News and views of property in English Riviera
This blog follows the buy-to-let market in Torbay. You’ll find tips, guidance, and analysis that relates specifically to Torbay and you’ll also find properties from all the estate agents in the town on here that may make decent investments. I operate Ridgewater Residential Lettings in Torbay and if you’re thinking of buying a property to let in Torbay, I’m happy to offer a second opinion.
Earlier this year the UK property market forecast 2020 was looking up. With the resolution of Brexit in sight, experts predicted a ‘buoyant’ spring. Then Covid-19 happened.
We know how the rest of the story goes.
After three months of lockdown, and a pretty stagnant market, here in Torbay and the rest of the UK, normality is finally starting to return. Sanctions are slowly being lifted, and just in time for the summer barbecue’s we’ve all been craving!
If you wondered how will coronavirus affect property prices, then read on for the full analysis from Ridgewater Sales and Lettings, and learn how the housing market is starting to bounce back.
Over the past few months we’ve all been honing our baking skills, Zooming left, right and centre and adapting to the ‘new normal’, as we await for the easing of lockdown. Then on 14 May, we heard the housing market news we’ve been waiting for – public house viewings could return, with new safety measures in place. These include restricted numbers of people attending viewings, no more ‘open-houses’, and for homeowners to vacate the property during viewings.
In a positive sign, on that day, Rightmove said that traffic to its property website returned to pre-lockdown figures with 5.2 million visitors – an uplift of 4 per cent on the previous year. In the subsequent week, a reported 11,000 new properties were listed for sale.
As many of us remain hopeful that the market will slowly regain momentum, we’re also aware that this will take time to return to pre-coronavirus levels.
Ultimately though, people need to move house for a whole host of reasons. Be it for relocating, expanding families, for work, or just for a change. This is particularly true of those aged 18 to 30 year’s old, who move on average three of four times during this age.
There’s another important factor, one you’re probably familiar with by now: remote working. Due to the coronavirus pandemic, 60 per cent of people are now working from home. As a result, we may see people looking to upsize to properties with home offices in the future.
Other studies suggest that 15 per cent of people are considering moving house due to life in lockdown. A further 34 per cent state that they feel differently about their home since Covid-19, such as the importance of a garden or the need for more space. So while the market may be slow in the short-term, there’s plenty of reasons to believe that long-term, it will bounce back.
It may be too soon to predict the impact of coronavirus on UK property prices, but the UK Land Registry figures are a useful indicator.
Although their data only runs until March 2020, it shows that the average house price in the UK was £231,855 at that time. It also reveals that property prices dropped by 0.2 per cent on the previous month. Although in good news, this had risen by 2.1 per cent compared to the previous year.
More recently, data from Nationwide, found that the average house prices dropped by 1.7 per cent in May compared to the previous month, with the latest average UK property price valued at £218,902.
But in keeping with the positive vibes, the housing market and our team at Ridgewater Sales and Lettings remains optimistic.
In their latest report, Robert Gardner, Nationwide’s Chief Economist, said that the policies put in place by the government to support the economy have helped limit damage. As we all know, these include furlough schemes and other financial support, which help to keep borrowing costs down.
In an encouraging statement, Robert Gardner said: “These same measures should also help ensure the impact on the housing market will ultimately be less than would normally be associated with an economic shock of this magnitude.”
As you’d expect, a snapshot of UK property prices right now shows the dent that coronavirus has made.
However, there are many reasons to be optimistic. As we know, things can change quickly, and once we return to the ‘new normal’, it’s expected for demand to return with property prices reflecting this.
You have secured your new dream house in Torbay, and the only thing remaining is to wait for moving day! It’s a thrilling time for anyone, single, couple, or family, and it’s easy to let the excitement get the better of you. In most cases, you will have a mountain of belongings to move from one property to another, so by planning in advance, you can make that move as smooth, efficient, and stress-free as possible.
It’s always best to start packing well in advance. In fact, it’s ideal if you can start packing up when you begin your new house hunt. This way, you can forget about the stress later on and instead begin to declutter and pack at the same time.
Sell any items of value that you don’t require to make a small profit and to offset some of the high costs of moving. Donate items to charity that aren’t worth selling but are still in good condition, and then recycle or bin the rest. This applies to everything, from clothes to knick-knacks. Streamline what you will bring to your new home.
Create a packing plan by going through what you need to have available until the day of the move. Once you have that list, you can then work out how you intend to pack up your belongings. This can be by theme, by room, or by both.
