Easy problems should have easy solutions  – shouldn’t they?

Problems like Locks Heath’s housing crisis, where we have a rudimentary numerical problem of too few homes for too many people. The answer is clearly to build more property in Locks Heath – but that, unfortunately for those desperately seeking to purchase or let a property, takes a lot of time and huge amounts of money. So what about other solutions?

Whilst at a dinner with friends recently, the subject of property was mentioned (as I am sure it does at most dinner parties up and down the country). Normally someone always mentions empty properties as the solution to the problem. On the face of it, it seems so obvious. Now quite interestingly, I had recently done some research on this topic, which I want to share with you.

The most recent set of figures from 2015 state there are 1,010 empty homes in the Fareham Borough Council area. So it begs the question … why not put them back onto the system and help ease the Locks Heath housing crisis? Whilst they stand empty, 1,251 Fareham households (not people – households) are on the Council House Waiting List for council houses. Surely, we can undoubtedly all agree that property left empty for years and years isn’t morally right with the burgeoning Council House Waiting List, not to also mention the issue of homelessness.

But a different story emerges when you look deeper into the numbers. Of those 1,010 homes lying empty, only 117 properties were empty for more than six months. The local authority has to report a property being empty, even if it’s for a week. So many of the Locks Heath properties are either awaiting new homeowners or, in the case of rental properties, new Tenants. Also most certainly, some properties are being refurbished and renovated, while others properties have homeowners who are anxious to sell but cannot find a buyer.

And this is where its gets even more interesting. Of the 117 long-term vacant properties (those empty more than six months), 25 belong to the council. However, before we all go Council-bashing, evidence suggests these empty council houses are habitually in need of so much restoration that it’s not worth the Council’s while to do and are in the roughest parts of the council estates, they are properties that even the Council find difficult to fill.

The fact is that the number of genuinely long term empty properties is only a tiny drop in the ocean of the 46,579 properties in the area covered by Fareham Borough Council and, even if every one of those empty homes were filled with happy cheerful Tenants tomorrow, it would only meet a small fraction of Locks Heath housing needs.

So what does this mean for all the homeowners and Landlords of Locks Heath? Well it means with demand being so high, especially for rental properties, the certainty of the rental market growing is an inevitability because young people cannot buy and councils don’t have the money to build new council houses. This in turn bolsters property prices as Landlords continue to buy at the lower end of the market (starter homes, etc), which in turn sustains the rest of the market as those sellers move up the property ladder, releasing others in turn to buy on again.

These are interesting times in the Locks Heath property market!

There’s a whole legion of wannabe Locks Heath first time buyers keen to get on the property ladder and they now have a 3% price advantage over the previously quicker responding army of Locks Heath Landlords with cash at the ready.  Since the start of April, buy to let landlords have had to pay an additional 3% stamp duty so whilst demand from some Locks Heath buy to let Landlords has dropped away, in the interim, it offers Locks Heath first time buyers (FTB’s) a chance to fill the vacuum with less competition from cash rich Landlords (over two thirds of BTL properties were purchased without a mortgage in the last 7 years) who could bid more and complete quicker.

Looking at the average value of a terraced house in Locks Heath currently standing at £212,700, that means if our Locks Heath FTB went up against a Locks Heath Landlord, the Landlord would have to pay an additional £6,381 in stamp duty.  Early evidence from fellow property professionals in the suburb is suggesting Landlords are reducing their offers slightly on Locks Heath properties to reflect the extra stamp duty.

Whilst on the face of it, it appears Landlords are being punished by No.11 Downing Street, I actually believe this increase in stamp duty for Landlords is a good thing for the Locks Heath property market as a whole.

Since 2011/12, the Locks Heath property market has performed very well indeed.  Over the last 12 months, £63,395,545 has been spent buying 215 Locks Heath properties.  Figures from the Land Registry have just been released and month on month in our council area, property values are 0.9% higher, yet 8.4% higher year on year.  These figures are nowhere near the heady days of 2003 (April to be exact), when Locks Heath property prices rose by 22% in 12 months.

