We are counting down the Top 30 Most Saleable Streets in SO31, PO14 & PO15.

Here we start with Number 30 on the list – Oak Coppice Road in Whiteley.

For more articles about the local property market please visit the Locks Heath Property Blog at http://www.thelocksheathpropertyblog.co.uk.

For help with the sale or letting of your property please contact us on 01489 885500.

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According to the National House Building Council (NHBC), more than 26,142 new homes were registered to be built in the South East last year, on par with 2016 levels of 26,147 dwellings.  Great news when you consider it is one of the highest number of new builds in the region since the pre-recession levels of the Credit Crunch and the uncertainty of Brexit and the General Election.

So, when a landlord recently asked me why the brand-new property she was considering buying was a lot more expensive compared to a second-hand/existing property of similar type, accommodation, location and structure I thought this would make a fascinating topic to do some homework on… homework I want to share with the homeowners and Landlords of Locks Heath.

You might believe that the difference between purchasing a new build home against purchasing a second-hand/existing home is just individual preference.  Some buyers/Tenants like the ostentatious trendy modern feel of a new home, whilst others like a home that has stood the test of time.

So, what is the right answer?  Well, I am going to be looking at some statistics that shows there is a real difference in the Locks Heath and Fareham Borough Council area’s property market when it to comes to new vs existing homes and the price paid.  Looking at the average price paid for existing (second-hand) versus a brand new home since 1996, one can see from the graph it makes interesting reading.

On this second graph, one can see the percentage difference in average price paid between new and existing…

Yet possibly nothing is ever that easy, as there are issues with these statistics.

Whilst, the overall average for the whole Fareham Borough Council area for the ‘new build premium’ (new build premium being the additional price a buyer pays for buying a new property compared to a second-hand one) over the last 21 years has been 18.9%.  These statistics actually show that it is problematic to compare like with like because it is impossible to completely separate all the different factors of type, accommodation, location and structure etc.

One would have to have a mirror image second-hand Locks Heath home and a duplicate new build right next door to each other, then calculate out which Locks Heath house buyers or Locks Heath buy to let Landlords would pay more for.  Perhaps if everything was the same (all things being equal), there might not be any difference in what buyers would be prepared to pay… but then again, it’s like new cars versus cars that have a few hundred miles on the clock… there is always a difference on the forecourt because things are never wholly equal.

What I do know is that my statistics of the Locks Heath property market show that new build Locks Heath apartments are worth more to people than their second-hand equivalents, whilst the difference is negligible between new build Locks Heath detached houses and second-hand Locks Heath detached houses.

However, I believe the really important lesson in all these statistics is the fact that ‘new build premium’ for new-build versus buying a second-hand property increases in a buoyant market and reduces in a tougher market.  So, if you want to buy new and the only consideration is money… try buying in a tougher challenging property market.

The degree to which young Locks Heath people are locked out of the Locks Heath housing market has been revealed in new statistics.

A Locks Heath landlord was asking me the other week to what effect homeownership rates in Locks Heath in the early to middle aged adult age range had affected the demand for rental property in Locks Heath since the Millennium.  I knew anecdotally that it affected the Locks Heath rental market, but I wanted some cold hard numbers to back it up.  As you know, I like a challenge when it comes to the stats… so this is what I found out for the landlord, and I’d like to share them with you as well.

As anyone in Locks Heath, and most would say those born more recently, are drastically less likely to own their own home at a given age than those born a decade earlier, let’s roll the clock back to the Millennium and compare the figures from then to today.

In the year 2000, 65.6% of Locks Heath 28-year olds (born in 1972) owned their own home, whilst a 28 year old today born in 1990) would have a 35.0% chance of owning their own home.  Next, let’s look at someone born ten years before that.  So, going back to the Millennium, a 38 year Locks Heath person (therefore born in 1962) would have a 96.8% chance of owning his or her own home and a 38 year today in Locks Heath (born in 1980) would only have a 75.4% chance of owning their own home.

