Aylesbury House Prices Outstrip Wage Growth by 26.12% since 2007

I recently read a report by the Yorkshire Building Society that 54% of the country has seen wages (salaries) rise faster than property prices in the last 10 years. The report said that in the Midlands and North, salaries had outperformed property prices since 2007, whilst in other parts of the UK, especially in the South, the opposite has happened and property prices have outperformed salaries quite noticeably.

As regular readers of my blog know, I always like to find out what has actually happened locally in Aylesbury. To talk of North and South is not specific enough for me. Therefore, to start, I looked at what has happened to salaries locally since 2007. Looking at the Office of National Statistics (ONS) data for Aylesbury Vale District Council, some interesting figures came out...

Salaries in Aylesbury Vale have risen by 12.15% since 2007 (although it’s been a bit of a rollercoaster ride to get there!) - interesting when you compare that with what has happened to salaries regionally (an increase of 15.87%) and nationally, an increase of 17.61%.

Next, I needed to find what had happened to property prices locally over the same time frame of 2007 and today. Net property values in Aylesbury Vale are 38.27% higher than they were in late 2007 (not forgetting they did dip in 2008 and 2009). Therefore...

Property values in the Aylesbury area have increased at a higher rate than wages to the tune of 26.12% ... meaning, Aylesbury is in line with the regional trend 

All this is important, as the relationship between salaries and property values is the basis on how affordable property is to first (and second, third etc.) time buyers. It is also vitally relevant for Aylesbury landlords as they need to be aware of this when making their buy-to-let plans for the future. If more Aylesbury people are buying, then demand for Aylesbury rental properties will drop (and vice versa).

As I have discussed in a few articles in my blog recently, this issue of ‘property-affordability’ is a great bellwether to the future direction of the Aylesbury property market. Now of course, it isn’t as simple as comparing salaries and property prices, as that measurement disregards issues such as low mortgage rates and the diminishing proportion of disposable income that is spent on mortgage repayments.

On the face of it, the change between 2007 and 2017 in terms of the ‘property-affordability’ hasn’t been that great. However, look back another 10 years to 1997, and that tells a completely different story. Nationally, the affordability of property more than halved between 1997 and today. In 1997, house prices were on average 3.5 times workers’ annual wages, whereas in 2016 workers could typically expect to spend around 7.7 times annual wages on purchasing a home.

The issue of a lack of homeownership has its roots in the 1980’s and 1990’s. It’s quite hard as a tenant to pay your rent and save money for a deposit at the same time, meaning for many Aylesbury people, home ownership isn't a realistic goal. Earlier in the year, the Tories released proposals to combat the country’s 'broken' housing market, setting out plans to make renting more affordable, while increasing the security of rental deals and threatening to bring tougher legal action to cases involving bad landlords.

This is all great news for Aylesbury tenants and decent law-abiding Aylesbury landlords (and indirectly owner occupier homeowners). 

Its Not Just Hallowe’en That Is Scary In October!

I touched on the current state of the Rental market in Aylesbury in my last article which would appear to be slower moving than it has been for any of the previous months of 2017.

This is what makes October scary if you are trying to let. For the 3 years prior to 2017, October was the lowest performing month in all three years and whilst this year, we have already exceeded the performance against October 2016, we are still seeing the market do what it seems to do year in, year out.

This was backed up by a recent Rightmove webinar, which confirmed that October for the rental market up and down the land follows the same pattern. In a poll conducted on this webinar, 55% of agents claimed it was harder to find good quality rental applicants for their properties in October and only 9% said it was still easy to find good quality applicants.

If it is just a trend, then we should see November pick back up to normal levels as in previous years. December will tail off toward Christmas but should start well.

But who has time to wait? each month that your property sits on the market is money lost.

I know I say this all the time, but it’s true… Listen to the advice of your agent!!!

Of 67 Rental Properties that have been loaded to Rightmove in the last 7 days leading up to 19/10/17.

17 are price reductions.

6 Have been marked as LET AGREED, yes that really is Just 6 Let in the last 7 days of the 245 properties available to let currently, which is around double the amount of available properties at the start of 2017.

So, supply has increased, demand appears to have slowed, but it has not stopped.

It’s really important to note that people are still looking at Rightmove, they are clicking to view properties online, but this activity online is not converting to viewings.

