Tuesday 30 June 2015

Milton Keynes Property Market – Bricks and Mortar!


The Land Registry have just released their latest set of figures for the Milton Keynes Property market. It makes interesting reading, as average property values in Milton Keynes rose by 0.2% in May. This leaves average property values 10.5% higher than 12 months ago, meaning the annual rate of growth in the town fell to its lowest level since August 2014. When we compare Milton Keynes against the regional picture, South East property values rose by 0.9%, leaving them 9.1% higher than a year ago.

Obviously this is a far cry from the price rises we were experiencing in Milton Keynes throughout 2014. At one point (December 2014 to be exact) property values were rising by 11.7% a year. All the same, even with the tempering of the Milton Keynes property values in 2015, property values are still higher. This is good news for local homeowners who had been affected by the downturn after 2007 and still find themselves in negative equity.

However, the thing that concerns me is that the average number of properties changing hands (ie selling) has dropped substantially over the last 12 months in the town. In March 2014, 371 properties sold in Milton Keynes but in April 2015, that figure dropped to 256.  I have been in the Milton Keynes property market for quite a while now and the one thing I have noticed over the last few years has been the subtle change in the traditional seasonality of the Milton Keynes property market. It has been particularly noticeable this year in that the normal post Easter flood of properties coming onto the market was not seen. This has made an imbalance between supply and demand, with less houses coming onto the market there is simply not as much choice of properties to buy in Milton Keynes and with the population of Milton Keynes ever increasing, this will generally strengthen house price growth for the foreseeable future.

So what does all this mean for Milton Keynes landlords or those considering dipping their toe into the buy to let market for the first time? For many people, buy to let looks a good investment, providing landlords with a decent income at a time of low interest rates and stock market unpredictability.

However, if you are thinking of investing in bricks and mortar in Milton Keynes, it is important to do things correctly. As an investment to provide you with income, for those with enough savings to raise a big deposit, buy to let looks particularly good, especially compared to low savings rates and stock market yo-yo’s. I must also remind readers, landlords have two opportunities to make money from property, not only is there the rent (income), but with the property market bouncing back over the last few years, property value increases has spurred on more investors to buy property in the hope of its value continuing to rise.

Savvy landlords with decent deposits can fix their mortgages at just over 3% for five years, making many deals stack up. Nevertheless, low rates cannot stay low forever, because one day they must rise and you need to know your property can stand that test. I saw some Milton Keynes landlords struggling in the mid noughties, when interest rates rose from 3.5% in July 2003 to 5.75% in July 2007. That might not sound a lot, but that was the difference of making a £100 a month profit in 2003 to having to make up a shortfall in the mortgage payments of £100 per month in 2007.

Its true many landlords were thrown a life raft when the base rate dropped to 0.5% in March 2009. Whilst interest rates have remained there since, mark my words, they will rise again in the future. However, even with the potential for costs to rise, demand for decent rental properties remains high as there are ever more tenants in the market, driving up demand and thus rents. The British love of bricks and mortar plus improving mortgage deals also add up to fuel the buoyant Milton Keynes property market.

If you are planning on investing in the Milton Keynes property market, or just want to know more, things to consider for a successful buy to let investment, one source of information is the Milton Keynes Property Blog.

 

Thursday 18 June 2015

Why are less Milton Keynes people moving house?

During my school years, my parents seemed to move every other year (or it seemed that way). In reality, looking back at the house moves, we actually moved three times before I left home. However, whilst my parents kept the removal van people in business whilst I was at school, from research I have carried out it shows things have changed considerably in Milton Keynes over the last few decades, and interestingly, the trend is getting worse ... for the removal van people at any rate!

In Milton Keynes, there are 66,979 properties. However, after we remove the 12,991 council houses, 12,700 privately rented houses and 522 houses where the occupants live rent free, that leaves us with 40,766 owned properties (be that 100% outright, with a mortgage or shared ownership). This means 60.9% of the properties in Milton Keynes are occupied by the owner (the national average is interestingly 64.2%) but the number of people who have sold and moved house in Milton Keynes, over the last 12 months, has only been 3,473. This means on these figures, the homeowners of Milton Keynes are only moving on average every 11.73 years.

These are the reasons. Firstly, the cost of moving house has risen over the last twenty years. Secondly, with many remortgaging their properties in the mid 2000’s before the price crash of 2008, there is a reluctance or inability in a small minority of homeowners to finance a home sale/purchase, due to lack of equity. These are both factors driving fewer moves by existing homeowners.

