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.

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 https://www.google.co.uk/#q=the+aylesbury+property+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.

 

An excellent Southside of Aylesbury one bedroom maisonette with 4.7% gross yield and no chain.

A vacant first floor one bedroom maisonette in Dalesford Road Aylesbury HP21 9XZ. The property has a modern kitchen, spacious lounge, modern bathroom and a double bedroom. There is an allocated parking space to the rear of the property. Easy access in to town or to commute by car out of Aylesbury. All in all an excellent property for rental.

Rental value should be fine at £650pcm giving a gross income of £7800pa, equating to a gross yield of 4.7%. After costs still better than the banks and with great opportunity for capital growth.

For viewings ring the Mortimers sales team on 01296 398555.

84.1% of Aylesbury Properties have 3 or more bedrooms

The orthodox way of classifying property in the UK is to look at the number of bedrooms rather than its size in square metres (although now we are leaving the EU – I wonder if we can go back to feet and inches?). Homeowners and tenants are happy to pay for more space. The more bedrooms a house or apartment has, the bigger it is likely to be. The reason being not only the actual additional bedroom space, but that properties with more bedrooms tend to have larger / more reception (living) rooms. This is not so surprising given that properties with more bedrooms would typically accommodate more people and therefore require larger reception rooms.

Aylesbury homeowners and Aylesbury landlords I talk to often ask me which attributes and features are likely to make their property comparatively more attractive and which ones may detract from the price. Over time, buyers’ and tenants’ wants and needs have changed. In Aylesbury, location is still the No. 1 factor affecting the value of property, and a property in the best areas can command a price nearly substantially higher than a similar house in an ‘average’ area. However, after location, the next characteristic that has a significant influence on the desirability, and thus price, of property is the number of bedrooms and the type (i.e. Detached/ Semi/Terraced/Flat).

In previous articles, I have analysed the Aylesbury housing stock into bedrooms and type of property, but here I have cross-referenced type against bedrooms. These figures for the Aylesbury Vale District Council area make fascinating reading. It shows 84.1% of all properties in the area have 3 or more bedrooms

Bedrooms	Detached	Semi-detached	Terraced (including end-terrace)	Flat
1	32	96	95	338
2	320	1,794	2,565	1,146
3	2,881	8,607	5,809	216
4	7,108	3,159	1,083	54
5 or more	3,971	719	189	8

 

I was surprised at the low numbers of one and two bedroom properties as tenants and first time buyers  alike favour smaller one and two bed properties in Aylesbury (so they would be attractive to buy to let investors). It is interesting that there has been little change in the numbers of properties on the market in total. However the split in bedrooms on the market over the last 12 months is much more marked. 

·         12 months ago, 54 one bed properties were for sale in Aylesbury, today 25, a drop of 54%

·         12 months ago, 118 two bed properties were for sale in Aylesbury, today 97, a drop of 18%

·         12 months ago, 105 three bed properties were for sale in Aylesbury, today 165, a rise of 57%

·         12 months ago, 54 four bed properties were for sale in Aylesbury, today 57, a rise of 6%

·         12 months ago, 13 five + bed properties were for sale in Aylesbury, today 15, a rise of 15% 

This availability helps to explain the substantial price increases we have seen at the lower end of the market as investors and first time buyers compete for limited stock…straight forward rules of supply and demand!

This trend is showing no signs of changing post Brexit with the interest rates at incredibly low levels money is cheaper that it has been for years and returns from the banks on invested money are miserly. I think we are likely to see increased activity once we approach September and the end of the holiday season.

Pricing attitudes continue to be an issue for buyers as prices are often inflated by over ambitious agents and vendors alike. But so long as you do your research there are still sensible buys to be had.

Want to talk through you plans?...pop in for a cup of tea and a digestive any time you are passing our office in Temple Street or email me ian@mortimersaylesbury.co.uk 

 

 

Post Brexit - Aylesbury Property Prices set to drop £30,400 in the next 12 months? 

Excluding central London which is another world, most commentators are predicting prices will be affected by around 10%. So looking at the commentators’ thoughts in more detail, property values in Aylesbury will be 10% lower than they would have been if we had not voted to leave the EU. 

As the average value of a property in the Aylesbury Vale District Council area is £303,800, this means property values are set to drop for the average Aylesbury property by £30,380.

 

... but before we all go into panic mode ... the devil is always in the detail.

Property values today, according to the Land Registry are 15.66% higher than a year ago in the Aylesbury Vale District Council area. The 12 months before that they rose by 9.35% and the 12 months before that, they rose by 5.42%. If we had not voted to leave, we could have safely assumed Aylesbury House prices would have been 15% higher by the Summer of 2017.