So as property values in Locks Heath (and the UK as whole) start to stablise and come back to some kind of balance, I am beginning to see savvy Landlords view the Locks Heath property market in a different light.  Even with the Spring rush, gone are the days where you could make limitless money on anything that had a door, a few windows and roof.  This stamp duty change has made more and more Landlords, after reading the Locks Heath Property Market Blog www.thelocksheathpropertyblog.co.uk take advice on what or what not to buy and what to pay, meaning Locks Heath Landlords are being more calculated with their Locks Heath BTL purchases.  I am also seeing a variance between relatively brisk current price momentum and softer expectations in terms of property value growth in Locks Heath, this in part reflects amplified uncertainty about the short term economic outlook (eg Brexit, Issues in the Far East etc).

Now I know a lot of Locks Heath Landlords brought forward their BTL purchases to beat the stamp duty deadline.  However, it is probable that hunger from Locks Heath investors will return for the right Locks Heath property later in the year, especially if it’s at the right price and offers a decent yield.  However, in the meantime, Locks Heath FTB’s could and should, in the short term, make hay whilst the sun shines, plug the gap and grab a bargain!

April Fools Day was no joke for some Landlords, as they rushed their buy to let property purchases throughout late March to beat the extra 3% stamp duty George Osborne imposed on buy to let properties after the 31^st March 2016. Because some investors brought forward their 2016 property purchases to save the extra tax, speaking to fellow property professionals in Locks Heath, all of us have noticed, since the clocks went forward, demand to buy in April and May from these Landlords has eased.

Then we have the Brexit issue, which is also having a tempering effect on the Locks Heath property market – although if you recall I wrote about this last week, and whilst an exit will have an effect, it won’t be the end of the world scenario some commentators are suggesting. In another article I wrote previously, I spoke of the growth rate of Locks Heath property values, and whilst the rate of growth is slowing, Locks Heath property values are still 7.7% higher year on year, albeit the growth rate month on month has started to moderate when compared to the heady days of month on month rises of 2014 and 2015. Interestingly though, a very recent members survey of the Royal Institution of Chartered Surveyors states that only 17% of members believed property values would increase over the next Quarter compared to 44% at the end of 2015.

All this had led to increase in the number of properties for sale. For example in the SO31 postcode, which mainly comprises of Locks Heath, Warsash, Hamble and Netley Abbey, there 322 properties for sale in the postcode in December (of which 73 came on to the market for the first time). In January, February and March, 418 properties came onto the market in the postcode district (or an average of 139 per month), meaning by end of the first Quarter, there were 419 properties available for homeowners and landlords alike to buy in SO31 (i.e. a rise of 30.1% more properties for sale). These figures are mirrored in neighbouring postcodes throughout the Locks Heath area.

Nevertheless, I believe this easing of the Locks Heath property market is a good thing, as investment Landlords wont have to pay top dollar to secure a property because of the lower competition. On the face of it, this easing should be bad news for the 33,716 homeowners in the SO31 area, but nothing could be further from the truth. The majority of homeowners that move, move up market, (i.e. from a flat to terrace/town house, then a semi and then detached), so whilst last year you would have achieved a top dollar figure for your property, you would would have had to have paid an even higher top dollar to secure the one you wanted to buy. The Swings and Roundabouts of the Locks Heath Property Market!

However, all the signals suggest that whatever the aftermath of the approaching EU referendum, in the long term, the disparity between demand for Locks Heath property and the supply (i.e. the number of actual properties) will still exercise a sturdy and definitive influence on the Locks Heath property market. It wouldn’t surprise me that if by 2021, whichever way we vote in late June, assuming we don’t have another credit crunch or issues like a major world conflict, property prices will be between 20% to 23% higher than they are today.

If you want to read more articles on the Locks Heath property market, whether you are a Locks Heath landlord, Locks Heath homeowner, first time landlord or a first time buyer – then visit the Locks Heath Property Blog HERE.

If you read all the newspapers, the Brexit debate seems to be focused solely on central London. Many commentators have said Brexit would mean central London would have a lower standing in the world, meaning less people would be employed in Central London, with the implication of lower wages, fewer jobs etc., in Central London.  But we are in Locks Heath, not Marylebone, Mayfair or any part of Zone 1 London.