However, the big effect has been the change in house price inflation. Back in the 1970’s and 1980’s, house prices were doubling every 5 to 7 years. Even in Greater London, with its stratospheric property price increases over the last few years, it has taken 13 years (August 2002 to be exact) for property values to double to today’s levels.

This change to a relatively low inflation Milton Keynes property market (i.e. Milton Keynes property values not rising quickly) is significant because the long term consequences of sustained low house price growth is that it eats into mortgage debt more slowly than when property price inflation is higher. Milton Keynes homeowners cannot rely on inflation to shrink their debt in real terms as much as they did in say the 1970’s and 1980’s.

So what does this all mean for Milton Keynes buy to let landlords? Well for the same reasons existing Milton Keynes homeowners aren’t moving, less ‘twenty something’s’ are buying their first home as well. Milton Keynes youngsters may aspire to own their own home, but without the social pressure from their peers and parents to buy their first property as soon people reach their early 20’s, the memory of the 2008 housing crisis and the belief the hard times either aren't over or the worst is yet to come, current and would-be homeowners are warming to the idea of renting. I also believe UK society has changed, with the youngster’s wanting prosperity and happiness; but wanting it all now... instantly... today... without the sacrifice, work and patience that these things take. As a society, we expect things instantly, and if it doesn’t come easy, doesn’t come quick, some youngsters ask if it is really worth the effort to save for the deposit? Why go without holidays, the newest iPhone, socialising four times a week and the fancy satellite package for a couple of years, to save for that 5% deposit if there is no longer a social stigma in renting or pressure to buy as there was... say... a generation ago?

Even though, in real terms, property prices are 5% cheaper than they were ten years ago (when adjusted by inflation), 19% of Milton Keynes properties are privately rented (nearly double it was twenty years ago). As a result, the demand for rental properties continues to grow from tenants, meaning those wishing to invest in the buy to let market, over the long term, might be on to a good thing? For advice and opinion on the Milton Keynes Buy To let property market, one source of information is The Milton Keynes Property Blog.

 

Friday 12 June 2015

Affordability of housing in Milton Keynes

Talking to an elderly relative recently, he reminded me that in his day, you could have bought a property for the same price of what a decent second hand car would sell for today and that his father was buying property for the same price as a decent 50 inch LCD TV!  Now of course, these are only headline prices and we have had wage growth and inflation.  Interestingly, since the Second World War, property values in Milton Keynes doubled in 1961, 1971, 1975, 1980, 1988, 2000 and 2006.

Looking at more recent times, since the start of the Millennium, these increases in property values have generated large increases in equity for many homeowners but on the other side of the coin also making housing unaffordable for other people.  It might interest readers to note that most of Europe experienced sharp increases in property values in the early years of 2000’s, with only Spain beating  us (although we know what has happened to the Spanish property market over the last few years!).  In the 2000’s, the British situation was different in two regards.  First the property value boom started earlier and saw more sustained increases, second, the regional pattern was fairly uniform.

However, since 2010, the regional pattern has been completely different in the UK.  Compared with  2007 (the last property boom), average property values today in England and Wales are 1.2% higher, whilst in Greater London, they are 35.7% higher, whereas in Milton Keynes they are 8.2% higher. The London property market has been like a different country.  Looking specifically at Milton Keynes though, it has continued for first time buyers to get on the housing ladder.  The best measure of the affordability of housing is the ratio of Milton Keynes Property Prices to Milton Keynes Average Wages, (the higher the ratio, the less affordable properties are).  

·         1997       3.13 to 1  (i.e. the average value of a Milton Keynes property was 3.13 times higher than the average annual wage in Milton Keynes)