Since the Millennium, overall general homeownership in the 25 to 44 year old age range in Locks Heath has reduced from 89.54% to 64.75%

If you look at the graph below, split into the four age ranges of 25 year olds (yo) to 29yo, 30yo to 34yo, 35yo to 39yo and finally 40yo to 44 yo, you will quite clearly see the changes since the Millennium in Locks Heath.  The fact is the figures in Locks Heath show the homeownership rate has proportionally fallen the most for the youngest (25yo to 29yo) age range compared to the other age ranges.

The Landlord suggested this deterioration in homeownership in Locks Heath across the age groups could be down to the fact that more of those born in the 1980’s and 1990’s (over those born in the 60’s and 70’) are going to University and hence entering the job market at an older age or those young adults are living with their parents longer.

I read some national homeownership statistics of different age groups with the same number of years after they left education (rather than at the same age) and that gave an identical dip to the graph above.  Neither are these drops in homeownership related with a significant increase in the number of young adults living with their parents.  Again, nationally, that has hardly changed over the last 20 years as the percentage of 30-year-olds living with Mum and Dad only increased from 22% of those born in the early ‘70s to 23% of those born in the early ‘80s.

So, what does this mean for the rental market in Locks Heath?

Only one thing… with the local authority not building Council houses, Housing Associations strapped for cash to build new properties and the younger generation not buying, there is only one way these youngsters can obtain a roof over their head and have a home of their own… through the private Landlord sector.  Now with the new tax rules and up and coming licensing rules, Locks Heath Landlords will have to work smarter to ensure they make the investment returns they have in the past.  If you ever want to pick my brains on the future direction of the Locks Heath rental market drop me line or pop in next time you are passing my office.

A little bit of good news this week on the Locks Heath Property Market as recently released data shows that the number of first time buyers taking out their first mortgage in 2017 increased more than in any other year since the global financial crisis in 2009.  The data shows there were 54 first time buyers in Locks Heath, the largest number since 2006.

I expect in 2018 that this increase of first time buyers will level out and maybe dip slightly as, nationally, figures demonstrate that first time buyer’s average household income was £40,691 and this represented 17.3% of their take home pay.  Although, it might surprise readers that it is actually cheaper to buy than it is to rent at the ‘starter home’ end of the housing market.  Many of you can remember mortgage rates at 12%… even 15%.  Today, at the time of writing this article, I found on the open market, 189 first time buyer mortgages at 95% (meaning only a 5% deposit was required) with 3 year fixed rates from a reputable High Street bank at 2.49%… they even did a 3 year fixed rate 100% mortgage for 2.89%!

Interestingly, looking at the other end of the market, the buy-to-let investment in Locks Heath was subdued, with only 11 buy-to-let properties being purchased with a mortgage. However, I must stress, whilst there is no hard and fast data on the total numbers of Landlords buying buy-to-let, as HM Treasury believes only 30% to 40% of buy-to-let property is bought with a mortgage.  This means there would have been further cash only buy-to-let purchases in Locks Heath – it’s just that the data isn’t available at such a granular level.

In terms of the level of mortgage debt in Locks Heath, looking specifically at the SO31 postcode, you can see there has been a steady rise in borrowing over the last few years.

This is pleasing to see, as new mortgage debt is created by first time buyers, buy-to-let landlords and home movers themselves, that is being roughly equalled by the amount being paid off with mature mortgaged homeowners in their 50’s and 60’s finally paying off their mortgage.

So, what does all this mean for the Locks Heath Property Market?  Well, the stats paint a picture, but they don’t inform us of the whole story.  The upper end of the Locks Heath property market has been weighed down by the indecision around the Brexit negotiations and rise in stamp duty in 2014, when it made it considerably more expensive to buy a home costing more than £1m.  The middle part of the Locks Heath property market has been affected by issues of mortgage affordability and lack of good properties to buy, as selling prices have reached the limit of what buyers can afford under existing mortgage regulations.  The lower to middle Locks Heath property market was hit by tax changes for buy-to-let landlords, although this has been offset by the increase in first time buyers.

