Torbay Property News

News and views of property in English Riviera

Slowing Torquay Property Market? Yes and No!

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My thoughts to the landlords and homeowners of Torquay…

The tightrope of being a Torquay buy-to-let landlord is a balancing act many do well at. Talking to several Torquay landlords, they are very conscious of their tenants’ capacity and ability to pay the rent and their own need to raise rents on their rental properties (as Government figure shows ‘real pay’ has dropped 1% in the last six months). Evidence does suggest many landlords feel more assured than they were in the spring about pursuing higher rents on their properties.

During the summer months, historic evidence suggests that the rents new tenants have had to pay on move in have increased. June/July/August is a time when renters like to move, demand surges and the normal supply and demand seesaw mean tenants are normally prepared to pay more to secure the property they want to live in, in the place they want to be. This is particularly good news for Torquay landlords as average Torquay rents have been on a downward trend recently. So look at the figures here…

Rents in Torquay on average for new tenants moving in have risen 2.9% for the month, taking overall annual Torquay rents 2.4% higher for the year

However, several Torquay landlords have expressed their apprehensions about a slowing of the housing market in Torquay. I think this negativity may be exaggerated.

Before we get the Champagne out, the other side of the coin to property investing is capital values (which will also be of interest to all the homeowners in Torquay as well as the Torquay buy-to-let landlords).  I believe the Torquay property market has been trying to find some level of equilibrium since the New Year.  According to the Land Registry…

Property Values in Torquay are 1.17% higher than they were 12 months ago, even with a drop of 1.21% last month

Yet, I would take those figures with a pinch of salt as they reflect the sales of Torquay properties that took place in early Spring 2017 and now are only exchanging and completing during the summer months.

The reality is the number of properties that are on the market in Torquay today has risen by 11.23% since the New Year and that will have a dampening effect on property values. As tenants have had less choice, buyers now have more choice … and that will temper Torquay property prices as we head towards 2018.

Be you a homeowner or landlord, if you are planning to sell your Torquay property in the short term, it is crucial, especially with the rise in the number of properties on the market, that you realistically price your property when you bring it to the market … with the increase in choice of properties, the balance of power during negotiation generally sways towards the buyer. Given that everyone now has access to property details, including historic stats for how much property have sold for, they will be more astute during the offer and negotiation stages of a purchase.

However, even with this uplift in the number of properties for sale in Torquay, property prices will remain stable and strong in the medium to long term. This is because the number of properties on the market today is still way below the peak of summer of 2008, when there were 1,990 properties for sale compared to the current level of 1,040 (if you recall, prices dropped by nearly 20% in Credit Crunch years of ‘08 and ‘09).

Compared to 2008, today’s lower supply of Torquay properties for sale will keep prices relatively high…and they will continue to stay at these levels for the medium to long term.

Less people are moving than a few years ago, meaning less property is for sale. Fewer properties for sale mean property prices remain relatively high and this is because of a number of underlying reasons. Firstly, buy-to-let landlords tend not sell their properties as often than owner-occupiers, consequently removing the property out of the housing market selling cycle. Secondly, Stamp Duty is much higher compared to 10 years ago (meaning it costs more to move). Next, there is a dearth of local authority rental housing so demand for private rented housing will remain high. Then we have the UK’s maturing owner occupier population, meaning these older people are less likely to move (compared to when they were younger). Another reason is the lack of new homes being built in the country (we need 240k houses a year to be built in the UK and we are currently only building 145k a year!) and finally, the new mortgage rules introduced in 2014 about how much a person can borrow on a mortgage has curtailed demand.

 

Some final thought’s before I go – to all the Torquay homeowners that aren’t planning to sell – this talk of price changes is only on paper profit or loss. To those that are moving … most people that sell, are buyers as well, so as you might not get as much for yours, the one you will want to buy won’t be as much, (swings and roundabouts as Mum used to say!)

To all the Torquay landlords – keep your eyes peeled – I have a feeling there may be some decent buy-to-let deals to be had in the coming months. One place for such deals, irrespective of which agent is selling it, is my Torbay Property News Blog

Supply and Demand Issues Mean Torquay Property Values Rise by 1.1% in the Last 12 Months

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The most recent set of data from the Land Registry has stated that property values in Torquay and the surrounding area were 1.17% higher than 12 months ago and 11.39% higher than January 2015.

Despite the uncertainty over Brexit as Torquay (and most of the UK’s) property values continue their medium and long-term upward trajectory. As economics is about supply and demand, the story behind the Torquay property market can also be seen from those two sides of the story.

Looking at the supply issues of the Torquay property market, putting aside the short-term dearth of property on the market, one of the main reasons of this sustained house price growth has been down to of the lack of building new homes.

The draconian planning laws, that over the last 70 years (starting with The Town and Country Planning Act 1947) has meant the amount of land built on in the UK today, only stands at 1.8% (no, that’s not a typo – it’s one point eight percent) and that is made up of 1.1% with residential property and 0.7% for commercial property. Now I am not advocating building modern ugly carbuncles and high-rise flats in the Cotswolds, nor blot the landscape with the building of massive out of place ugly 1,000 home housing estates around the beautiful countryside of such villages as Shaldon and Collaton St Mary.

The facts are, with the restrictions on building homes for people to live in, because of these 70-year-old restrictive planning regulations, homes that the youngsters of Torquay badly need, aren’t being built. Adding fuel to that fire, there has been a large dose of nimby-ism and landowners deliberately sitting on land, which has kept land values high and from that keeps house prices high.

Looking at the demand side of the equation, one might have thought property values would drop because of Brexit and buyers uncertainty. However, certain commenters now believe property values might rise because of Brexit. Many people are risk adverse, especially with their hard-earned savings. The stock market is at an all-time high (ready to pop again?) and many people don’t trust the money markets. The thing about property is its tangible, bricks and mortar, you can touch it and you can easily understand it.

The Brits have historically put their faith in bricks and mortar, which they expect to rise in value, in numerical terms, at least. Nationally, the value of property has risen by 635.4% since 1984 whilst the stock market has risen by a very similar 593.1%. However, the stock market has had a roller coaster of a ride to get to those figures. For example, in the dot com bubble of the early 2000’s, the FTSE100 dropped 126.3% in two years and it dropped again by 44.6% in 9 months in 2007… the worst drop Torquay saw in property values was just 18.47% in the 2008/9 credit crunch.  

Despite the slowdown in the rate of annual property value growth in Torquay to the current 1.17%, from the heady days of 11.1% annual increases seen in late 2015, it can be argued the headline rate of Torquay property price inflation is holding up well, especially with the squeeze on real incomes, new taxation rules for landlords and the slight ambiguity around Brexit. With mortgage rates at an all-time low and tumbling unemployment, all these factors are largely continuing to help support property values in Torquay (and the UK).