. Looking locally, in Aylesbury last quarter, £545.8m was loaned on HP21 properties alone! 

Even though the Bank won’t be releasing the Q3 figures until December 2016, as I discussed a few weeks ago, HMRC have published their own preliminary data to suggest Q3 will be even better, with a massive growth of buy-to-let landlords to the housing market in that time frame. Fascinating, as it seems to fly in the face of the popular narrative – that the uncertainty surrounding Brexit would negatively impact buyer sentiment.

And it’s not just buy-to-let landlords that seem to be flourishing. I am finding that first-time buyers are also a lot more confident too. Low, and now negative, inflation has had a tangible impact on household finances and first-time buyers feel more secure in their jobs. Coupled with a low interest rate environment and you have all the ingredients for a strengthening property market. To back that up with numbers, of the £68.12bn of mortgages lent in the Quarter (Q2), £14.9bn was lent to first-time buyers (the highest proportion of that overall lending for over two years at 21.99%). 

When I looked at the data for Aylesbury Vale District Council area, the average price paid by first-time buyers (FTB’S) was £253,957, which is a rise of 2.0% from last month and a rise of 17.4% to twelve months ago. The Land Registry then categorise the remaining buyers into cash buyers or those buying with a mortgage. The average price paid by cash buyers was £306,694, a rise of 1.92% from last month and a rise of 17.22% to twelve months ago, whilst buyers with mortgages (but not FTB’s), the average price paid by them was £319,806, a rise of 1.9% from last month and a rise of 17.31% to twelve months ago. 

What surprised me with these figures was how close the property prices, values and percentages were to each other. It just goes to show the combination of low mortgage rates and a stable job market will continue to have a positive effect on the Aylesbury and UK market.  And that is why, while there is undoubtedly more cautiousness in the market at present than a year or so ago (among borrowers and mortgage companies alike) - mortgage rates are so competitive that they are inducing people to commit to a home purchase.

It seems the great Brexit uncertainty is over hyped, and house price growth as well as mortgage approvals, will pick up pace into 2017.
Now is a great time to give thought to your 2017 investment plans. Pop in to see me when you are passing or trying to avoid the Xmas carols!
I'm lovin' this cold weather.