… and that is the point, we will not see a house price crash in Aylesbury, it is just that house prices in a years time will only be 5% higher than they are now (i.e. 15% less the 10% lower figure because of Brexit). Let’s look at the historic figures and how that compares to today’s figures for the Aylesbury Vale district Council area and Aylesbury as a whole.

Average Value of a property 20 years ago                             £  70,100

Average Value of a property 10 years ago                             £208,600

Average Value of a property 2 years ago                               £240,200

Average Value of a property 1 year ago                                 £262,700

Average Value of a property today                                          £303,800

Projected Value of a property in 12 months’ time               £319,000 

The average value of an Aylesbury property will be £15,200 higher in 12 months’ time than today. 

That is not to say Aylesbury property prices might not dip slightly in the run up to Christmas (they always have done just about every year since 2000 and most of those were boom years) ... but in 12 months’ time this is where Aylesbury property values will be.

Whilst the UK's vote for Brexit has created an uncertainty in the Aylesbury housing market, there is no need to panic and prospective buyers should merely use common sense about their purchases. I always say to people to be prudent and if you are taking out a mortgage, at some stage during the life of that mortgage, circumstances will be difficult. We will not have a 2008 Credit crunch fire sale of properties. There will not be distressed sales.

There will be asking price reductions as agents reduce the price of their existing stock which was ambitiously priced to start with to attract new business. 

... and Aylesbury landlords? Yields could rise if Aylesbury rents continue to grow, and this might also make it easier for landlords to obtain mortgages, as the income would cover more of the interest cost. If prices were to level  that could help Aylesbury landlords add to their portfolio, as rental demand for Aylesbury property is expected to stay strong as more people find it more and more difficult to obtain mortgages.

For more thoughts on the Aylesbury Property market ... visit the Aylesbury Property Blog http://theaylesburypropertyblog.blogspot.co.uk/

 

Frozen yoghurt...yum!

 

The Aylesbury Love Affair with its 9,700 Terraced Houses

Call me old fashioned, but I do like a terraced house.   In fact, I have done some research that I hope you will find of interest.  

In architecture terms, a terraced house is a style of housing in use since the late 1600’s in the UK, where a row of symmetrical / identical houses share their side walls. The first terraced houses were actually built by a French man, Monsieur Barbon around St. Paul’s Cathedral within the rebuilding process after the Great Fire of London in 1666.  Interestingly, it was the French that invented the terraced house around 1610-15 in the Le Marais district of Paris with its planned squares and properties with identical facades. However, it was the 1730’s in the UK, that the terraced house came into its own in London and of course in Bath with the impressive Royal Crescent.

However, we are in Aylesbury, not Bath, so the majority of our Aylesbury terraced houses were built in the Victorian era.  Built on the back of the Industrial Revolution, with people flooding into the towns and cities for work in Victorian times, the terraced house offered decent livable accommodation away from the slums. An interesting fact is that the majority of Victorian Aylesbury terraced houses are based on standard design of a ‘posh’ front room, a back room (where the family lived day to day) and scullery off that.  Off the scullery, a door to a rear yard, whilst upstairs, three bedrooms (the third straight off the second). The law was changed in 1875 with the Public Health Act and each house had to have 108ft of livable space per main room, running water, it’s own outside toilet and rear access to allow the toilet waste to be collected (they didn’t have public sewers in those days in Aylesbury – well not at least where these ‘workers’ terraced houses were built).  

It was the 1960’s and 70’s where inside toilets and bathrooms were installed (often in that third bedroom or an extension off the scullery) and gas central heating in the 1980’s and replacement Upvc double glazing ever since.  

Looking at the make up of all the properties in Aylesbury, some very interesting numbers appear.  Of the 29,792 properties in Aylesbury …

4,469 are Detached properties (15.0%)

9,503 are Semi Detached properties (31.9%)

9,701 are Terraced / Town House properties (32.5%)

6,104 are Apartment/ Flat’s (20.4%)

And there are 15 mobile homes, representing 0.05% of all property in Aylesbury.   

When it comes to values, the average price paid for an Aylesbury terraced house in 1995 was £51,590 and the latest set of figures released by the land Registry states that today that figure stands at £236,820, a rise of 359% - not bad when you consider detached properties in Aylesbury in the same time frame have risen by 234%. 

But then a lot of buy to let landlords and first time buyers I speak to think the Victorian terraced house is expensive to maintain.  I recently read a report from English Heritage that stated maintaining a typical Victorian terraced house over thirty years is around sixty percent cheaper than building and maintaining a modern house.  

Don’t dismiss the humble terraced house – especially in Aylesbury, it will do you proud!