We are in Locks Heath and central London is 82 miles away, and whilst the central London property market exploded after 2009, that explosion really and honestly didn’t affect the Locks Heath property market. So, putting central London aside, what would an ‘in’ or ‘out’ vote really mean for the 13,800 property owners of Locks Heath and Fareham?

Initially, over the coming months, on the run up to referendum, I believe it will be like the run up to last year’s General Election. With the short-term uncertainty in the country, quite often, big decisions are put on ice and people are less likely to make big money purchases i.e. buy a property. However, in the four months up to last year’s Election, property values in Locks Heath increased by 1.73%, not bad for a country that thought it would get a hung parliament! So that argument doesn’t hold much weight with me.

Post vote, should the UK opt to leave Brussels, there would be a much more noteworthy impact. I believe that a vote to stay in the EU would see the Locks Heath property market return to a status quo very quickly, but the contrasting result could lead to some changes. The principal menace to the Locks Heath (and UK) housing market could be variation (in an upwards direction) in interest rates as a result of a Brexit, which could theoretically see the cost of mortgages grow swiftly, pricing many out of the market … but then two thirds of landlords buy without a mortgage, so that won’t affect them.

So in reality, if I really knew what will happen, I would be a City Whiz Kid in London earning millions, not a Letting Agent in Locks Heath. However, I suspect whatever decision the electorate of Locks Heath and the country as a whole makes, over the long term it won’t have a major effect on the Locks Heath property market. We have seen off ‘the end of the world’ credit crunch of 2008/9 and subsequent property crash, the 1988 Nigel Lawson induced post dual-MIRAS property crash, the 1979 Winter of Discontent property crash, the 1974 oil crisis that stimulated another property crash. We can even go back nearly a century with the 1926 post General Strike slump in property prices.

Today, property prices are 236.62% higher than 21 years ago in Locks Heath and are 7.7% higher than 12 months ago. So, make your own decision on 23^rd of June 2016 safe in knowledge that whatever the result, there might be some short term volatility in the Locks Heath property market, but in the long term (and property investment is a long term strategy) there aren’t enough houses in Locks Heath to live in either to buy or rent. And until the Government allow more properties to be built, the Locks Heath property market will be just fine. Even if it has a little blip in the summer, there could be some property bargains on the run up to Christmas to be had!

For more advice and opinion on the Locks Heath property market, even where those buy to let bargains could be found now visit the Locks Heath Property Blog HERE.

I was reading the Sunday Papers and, when reading the financial pages, it was announced UK inflation had increased to its highest level in a year. Inflation, as calculated by the Government’s Consumer Prices Index, rose by 0.3% over the last 12 months.  The report said it had risen to those ‘heady’ levels by smaller falls in supermarket and petrol prices than a year ago. If you recall, in early 2015, we had deflation where prices were dropping!

So what does this mean for the Locks Heath property market… especially the Tenants?

Back in November, the Office of National Statistics stated average wages only rose by 1.8% year on year, so when adjusted for inflation, Locks Heath people are 1.5% better off in ‘real’ terms.   Great news for homeowners, as their mortgage rates are at their lowest ever levels and their spending power is increasing, but the news is not so good for Tenants.

The average rent that Locks Heath Tenants have to pay for their Private Rental Properties in Locks Heath (i.e. not housing association or council tenants) rose by 2.9% throughout 2015, eating into most of the growth.  2015 wasn’t a one off either.  In 2014, rents in Locks Heath rose by 2.2% (where salaries only rose by only 0.2%) However, it’s not all bad news for Locks Heath Tenants, because in 2013 rents rose by 1.8%, (but salaries rose by 2.2%).

It must also be noted that the private rents Locks Heath Tenants have had to pay for Locks Heath property since 2005 are only 20.0% higher, not even keeping up with inflation, which over the same time frame, rose at 27.8% (although salaries were only 22.3% higher over the same time period).