For example, you might have general bathroom boxes, bedroom boxes and kitchen boxes or you might instead pack by object type, for example packing away all your towels and tea-towels in one box and bathroom toiletries, hand soaps and so on in another. When packing, you should try and keep boxes at a manageable weight and ensure that items won’t break through the box, so don’t pile them too high! The last thing you want is for your valuables to become damaged in the moving process.
When packing up items in boxes, it’s very important that you label each box with its contents. This way, you won’t have to open every box right away and have your new home filled with items that don’t yet have a place to go. If you created a strategic enough packing plan, you should be able to unpack a few boxes and have everything you need to be comfortable whilst you unpack your belongings.
Not every piece of furniture can easily be taken apart, but the chances are you will have at least one or two items such as beds or wardrobes. Disassembling these items can make moving your furniture and belongings so much easier. You might also want to invest in movers blankets so that your furniture doesn’t get dented when it is disassembled.
If you have kids, it can be difficult to move to a new home, especially if they are worried about the change. You can improve this situation by asking them to help you pack. Have them declutter their own rooms and become involved and give them tasks disguised as games to help make the move fun.
Once everything is boxed up and labelled, you are going to want to hire professional movers. This takes out the heavy lifting, saves your back, and means your furniture is in good hands as it is packed up and moved into your new property. This is particularly important for furniture you couldn’t disassemble into small pieces.
The last thing that you should pack are your “First Night Boxes”. These boxes should have clothes for a few days, towels, toiletries, bed linen, blankets, kitchen tools and utensils, such as a kettle, mugs, tea and coffee. Essentially anything you will need for the first few nights in your new home. Bring them with you in your own vehicle so that you can easily find them once all your other items are safely within your new home in Torbay.
A smooth house move is one that is done well in advance. The last thing you want is to be scurrying about trying to pack everything away in a rush because your moving date is nearing, and you need to be out of the property in just a few days.
Decluttering for viewings is the perfect time to start packing and giving yourself that time means you can easily find items once you are in your new home, guaranteeing a stress-free move.
In the credit crunch of 2008/9 the rate of home moving plunged to its lowest level ever. In 2009 the rate at which a typical house would change hands slumped to only once every 19 years. The biggest reason being that confidence was low and many homeowners didn’t want to sell their home as Torquay property prices plunged after the onset of the financial crisis in 2008. However, since 2009, the rate of home moving has increased (see the table and graph below), meaning today:
The average period of time between home moves in Torquay is now 13.5 years.
This is an increase of 42.57 per cent between the credit crunch fallout year of 2009 and today, but still, it is a 38.04 per cent drop in moves by homeowners, compared to 15 years ago (The Noughties).
So why aren’t Torquay homeowners moving as much as they did in the Noughties?
The causes of the current state of play are numerous. In last weeks article I talked about how ‘real’ incomes and savings had been dropping. Another issue is the long-term failure in the number of properties being built. Only a few weeks ago in the blog, I was discussing the draconian planning rules meaning house builders struggle to locate building land to actually build on.
Back in the 1960’s and 1970’s, as a country, we were building on average 300,000 and 350,000 households a year. The Barker Review a few years ago said that for the UK to stand still and keep up with housing demand (through immigration, people living longer, a just under 50% increase in the number of households with a single person since the 1980’s and family makeup (i.e. divorce makes one household now two)) we needed to build 240,000 households a year. Over the last few years, we have only been building between 135,000 and 150,000 households a year.
Finally, as the UK Population gets older, there is no getting away from the fact that a maturing population is a less mobile one.
So, what does this mean for Torquay homeowners and landlords?
Well, if Torquay people are less inclined to move or find it hard to sell a property or acquire a new one, they are probably less likely to move to an improved job or a more prosperous part of the UK.
Many of the older generation in Torquay are stuck in property that is simply too big for their needs. The fact is that, in Torquay and the Torbay area, more than four out of every ten (or 42.6 per cent) owned houses has two or more spare bedrooms; or to be more exact …
17,020 of the 39,978 owned households in the Torbay area have two or more spare bedrooms.
So, as their children and grandchildren struggle to move up the housing ladder, with those young families bursting at the seams in homes too small for them i.e. overcrowding, we have a severe case of under-occupation with the older generation – grandparents staying put in their bigger homes, with a profusion of spare bedrooms.
