Locks Heath property values are currently 0.7% higher than at the end of 2017, notwithstanding the uncertainty and threats over the potential impact of Brexit in 2019. This has exceeded all the predictions (aka guesses) of all the City of London economists, in an astonishing sign of strength for the local Locks Heath and wider national economy.

Nevertheless, the statistics from the Land Registry come after a lethargic year for the number of properties in Locks Heath compared to the actual prices achieved for those properties.  All this against a framework of amplified political ambiguity and ensuing years of rising Locks Heath property values that have reduced the affordability of homes in the locality.

The average value of a Locks Heath property today currently stands at £346,300

Looking in finer detail, it isn’t a surprise that 166 property sales in Locks Heath over the last 12 months is somewhat lower than the long-term average over the last 20 years of 245 property sales per year in Locks Heath as the long-term trend of people moving less has meant a decline in the number of property transactions.

I believe locally, Locks Heath property value growth will be more reserved in 2019 after two decades of weaker wage rises. One of main drivers in the demand (and thus the price people are prepared to pay for a home) is the growth of peoples wage packets. Interestingly, wage inflation over the last six months has risen from 2.4% in the late summer to its current level of 3.3% (which is higher than the average since the Millennium, which has been a modest 2.1%). One of the reasons why wages are growing in the short term is the unemployment rate in the country currently only stands at 4.1%, continuing to stay close to its lowest level since the 1970’s.

However, even though Locks Heath salaries and wages are rising comparatively higher than they were last year, looking over the long term, Locks Heath property values are 122.55% higher than they were in January 2002, yet average salaries are only 76.1% higher over the same time frame. This means over the last few years, with average property values so high comparative to salary/wages, many Locks Heath potential buyers have been priced out of being able to purchase their first home.

At first glance, these stats are actually rather positive during this reported time of political uncertainty and the height of Brexit commotion… because I genuinely believe that to be the case. The press have always looked for the bad news (well they do say it is that that sells newspapers), and whilst I am not entering into the pros and cons of Brexit itself, the numbers do stack up quite well since the Brexit vote took place nearly 3 years ago.

Moving forward, when taken with the recent reduction in short to medium term number of property transactions (i.e. the number of Locks Heath properties sold), it should be noted that a lot of the buoyant house price increase has a lot more to do with a shortage of properties on the market rather than an uplift in the Locks Heath housing market generally.

And we can’t forget that Locks Heath isn’t in its own little bubble, as there are noteworthy differences across the UK in property value inflation. House prices in London and the South East have hardly risen or even fallen in some places, whilst in the Midlands, North and other parts of the country they have generally increased.

Looking forward, I would say to the homeowners and buy to let Landlords of the locality that I expect Locks Heath house price growth to remain stable between -0.2% and 0.8% by the end of this year (although they could dip slightly during the summer) … as long as nothing unexpected happens in the world economically or politically of course.

We’ve reached number 17 on our countdown of the Top 30 Most Saleable Streets in SO31, PO14 & PO15.

Are we in your street?

The conventional way of categorising property in Britain is to look at the number of bedrooms rather than its size in square metres (square feet for those of you over 50!).  My intuition tells me that homeowners and Tenants are happy to pay for more space.  It’s quite obvious, the more bedrooms a house or apartment has, the bigger the property is likely to be.  And it’s not only the tangible additional bedrooms, but those properties with those additional bedrooms tend to have larger (and more) reception (living) rooms.  However, if you think about it, this isn’t so surprising given that properties with more bedrooms would typically accommodate more people and therefore require larger reception rooms.

In todays Locks Heath property market, the Locks Heath homeowners and Locks Heath Landlords I talk to are always asking me which attributes and features are likely to make their property comparatively more attractive and which ones may detract from the price.  Over time buyers’ and Tenants’ wants and needs have changed.

In Locks Heath location is still the No. 1 factor affecting the value of property, and a property in the best neighbourhoods can achieve a price almost 50% higher than a similar house in an ‘average’ area. Nevertheless, after location, the next characteristic that has a significant influence on the desirability, and therefore price, of property is the number of bedrooms and the type (i.e. Detached/Semi/Terraced/Flat).

The number of bedrooms for owner-occupiers very much depends on the size of the family and the budget, whilst Locks Heath Landlords have to consider the investment opportunity.  In this article, I have analysed Locks Heath’s housing stock into bedrooms and tenure.  Initially looking at Locks Heath homeowners..

And now the Private rented sector …

It can quite clearly be seen that Locks Heath owner-occupiers tend to occupy the larger properties with more bedrooms. This would be expected due to the demographic of homeowners and people that privately rent.

However, this shows there could be opportunities for Locks Heath buy to let Landlords to purchase larger properties with more bedrooms to attract Tenants requiring properties with more bedrooms.  However, before you all go buying larger 4 bed and 5 bed mansions to rent them out, a lot of bigger properties in Locks Heath don’t make financial sense when it comes to buy to let.

For numerous years Locks Heath buy to let Landlords have been the lone buyers at the smaller one and two bed starter homes of the market, as they have been lured by elevated Tenant demand and eye-catching returns.  Some Locks Heath Landlords believe their window of opportunity has started to close with the new tax regime for Landlords, whilst it already appears to be opening wider for first time buyers.  This is great news for first time buyers but one final note for Locks Heath Landlords…. all is not lost….. you can still pick up bargains, you just need to be a lot more savvy and do your homework.  One source of such information with articles like this is the Locks Heath Property Blog.