·         2000       3.99 to 1

·         2002       5.10 to 1

·         2003       5.76 to 1

·         2007       6.82 to 1

·         2009       5.64 to 1

·         2012       6.29 to 1

·         Today    7.02 to 1

You  can see quite clearly, even though we had an improvement just after the 2007 property crash (i.e. the ratio dropped), in following subsequent years with Milton Keynes house price’s rising but wages not keeping up with them,  the ratio started rise.  This has meant there has been a deterioration in affordability of property in Milton Keynes over the last couple of years.  This is one of the (many) reasons why the younger generation is deciding more and more to rent instead of buy their own house.  The local Council sold off council houses in the Thatcher years and for many on low incomes or with little capital, owning a home has simply never been an option.
With fewer people able to save up the deposit required by mortgage lenders, more and more people are looking to rent, this has also resulted in a change in attitudes towards renting over the last decade.  This delay in moving up the property ladder has driven rents up in Milton Keynes over the last few years, as more people are seeking properties to rent.  All these things have combined to make the demand for rental property in Milton Keynes rise.  If you are an existing landlord or someone thinking of become a first time landlord looking for advice and opinion and what (or not to buy in Milton Keynes), one source of information is the Milton Keynes Property Blog.

Saturday 6 June 2015

Milton Keynes Buy To Let Yields of 4.98% – Should you look further afield?


 


I was at a recent business networking event in Milton Keynes, when a landlord (who it transpired had a couple of Buy to let properties) bent my ear on where the next hot spot town or city is to invest his money in and where the best rental yields are. Now it can be tempting to just look at Milton Keynes when growing a buy to let property portfolio, but there can be big differences in the amount of rental income you receive and how much your property will appreciate by considering other locations in the country.
Now regular readers of my articles of the Milton Keynes Property Blog know of my love of the ‘buy to let seesaw’. On one side of the seesaw is yield and the other capital growth. Landlords should be looking for a high rental yield so that they can comfortably cover any mortgage payments and make some profit from the income return, but you also want the property to rise in value over time so you can get some capital growth when you come to sell. However, high yielding property in say such areas as Netherfield and Beanhill  in Milton Keynes, (so the seesaw arm with yield on it goes up on one side), will suffer from low capital growth (so the other arm with capital growth on the seesaw goes down).  The relationship works in reverse as well, so in such upmarket areas as The Shenley’s and Woughton on the Green, properties offer good capital growth, but at the expense of a decent yield.  
The North East and North West of the UK are landlord magnets for great yields. The average yield in Milton Keynes today is 4.98%, which when you compare with say Hartlepool in the North East, which achieves 7.73% or  9.43% in the Anfield area of Liverpool, doesn’t look too healthy. Now of course, these are only averages and some of my Milton Keynes landlords are achieving 6% to 7% on some of their Milton Keynes properties, but at the expense of capital growth. Anyway, after wasting a tank full of petrol up the A1 to Teeside or the M1/M6 to the Home of the ‘The Reds’,  that Liverpool property, would have dropped in value by 2.2% in the last 12 months and the Hartlepool property would have dropped by 1.4%.
When you compare the long term house price growth, it gets even worse. Looking at the graph, since 1995, property values in Milton Keynes have risen by 218.89%,compared with Hartlepool at 21.02% and Liverpool  at 90.11% – it just shows you shouldn’t always chase the yield because of the poor increases in property values in those two places. As I always like to explain to landlords when they either email me, pick up the phone or pop into my offices for a coffee (both my own and even landlords who use other agents (you are all welcome at ours), together with soon to be FTL’s (first time landlords)), a decent yield is important, but when you come to sell your buy to let property it would also be nice to make a decent profit.
At the end of the day, as a Milton Keynes landlord, you want to be making gains from both your rent and house price growth, particularly when you want to sell, because when combined, the rental yield and capital growth, that gives you the real return on your investment.

 

Thursday 4 June 2015

Your property isn’t selling? Here are a few reasons why


When selling your home, it can sometimes feel like a breakthrough is never going to come and your house is destined to remain on the market forever.

You might be struggling to get viewings or you might have casual interest from buyers that is failing to translate into something more concrete.

Fear not though, there are a number of steps you can take to increase your chances of selling…

First things first, you need to ensure you are pricing your property correctly. Every seller wants to get as much as possible for their home, but if priced too high you run the risk of deterring would-be buyers.

Likewise, if you price your property too low, you’ll be short-changing yourself. This is where you need to lean on the local knowledge of your estate agent. They’ll use their expertise and experience to set a fair, realistic price for your property. In turn, you’ll receive more interest, the number of viewings will go up and the possibility of a sale will be much greater.

Viewings, in particular, can make or break a sellers’ chance of selling. It’s your chance to shine a light on your property and convey its best attributes in a passionate, genuine way. Getting it right isn’t a straightforward task, though – in fact, it’s very easy to get it wrong.