Regrettably, I cannot see how the rate of properties being sold will rise any time soon. Many commentators have suggested the Government should give tax breaks to allow the older generation to downsize, yet in a recent White Paper on housing published just weeks before the General Election, there was no reference of any thoughtful and detailed policies to inspire or support them to do so.
This means that there could be an opportunity for Torquay buy to let landlords to secure larger properties to rent out, as the demand for them will surely grow over the coming years. As for homeowners; well those in the lower and middle Torquay market will find it a balanced sellers/buyers market, but will find it slightly more a buyers market in the upper price bands.
Interesting times ahead!
As I mentioned in a previous article, the average house price in Torquay is 8.14 times the average annual Torquay salary. This is lower than the last peak of 2008, when the ratio was 8.93. A number of City commentators anticipated that in the ambiguity that trailed the Brexit vote, UK (and hence Torquay) property prices might drop like a stone. The point is – they haven’t.
Now it’s true the market for Torquay’s swankiest and poshest properties looks a little fragile (although they are selling if they are realistically priced) and overall, Torquay property price growth has slowed, but the lower to middle Torquay property market appears to be quite strong.
Scratch under the surface though, and a different long-term picture is emerging away from what is happening to property prices. Torquay people are moving home less often than they once did. Data from the Office of National Statistics shows that the number of properties sold in 2016 is again much lower than it was in the Noughties. My statistics show…
Even though we are not anywhere near the post credit crunch (2008 and 2009) low levels of property sales, the torpor of the Torquay housing market following the 2016 Brexit vote has seen the number of property sales in Torquay and the surrounding local authority area level off to what appears to be the start of a new long term trend (compared the Noughties).
Interestingly, it was the 1980’s that saw the highest levels of people moving home. Nationally, everyone was moving on average every decade. Even though it was during the Labour administration of the late 1970’s where the right to buy one’s council house started, it was the Housing Act of 1980 that that really got council tenants moving, as Thatcher’s Tory government financially encouraged council tenants to buy their council-rented homes – for which countless then sold them on for a profit and moved elsewhere. The housing market was awash with money as banks were allowed to offer mortgages as well as the existing building societies, meaning it made it simpler for Brits to borrow even more money on mortgages and to climb up the housing ladder.
But coming back to today, looking at the property sales figures in the Torquay area since 2010/11, a new trend of number of property sales appears to have started. Interestingly, this has been mirrored nationally. The reasons behind this are complex, but a good place to start is the growth rate of real UK household disposable income, which has fallen from 5.01% a year in 2000 to 1.68% in 2016. Also, things have deteriorated since the country voted to leave the EU as consumer price inflation has risen to 2.7% per annum, meaning inflation has eaten away at the real value of wages (as they have only grown by 1.1% in the same time frame).
With meagre real income growth, it has become more difficult for homeowners to accumulate the savings needed to climb up the housing ladder as the level of saving has also dropped from 4.26% of household income to -1.11% (i.e. people are eating into their savings).
Next week I will be discussing how these (and other issues) has meant the level of Torquay people moving home has slumped to once every 13.5 years.
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 Torquay. 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 Torbay Council, some interesting figures came out…
Salaries in Torbay have risen by 20.27% 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 18.63%) 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 Torbay are 4.08% higher than they were in late 2007 (not forgetting they did dip in 2008 and 2009). Therefore…
Salaries in Torbay have risen by 20.27% 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 18.63%) 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 Torbay are 4.08% higher than they were in late 2007 (not forgetting they did dip in 2008 and 2009). Therefore…
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 Torquay landlords as they need to be aware of this when making their buy-to-let plans for the future. If more Torquay people are buying, then demand for Torquay 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 Torquay 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 simultaneously, meaning for many Torquay 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 Torquay tenants and decent law-abiding Torquay landlords (and indirectly owner occupier homeowners). Whatever has happened to salaries or property prices in Torquay in the last 10 (or 20) years … the demand for decent high-quality rental property keeps growing.
Moving to a bigger home is something Torquay 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 Torquay homes are much in demand and it can be a costly move.
If you live in Torquay in a two-bedroom property and wish to move to a four-bedroom house in Torquay, you would need to spend an additional £233,193 (or £921.11 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 Torquay 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 a Torquay property by the number of bedrooms it has.
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).
There are some interesting jumps in costs when moving upmarket as a Torquay 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 Torquay is quite high and therefore financially prohibitive for most families. This helps provide a partial explanation as to why some four-bed properties are currently taking slightly longer to sell.