There could be any number of reasons for this; they aren’t sure if they really want to move in the lead up to Christmas, they have concerns about what Brexit could mean for their personal situation (work stability, right to remain or any other possible concerns that could come up from the mess that is Brexit),

it could also be that they just haven’t seen anything that is making them stop and think ‘I really must call to have a look at that property’.

The property market is really no different to any other market place, in that you have a product you want someone to purchase (or in this case rent). Your product needs to be compelling enough to get that interest and you want your product to sell (rent) before your competitors.

Regardless of the size, design or layout of your property, everyone has different preferences and your objective is to get the largest target audience to want to see your property over anyone else’s.

How?

There are three main factors to think about and the more of these that you get right, the better positioned you will be to achieve your goal.

The Presentation has to be right. The property should not be cluttered or in a poor state of repair. 

You should not accept anything other than good quality photographs from your agent

But, if its cluttered and in poor decorative state, your agent may not even take internal photos... Is that doing the property justice in attracting you a good quality tenant?

The Price.  just because property “X” around the corner achieved top rent back in the summer and it is a similar property does not mean yours will too. The lettings market is dynamic and fast moving and getting your price right when you come to market is essential.

Make your property top of the list by pricing it to compete with everything else around, not to be hidden in amongst the rest and certainly not to stand out for being priced above and beyond anything else that is out there.

For every week that a property sits empty on the market, that is money lost, not just in rent but in utilities, council tax and mortgage and maintenance costs. Is coming on the market £25/£50 below the rest of the market a loss? or is it securing you a good tenant sooner than the rest of the market and cutting your expenses?

The Agent.   The last piece in the puzzle. Your agent should want to Let your property, it’s how they make money. They should want you to be happy that you have a good tenant that will remain your tenant for as long as possible, so that when the time comes you will come back to use them again and again. 

They should also want to give honest advice on the market conditions to ensure your property gets a good tenant at a correct rent in a sensible timescale.  Your agent should not shy away from having difficult conversations with you about, pricing, presentation and market conditions.

The conditions of the market could be at their slowest, but by taking an agents advice and getting ahead of the market as much as possible, will put you in a better position than any of your competitors.

It’s all too easy to forget that your target audience has access to the whole of the Aylesbury property market with the touch of a phone screen. They can search in price order, they can search for what has come to market most recently, if your property has sat on the market for a month or more at a price that is not competitive, how likely are they to even notice your property? Remember 67 properties have come to market in the last 7 days… your property needs to be top of that list. 

What is happening in the Aylesbury rental market?

Probably the question you are most often asked if you are a lettings agent! Right now, it is not an easy question to give a sensible response to.

We have seen significant price growth over this year and most landlords have been very happy that their property has been let swiftly. So it has been a good year to date.

However, things are changing. Properties are not letting as swiftly and the prices are not as strong. We are seeing some property dropping in price before being able to let (that is not counting the ones that went to market at an inflated price!).

The strong supply available means tenants are being much more picky and not willing to commit as fast.

If you are trying to let your property you need to have your price and presentation right. It goes without saying that you need a proactive agent on side giving you the right advice. If you stumble in to a void period things get expensive pretty quickly. Don’t forget that as we move in to the festive end of the year the number of tenants seeking to move will reduce further. Much better to let now at a price you don’t like than to wait and let at a price you like even less in November…or not at all.

If it is not at all then those weeks without a rental income become expensive real quick and it won’t be a very merry Christmas.

If you were to look at Rightmove today the figures are quite telling. In the last 7 days 30 properties have come on to the market, 13 properties have been reduced in price and ONLY ONE property of those has been let.

I have looked at the level of applicants we have registered in the third quarter of the year for the last three years and this year is 10% down on last year and 18% down on 2015

If I was a landlord trying to let at the moment I would be taking action immediately to secure a tenant.

One more thing to think about…The sales market locally like much of the South East is slowing down (950 properties available on Rightmove today for ‘Aylesbury’)…as it does so this represents both a threat and an opportunity.

The threat is from those sellers that won’t or can’t reduce in price to sell in this climate but still need to move. They will become your competitors as they turn to the lettings market to allow them to move.

The opportunity comes from those that need to sell because they need to move. These vendors are more likely to reduce or take a lower offer to get moved…they could make a great addition to your portfolio. Look out for properties that have just come back on the market…there may be a developer at the top of the chain who will throw money at the bottom of the chain to see a swift exchange. The same applies to Part Exchange properties…you can often identify these as they likely come on to the market the same day but with 2 or more agents.