More and more, talking to ’20 and 30 somethings’ who rent – it is a choice.  Gone are the days where owning your own property was a guaranteed path to wealth, affluence and prosperity.    I know I keep mentioning Europe, but some of the highest levels of home ownership are in Romania at 96.1%, Hungary at 88.2% and Latvia at 80.9% (none of them European economic dynamos) and even West European countries like Spain at 78.8% and Greece at 74% (and we know both of those countries are on their knees, riddled with national debt and massive youth unemployment).

At the other end of the scale, whilst we in the UK stand at 64.8% home ownership, in Europe’s powerhouses, only 52.5% of Germans own a home and only 44% of Swiss people are homeowners.  Looks like eating chocolate, sauerkraut, renting and good economic performance go hand in hand!  Yet, joking aside, home ownership has not always been the rule in the UK.   In 1918, only 23% of people were homeowners, with no council housing, meaning in fact, 77% were tenants.

Tenants have choice, flexibility to move, they don’t have massive bills when the boiler blows up, it’s a choice.  Locks Heath rents are growing, but not as much as incomes. To buy or not to buy is an enormously difficult decision.  For while buying a Locks Heath home is a dream for the majority of the 20 and 30 something’s of Locks Heath have, it might not leave them better off in the long run and it isn’t necessarily the best option for everyone.  That is why, demand for renting is only going in one direction – upwards.

If you want to read more articles on the Locks Heath property market, whether you are a Locks Heath landlord, Locks Heath homeowner, first time landlord or a first time buyer – then visit the Locks Heath Property Blog HERE.

I occasionally like a drink in the Talisman in Park Gate and whilst I was in there recently a gentleman approached me and asked if I was the person who wrote the blog about the Locks Heath property market. We ended up having an interesting chat about the local property market, as he was concerned his daughter would never be able to buy her own property, a place in Locks Heath she herself can call home.

My latest analysis, using the Land Registry and Office of National Statistics, shows that overall, month on month, Locks Heath property values increased by 1%. The year on year figures showed the value of residential property in Locks Heath has increased by 7.7% in the year to the end February 2016, taking the average value of a property in the council area to £254,100.

It gets even more interesting when we look at the last few months’ figures and see the patterns that seem to be emerging.

• January 2016 – a rise of 0.4%
• December 2015 – a rise of 0.9%
• November 2015 – a rise of 0.7%

We have talked in many recent articles about the lack of properties being built in Locks Heath over the last 30 years. This lack of new building has been the biggest factor that has contributed to Locks Heath property values still being 236.62% higher than in 1995. At the risk of repeating myself, until the Government addresses this issue, and allows more properties to be built, things will continue to get worse as the UK population grows at just under 500,000 people a year (which is a combination of around 226,000 people because of higher birth rates/people living longer and 259,000 net migration) whilst the country is only building 152,400 properties a year – no wonder demand is outstripping supply.

Another reason intensifying the current level of property values in Locks Heath, is the fact that people aren’t moving home as much as they used to, meaning fewer properties are coming onto the market for sale, so in consequence, there is a lack of choice of property to buy, meaning people thinking of moving are discouraged from putting their property on the market … thus perpetuating the problem, as the scarcity of possible properties to buy in order to move also deters people from offering their home for sale. This unevenness between demand from would-be purchasers and the number of properties coming on to the market for sale is causing pressures in Locks Heath (and the rest of the UK).

So what of the future of the Locks Heath property market and this man’s daughter? I firmly believe the property market in Locks Heath and the country as a whole is changing its attitude about home-ownership. Back in the 1960’s, 70’s, 80’s and 90’s, getting on the property ladder was everything. Since the late 1990’s, we as a country (in particular, the young) have slowly started to change our attitude to home-ownership. We are moving to a more European model, where people choose to rent in their 20’s and 30’s (meaning they can move freely and not be tied to a property), then inherit money in their 50’s when their property owning parents pass away, allowing them to buy property themselves … just like they do in Germany and other sophisticated and mature European counties, meaning his daughter will end up owning property, just later in life than we did. So, whatever the vote on the 23rd of June, if you think about it, we might be more European than we think!

If you want to read more articles on the Locks Heath property market, whether you are a Locks Heath landlord, Locks Heath homeowner, first time landlord or a first time buyer – then visit the Locks Heath Property Blog HERE.