As an aside, there is a lesson here for all my 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. Simply put the monthly finance costs and rents achieved don’t match up so well (i.e. a mortgage for a 4 bed home in Torquay would cost you 43.96% compared to a 3 bed mortgage, but the jump in rent would be a lot less than that). I don’t wish to be dismissive about the solidity of investing in larger properties because it does depend on your circumstances. Four bedroom properties sometimes offer other advantages. Pick up the phone if you want to know what they are in more detail.
A further look at the stock of properties in Torquay is revealing.
The most active purchasers are 20 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 Torquay, they face stiff competition from these 20/30 something families, making the three bedroom Torquay 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 Torquay 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 Torquay family homebuyers.
Yet, the cost of an additional bedroom can be too much for some Torquay 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 position 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 Torquay 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 Torquay landlords – well these changes in the way people live also mean there are opportunities to be had in the Torquay rental market. Many Torquay landlords are starting to pick my brain on this, so if you don’t want to miss out – drop me a line.
The mind-set and tactics you employ to buy your first Torbay buy to let property needs to be different to the tactics and methodology of buying a home for yourself to live in. The main difference is when purchasing your own property, you may well pay a little more to get the home you (and your family) want, and are less likely to compromise. When buying for your own use, it is only human nature you will want the best, so that quite often it is at the top end of your budget (because as my parents always used to tell me – you get what you pay for in this world!).
Yet with a buy to let property, if your goal is a higher rental return – a higher price doesn’t always equate to higher monthly returns – in fact quite the opposite. Inexpensive Torbay properties can bring in bigger monthly returns. Most landlords use the phrase ‘yield’ instead of monthly return. To calculate the yield on a buy to let property one basically takes the monthly rent, multiplies it by 12 to get the annual rent and then divides it by the value of the property.
This means, if one increases the value of the property using this calculation, the subsequent yield drops. Or to put it another way, if a Torbay buy to let landlord has the decision of two properties that create the same amount of monthly rent, the landlord can increase their rental yield by selecting the lower priced property.
To give you an idea of the sort of returns in Torbay…
Now of course these are averages and there will always be properties outside the lower and upper ranges in yields: they are a fair representation of the gross yields you can expect in the Torbay area.
As we move forward, with the total amount of buy to let mortgages amounting to £199,310,614,000 in the country, landlords need to be aware of the investment performance of their property, especially in the era of tax increases and tax relief reductions. Landlords are looking to maximise their yield – and are doing so by buying cheaper properties.
However, before everyone in Torbay starts selling their upmarket properties and buying cheap ones, yield isn’t the only factor when deciding on what Torbay buy to let property to buy. Void periods (i.e. the time when there isn’t a tenant in the property between tenancies) are an important factor and those properties at the cheaper end of the rental spectrum can suffer higher void periods too. Apartments can also have service charges and ground rents that aren’t accounted for in these gross yields. Landlords can also make money if the value of the property goes up and for those Torbay landlords who are looking for capital growth, an altered investment strategy may be required.
In Torbay, for example, over the last 20 years, this is how the average price paid for the four different types of Torbay property have changed…
It is very much a balancing act of yield, capital growth and void periods when buying in Torbay. Every landlord’s investment strategy is unique to them. If you would like a fresh pair of eyes to look at your portfolio, be you a private landlord that doesn’t use a letting agent or a landlord that uses one of my competitors – then feel free to drop in and let’s have a chat. What have you got to lose? 30 minutes and my tea making skills are legendary!
I was having a lazy Saturday morning, reading through the newspapers at my favourite coffee shop in Torquay. I find the most interesting bits are their commentaries on the British Housing Market. Some talk about property prices, whilst others discuss the younger generation grappling to get a foot-hold on the property ladder with difficulties of saving up for the deposit and other articles about the severe lack of new homes being built (which is especially true in Torquay!). However, a group of people that don’t often get any column inches are those existing homeowners who can’t move
Back in the early
To answer that, we have to go back 40/50 years. Inflation was high in the late 1960’s, 70’s and early 80’s. To combat that, the Government set interest rates high to try to lower inflation. Higher interest rates meant the householders monthly mortgage payments were higher, meaning mortgages took a large proportion of the homeowner’s household budget. However, that wasn’t all bad news as the high inflation eroded the mortgage debt in ‘real spending power terms’. Consequently, as wages grew (to keep up with inflation), this allowed them to get an even higher mortgage (whilst their mortgage debt was decreasing) and therefore to move up the property ladder quicker.