If you are trying to let without success or want to sanity check your investment plans just drop in, call or email declen@mortimersaylesbury.co.uk 01296 398555 5Temple Street Aylesbury HP20 2RN

Moving from a 2 bed Aylesbury Property to a 4 bed will cost you £971 pm

Moving to a bigger home is something Aylesbury people with growing young families aspire to. Many people in two bedroom homes move to a three-bedroom home and some even make the jump to a four-bed home. Bigger homes, especially three bed Aylesbury homes are much in demand and it can be a costly move.

If you live in Aylesbury in a two-bedroom property and wish to move to a four-bedroom house in Aylesbury, you would need to spend an additional £3245,942 (or £971.47 pm in mortgage payments (based on the UK Bank average standard variable rate)). However, going straight to a four bed from a two-bed home is quite rare as most people jump from a two to three-bedroom home, then later in life, from a three to four-bedroom home.

So, after being asked my thoughts on moving home in Aylesbury by a friend recently, please find my analysis of the local property market and then some thoughts. To start with, let us see what the average property price is for an Aylesbury property by the number of bedrooms it has.

Average Property Price in Aylesbury by Bedroom
1 bed	2 bed	3 bed	4 bed	5 bed
£178,588	£238,485	£315,745	£484,426	£555,416

I then decided to calculate what it would cost to make the jump upmarket from one bedroom to two bedrooms, two to three bedrooms etc, etc, both in actual money and in mortgage payments (using the current standard variable rate of UK Banks of 4.74% - so the mortgage cost could be higher or lower depending on the mortgage taken).

	Aylesbury
	Price Difference to make the move	Cost per month to move up market (Mortgage)
1 bed to 2 bed	£59,896	£236.59
2 bed to 3 bed	£77,260	£305.18
2 bed to 4 bed	£245,942	£971.47
3 bed to 4 bed	£168,681	£666.29
4 bed to 5 bed	£70,990	£280.41

There are some interesting jumps in costs when moving upmarket as an Aylesbury buyer. The cost of moving from one to two beds, and two to three beds is relatively reasonable, whilst the jump from three to four beds in Aylesbury is quite high (and hence why some four bed properties are taking slightly longer to sell nowadays). On an aside, a lesson here for all my landlord property blog readers, you can quite clearly see why the larger 4 and 5 bed properties don’t offer the best returns for buy to let because the monthly finance costs and rents achieved don’t match up so well (i.e. A mortgage for a 4 bed home in Aylesbury would cost you 53.42% compared to a 3 bed mortgage, but the jump in rent would be a lot less than that - although depending on your circumstances, 4 bed homes can offer other advantages to buy to let – pick up the phone if you want to know what they are in more detail).

So, coming back and looking at the stock of properties in Aylesbury, this also makes interesting reading …

Housing Stock in Aylesbury by Bedrooms
1 bed	2 bed	3 bed	4 bed	5 bed
11.54%	32.05%	39.28%	16.67%	0.47%

The most active purchasers are 20 something and 30 something home-owning parents with growing families. Many look to more modern developments for the perfect balance of access to decent primary schools, commutability and lifestyle. For landlords looking to buy within Aylesbury, they face stiff competition from these 20/30 something families, making the three bedroom Aylesbury home massively in demand, often attracting spirited offers and selling within weeks of listing. This mix of homebuyers and landlords is a pressure point in the Aylesbury property market.  Again, if you are a landlord, call me and I will show you areas with decent returns where you aren’t in so much competition with young Aylesbury family homebuyers.

Yet, the cost of an additional bedroom can be too much for some Aylesbury buyers. It is quite challenging moving home the first time, but to then find you are priced out on the next move up the ladder can be quite disconcerting, with families often having to move to a different part of town to get the bigger home they need.

Nevertheless, that’s the place many homeowners find themselves in with the cost of the additional bedroom being too much to bear. To those buying their home for the first time, all I suggest is they not only consider the mortgage payments and other costs of their first home, but also do their homework into their next rung up the Aylesbury property ladder. Thinking about it now will keep you ahead of the game in the future; as your number of bedrooms, family property needs and lifestyle wants change.

..and Aylesbury landlords – well these changes in the way people live also mean there are opportunities to be had in the Aylesbury rental market. Many Aylesbury landlords are starting to pick my brain on this.