If you are in the market and selling now and want to ensure you get your Locks Heath property sold, the bottom line is you have to be 100% realistic with your pricing from day one and you might not get as much as you did say a year ago (but the one you want to buy will be less – swings and roundabouts?).  I know it’s not comfortable hearing that your Locks Heath home isn’t worth as much as you thought, but Locks Heath buyers are now unbelievably discerning.

So, if you are thinking of selling your Locks Heath property in the coming months, don’t ask the agent out a few days before you want to put the property on the market, get them out now and ask them what you need to do to ensure you get maximum value in the shortest possible time.

That got your attention … didn’t it!

But before we start, what is Generation X, let alone Generation Z, Millennials, Baby Boomers… these are phrases banded around about the different life stages (or subcomponents) of our society.  But when terminologies like this are used as often and habitually as these phrases (i.e. Gen X this, Millennial that etc.), it appears particularly vital we have some practical idea of what these terms actually mean. The fact is that everyone uses these phrases, but often, like myself, they are not exactly sure where the lines are drawn… until now…

So, for clarity …

Generation Z:              Born after 1996

Millennials:                 Born 1977 to 1995

Generation X:              Born 1965 to 1976

Baby Boomers:            Born 1946 to 1964

Silent Generation:       Born 1945 and before

My research shows there are 6,614 households in Locks Heath owned by Locks Heath Baby Boomers (born 1946 to 1964) and Locks Heath’s Silent Generation (born 1945 and before).  It also shows there are 8,912 Generation X’s of Locks Heath (Locks Heath people born between 1965 to 1976).  Looking at demographics, homeownership statistics and current life expectancy, around two-thirds of those Locks Heath 8,912 Generation X’s have parents and grandparents who own those 6,614 Locks Heath properties.

They will profit from one of the biggest inheritance explosions of any post-war generation to the tune of £2.341bn of Locks Heath property or £393,841 each but they will have to wait until their early 60’s to get it!

However, it’s the Millennials that are in line for an even bigger inheritance windfall.

There are 5,563 Millennials in Locks Heath and my research shows around two thirds of them are set to inherit the 7,853 Locks Heath Generation X’s properties.  Those Generation X’s Locks Heath homes are worth £2.780bn meaning, on average, each Millennial will inherit £749,132; but not until at least 2040 to 2060!

While the Locks Heath Millennials have done far less well in amassing their own savings and assets, they are more likely to take advantage of an inheritance boom in the years to come.  This will probably be very welcome news for those Locks Heath Millennials, including some from poorer upbringings who in the past would have been unlikely to receive gifts and legacies.

However, inheritance is not the magic weapon that will get the Millennials on to the Locks Heath housing ladder or tackle growing wealth cracks in UK society, as the inheritance is unlikely to be made available when they are trying to buy their first home… but before all you Locks Heath Millennials start running up debts, over 50% of females and around 35% of men are going to have to pay for nursing home care. Interestingly, I read recently that a quarter of people who have to pay for their care, run out of money.

So, if you are a Locks Heath Millennial there potentially will be nothing left for you.

Of course, most parents want to give their children an inheritance, the consideration that what you have worked genuinely hard for over your working life won’t go to your children to help them through their lives is a really awful one… maybe that is why I am seeing a lot of Locks Heath grandparents doing something meaningful, and helping their grandchildren, the Millennials, with the deposit for their first house.

One solution to the housing crisis in Locks Heath (and the UK as a whole) is if grandparents, where they are able to, help financially with the deposit for a house. Buying is cheaper than renting – we have proved it many times in these articles… so, it’s not a case of not affording the mortgage, the issue is raising the 5% to 10% mortgage deposit for these Millennials.

Maybe families should be distributing a part of the family wealth now (in the form of helping with house deposits) as opposed to waiting to the end… it will make so much more of a difference to everyone in the long run.

Just a thought…?