Roll the clock on to the late 1990’s and the early Noughties, and things had changed. UK interest rates tumbled as UK inflation dropped. Lower interest rates and low inflation, especially in the five years 2000 to 2005, meant we saw double digit growth in the value of UK property. This inevitably meant all the home owner’s equity grew exponentially, meaning people could continue to move up the property ladder (even without the effects of inflation).
This snowball effect (of everyone moving house) continued into the mid noughties (2004 to 2007), as Banks and Building Society’s slackened their lending criteria (who can remember the 125% loan to value Northern Rock Mortgages that could be obtained with just a note from your Mum!! ) meaning home movers could borrow even more to move up the property ladder.
So, now it’s 2017 and things have changed
You would think that with ultra-low interest rates at 0.25% (a 320+ year all time low), the the number of people moving would be booming – wouldn’t you ? However, with (1) low wage growth of 1.1% per annum, (2) the tougher mortgage rules since 2014 (3) sporadic property price growth in the last few years( and (4) high property values comparative to salaries (I talked about this a couple of months ago), all these four points have come together to mean less people are moving … but by how many?
Therefore, we have just over 900 less households moving in the Torquay and surrounding Council area each year. Now of that number, it is recognised throughout the property industry around fourth fifths of them are homeowners with a mortgage. That means there are around 737 mortgaged households a year (fourth fifths of the figure of 900) in the Torquay and surrounding council area that would have moved 10 years ago, but wont this year.
The reason they can’t/won’t move can be split down into different categories, based on a recent report by the Council of Mortgage Lenders (CML). So, of those estimated 737 annual Torquay (and surrounding area) non-movers, based on that CML report –
Undoubtedly, whilst the first three points (demographics, lifestyle and high price growth) is something beyond Government or Bank of England control , it is the fourth point where something could be done, as it is the people and households in that final 4th point (the non-movers because of financing the new mortgage and keeping within the new rules of mortgage affordability) that if Torquay property values were lower, this would decrease the size of each step up the property ladder. This would mean the opportunity cost of increasing their mortgage would reduce (i.e. opportunity cost = the step up in their mortgage payments between their existing and future new mortgage) and they would be able to move to more upmarket properties.
And then there is the mortgage rules, but before we all start demanding a relaxation in lending criteria for the banks, do we want to return to free and easy mortgages 125% Northern Rock footloose and fancy-free mortgage lending that seemed to be available in the mid 2000’s … available at a drop of hat and three tokens from a cereal packet?
We all know what happened with Northern Rock …. Your thoughts would be welcome on this topic.
Jonathan Holmes, 34-year-old father of two from Torquay, was out house hunting. It was a pleasant August Saturday afternoon, and our man cycles along on his bike. He cycles up a street of suburban semis, where he spots a few retired mature neighbours, chatting to each other over the garden fence. He leans his bicycle against a lamppost and launches softly into his property search.
“Anyone on the road contemplating moving?” Jonathan asks, “I am not a landlord or developer, I’m just a Torquay bloke trying to get out of renting, buy a house, do it up and live in it with my wife and two children”
“The only way I will leave here is in a box”, answers an 80-something lady, wearing her fading Paisley patterned housecoat from the 1970’s.
“I‘ve lived here since before you were born, its lovely up here .. we aren’t moving, are we Doris?” (as her neighbour sagely shook his head at his wife).
Jonathan, like many Torquay people born in the late 1970’s to the early 1990’s, is keen to get a slice of prime Torquay real estate. Yet people like Jonathan in Generation Y (or the Millennials as some people call them i.e. born between 1977 and 1994 and needing family housing now) are discovering, as each year passes by, they are becoming more neglected and ignored when it comes to moving up the property ladder.
Looking at the graph for the UK as whole …
Over 75 percent of Brits aged 65 and above (the baby boomers) are owner-occupiers, the biggest share since records began and a proportional rise of over 48.3% since the early 1980’s. Looking at those Baby Boomers (the current 65+year olds) .. and roll the clock back 36 years (to when they were in their 30’s and 40’s and two thirds (65.6%) of them owned their own home.
Whilst today, just under a half of 25 to 49 year olds (47.3%) own their own home.
However, the biggest drop has been in the 18 to 24-year old’s, where homeownership has dropped from a third (32%) in the 1980’s to less than one in ten (8.9%) today. Looking at the Torquay statistics, the numbers make even more interesting reading.