Decluttering is the golden rule; make sure the house is painted in neutral colours, carry out those little DIY tasks that you’ve been putting off  and get your house looking as attractive as it possibly can be.

It’s also important to have your house ready for a viewing at any time. Sometimes potential buyers might want to visit at the drop of the hat, which means you need to be alert and on the ball. If you don’t feel confident enough about conducting the viewing yourself, your agent can carry it out on your behalf.

Another possible reason for your house not selling is a malfunctioning marketing strategy. Pull back, take a look at it with fresh eyes and see if there is anything you can revise/change to make sure your property stands out from the crowd. Have you got high-quality, professionally taken photographs? Have you got a punchy and memorable online ad? Are you making best use of traditional marketing tools such as For Sale boards and newspaper adverts?

At Inspired Sales and Lettings marketing your home is where our main expertise lies. We have the experience and knowledge to get suitable buyers through your door, thus improving your chances of selling. Portals are the best way of getting your property maximum exposure, while office window displays, if done effectively, can still have the power to lure in interested parties.

Timing, too, can be vitally important. Dependent on which demographic you are looking to sell to, there are different times of the year when putting your house on the market  that will reach a larger pool of potential buyers. Retired people, for example, are more inclined to move during the summer.  Families, in contrast, prefer the spring or autumn months.

These measures may not guarantee a sale, but they will definitely enhance the prospects of one. 

If you would like more guidance on property selling in Milton Keynes, please don’t hesitate to contact us. Our knowledge of the local property market and our friendly, experienced staff allow us to offer an unparalleled service. For a free instant online valuation, check out our handy tool.



Monday 1 June 2015

Fewer people are moving house in Milton Keynes


Well the dust has settled and the General Election seems a distant memory, we can get back to a more normal property market, or that is what the London based ‘Fleet Street’ journalists would lead you to believe.  You see I have been talking to many fellow property professionals in Milton Keynes, solicitors, conveyancers are one the best sources of info – the chap who puts all the estate agent and letting boards up in Milton Keynes, and all of them, every last one of them told me they didn’t see any change over April in business, compared to any other month on the lead up to the Election itself.

 I am now of the opinion that maybe in the upmarket areas of Mayfair and Chelsea, the market went into spasm with the prospect of a Labour/SNP pact with their Mansion Tax for properties over £2,000,000, but in little old Milton Keynes, there has only been one property sold above £2,000,000 mark in the last 7 years.   

In a nutshell, the General Election in Milton Keynes didn’t really have any impact on people’s confidence to buy property.  As I write this article, of 839 properties that have come on to the market in Milton Keynes  since the 2nd of April, 331 of them have a buyer and are sold subject to contract, that’s nearly one in four (39.45% to be precise).

I think that things are starting to change in the way people in Milton Keynes (in fact the whole of the country as I talk to other agents around the UK) buy and sell property.  Back in the 1970’s, 80’s and 90’s, the norm was to buy a terraced house as soon as you left home and do it up.  Meanwhile, property prices had gone up, so you traded up to a 2 bed semi, then a 3 bed semi and repeated the process, until you found yourself in a large 4 bed detached house with a large mortgage. 

Looking into this a little deeper like I have said in previous articles Milton Keynes people’s attitude to homeownership itself has changed over the last ten years.  The pressure for youngsters to buy when young has gone as renting, not buying, is considered the norm for 20 something’s. This isn’t just a Milton Keynes thing, but, a national thing, as I have noticed that people buy property by trading up (or down) because they need to, not because ‘it’s what people do’.  This does means there are a lot less properties on the market compared to the last decade.

A by-product of less people moving is less people selling their property. My research shows there are a lot fewer properties each month selling in Milton Keynes compared to the last decade.  For example, in February 2015, only 305 properties were sold in Milton Keynes. Compare this to February 2002, and 443 properties sold and the same month in 2003, 477 properties.  I repeated the exercise on different sets of years, (comparing the same month to allow for seasonal variations) and the results were identical if not greater.  So what does this all mean?  Demand for Milton Keynes property isn’t flying away, but with fewer properties for sale, it means property prices are proving reasonably stable too. Stable, consistent and steady growth of property values in Milton Keynes, year on year, without the massive peaks and troughs we saw in the late 1980’s and mid/late2000’s might just be the thing that the Milton Keynes property market needs in the long term.