Government policy contributes to the generational stalemate. Stamp Duty rules prevent older Brits from moving as the price of land and planning rules make it harder to build affordable bungalows that are attractive to members of the older generation who want to move.
The average value of an acre of prime building land in the UK is between £750,000 and £800,000 per acre. Bungalows are the favoured option for the older generation, but the problem is bungalows take up too much land to make them profitable for new homes builders. The housing market is gridlocked with youngsters wanting to get on (then move up) the property ladder whilst the older generation, who want to move from their larger houses to smaller, more modern bungalows, can’t. The problem is – there simply aren’t enough bungalows being built and the high price of land, means they are prohibitive to build.
So, what is my point? Well, all I would say to the homeowners of Torquay is that one solution could be to start to talk to your local councillors, so they can mould the planners’ thoughts and the local authority thinking in setting land aside for bungalows instead of two up two down starter homes? That would free the impasse at the top of the property ladder (i.e. mature people living in big houses but unable to move anywhere), releasing the middle aged gridlocked people in the ladder to move up, thus releasing more existing starter homes for the younger generation.
… and to you Jonathan … the wandering new home searcher – if things are going to change, it will be years before they do .. so keep going out and spreading the word of your search for a new home for your family.
“What’s happening to the Torbay Property Market” is a question I am asked repeatedly. Well, would it be a surprise to hear that my own research suggests that there isn’t just one big Brixham property market – but many small micro-property markets?
According to recent data released by the Office of National Statistics (ONS), I have discovered that at least three of these micro-property markets have emerged over the last 20+ years in the town.
For ease, I have named them the …
The ‘lower’ and ‘lower to middle’ sectors of the Torbay property market have been fuelled over the last few years by two sets of buyers. The first set, making up the clear majority of those buyers, are cash rich landlord investors who are throwing themselves into the Torbay property market to take advantage of alluringly low prices and even lower interest rates. The other set of buyers in the ‘lower’ and ‘lower to middle’ Torbay property market are the first-time buyers (FTB), although the FTB market is in a state of unparalleled deadlock as it’s been trampled into near-immobility and incapacity by the new 2014 stricter mortgage affordability regulations and also fewer mortgages with low deposits.
Some of you may be interested to know how I have classified the three sectors ..
…. and if one looks at the figures for Torbay Council area you can see the three different sectors (lower, lower/middle and middle) have performed quite differently.
| Torbay Council Property Market – Sold Prices | Price Paid in 1995 | Price Paid in 2017 | Percentage Uplift 1995 – 2017 |
| Lower (Bottom 10%) | £29,000 | £107,000 | 268.97% |
| Lower to Middle (Lower Quartile) | £38,500 | £141,350 | 267.14% |
| Middle (The Median) | £57,671 | £206,649 | 258.32% |
You can quite clearly see that it is the ‘lower’ market that has performed the best.
You might ask, what do all these different figures mean to homeowners and landlords alike? Quite a lot – so let me explain. The worst performing sector (with the lowest Percentage uplift) was the ‘middle’ housing market. Therefore, interestingly, if we applied the best percentage uplift figure (i.e. from the ‘lower’ market percentage uplift), to the ‘middle’ 1995 housing market figure, the 2017 figure of £206,649, would have been £212,789 instead.
Now, I have specifically not mentioned the upper reaches of the Brixham housing market for several reasons. Firstly, the lower or middle market is where most of the buy to let investment landlords buy their property and where the majority of property transactions take place. Secondly, due to the unique and distinctive nature of Torbay’s up-market property scene (because every property is different and they don’t tend to sell as often as the lower to middle market), it is much more difficult to calculate what changes have occurred to property prices in that part of the Torbay property market – looking at the stats for the up-market Brixham property market from Land Registry, only 24 properties in Brixham (and a 5 mile radius around it) have sold for £2,000,000 or more since 1997.
So, what should every homeowner and buy to let landlord take from the information that there are many micro-property markets? Well, when you realise there isn’t just one Torbay Property Market, but many Torbay “micro-property markets”, you can spot trends and bag yourself some potential bargains. Even in this market, I have spotted a number of bargains over the last few months that I have shared in my Property Blog and to my landlord database, especially in the ‘lower’ and ‘lower/middle’ market. If you want to be kept informed of those buy to let bargains, have a look at my blog INSERT URL .. it’s free to do so and I’m sure you wouldn’t want to miss out – would you?
I would love to know if you have spotted any micro-property markets in Torbay.