For most Locks Heath people, a mortgage is the only way to buy a property. However, for some, especially Locks Heath homeowners who have paid off their mortgage or Locks Heath buy to let landlords, many have the choice to pay exclusively with cash. So the question is, should you use all your cash, or could a mortgage be a more suitable option?

Well, looking at the numbers locally…

4,316 of the 13,753 property sales in the last 7 years in Fareham were made without a mortgage (i.e. 31.4%)

Interesting when compared with the national average of 31.9% cash purchases over the last seven years. Next, I wanted to see that cash percentage figure split down by years. As you can see from the graph, this level of cash purchases vs mortgage purchases has remained reasonably constant over those seven years…

Next, if you are going to go for a mortgage, the next question has to be whether you should fix the rate or have a variable rate mortgage. In the last Quarter, 90.57% of people that took out a mortgage, had a fixed rate mortgage at an average interest rate of 2.27%. Although what did surprise me was only 65.79% of the £1.429 trillion mortgages outstanding in the whole of the UK were on a fixed rate. The level of mortgage debt compared to the value of the home itself (referred to as the Loan to Value rate – LTV) was interesting, as 61.9% of people with a mortgage have a LTV of less than 75%. Although, one number that did jump out at me was only 4.33% of mortgages are 90% and higher LTV – meaning if we do have another property slump, the number of people in negative equity will be relatively small.

Next, looking at the actual number of properties sold, it can be clearly seen the number of house sales has dipped slightly in 2018…

So those are the numbers… let us have a look at the pros and cons of taking a mortgage, with specific focus on Locks Heath buy to let Landlords.

Taking a mortgage will help a landlord increase their investment across more properties to maximise the return, rather than putting everything into one Locks Heath buy to let property. This will enable the Landlord to ensure if there is a void in the tenancy, there should still be rent coming from the other properties. The flip side of the coin is that there is a mortgage to pay for, whether or not the property is let.

The other great motivation of taking a mortgage is that landlords can set the mortgage interest against the rental income, although that will only be at the basic rate of tax by 2021 due the recent tax changes. Banks and Building Societies will characteristically want at least a 25% deposit (meaning Locks Heath Landlords can only borrow up to 75%) and will assess the borrowing level based on the rental income covering the mortgage interest by a definite margin of 125%.

A lot will depend on what you, as a Locks Heath Landlord, hope to attain from your buy to let investment and how relaxed you would feel in making the mortgage payments when there is a void (interestingly, Direct Line calculated a few months ago that voids cost UK Landlords around £3bn a year or an average of £1000 per property per year). You also have to consider that interest rates could also increase, which would eat into your profit… although that can be mitigated with fixing your interest rate (as discussed above).

So, with everything that is happening in the world, does it make sense to buy rental properties? Now we help many newbie and existing Landlords work out their budgets, taking into account other costs such as agent’s fees, finance, maintenance and voids
in tenancy. The bottom line is we as a country aren’t building enough property, so demand will always outstrip supply in the medium to long term, meaning property values will keep rising in the medium to long term. That’s not to say property values might fall back in the short term, like they did in 2009 Credit Crunch, the 1988 Dual MIRAS crash, the recession of the early 1980’s, the 1974 Oil Crisis, the early 1930’s Great Depression… yet every time they have bounced back with vigour. Therefore, it makes sense to focus on getting the best property that will have continuing appeal and strong Tenant demand. And to conclude, buy to let should be tackled as a medium to long term investment because the wisest Landlords see buy to let investment in terms of decades – not years.

I have reached number 18 on my countdown of the Top 30 Most Saleable Streets in SO31, PO14 & PO15.

Is it your street?

As we go full steam ahead into 2019, it’s certain that the Locks Heath housing market in 2018 was a little more restrained than 2016 and 2017 and I believe this will continue into 2019. Property ownership is a medium to long term investment so, looking at the long-term, the average Locks Heath homeowner, having owned their property since the Millennium, has seen its value rise by more than 198%.

This is important, as house prices are a national obsession and tied into the health of the UK economy as a whole. The majority of that historical gain in Locks Heath property values has come from the growth in Locks Heath property values, while some of it will have been enhanced by extending, modernising or developing their Locks Heath home.

Taking a look at the different property types in Locks Heath, and the profit made by each type, makes interesting reading..

However, we can’t forget there has been just over 60% inflation over those 18 years, which eats into the ‘real’ value (or true spending power of that profit)… so if we take into account inflation since 2000, the true spending power of that profit has been lower.

So the ‘real’ value of the profit, after inflation, in Locks Heath has been £8,178 per year – still nothing to sniff at.

I wanted to show you that even though we had the 2008/09 Credit Crunch property market crash where, depending on the type of Locks Heath property, property values dropped between 15% and 20% in 18 months… Locks Heath homeowners over the long term are still better off than those renting.

Moving forward, the question I get asked time and again is what will happen in the future to the Locks Heath Property market?  Irrespective of what is happening in the World, Europe or even Central London, the biggest factor over the medium to long term to ensure that this level of house price growth is maintained in Locks Heath is the building of new homes both locally and in the country as a whole. Whilst we haven’t had the 2018 stats yet, Government sources suggest this will be nearer 180,000 to 190,000, a decrease from the 2017 figure of 217,350 new households being created. When you consider that we need to build 240,000 households to equal demand (immigration, people living longer, higher divorce rates and people co-habiting later in life etc)… demand will outstrip supply and unless the Government start to spend billions building council houses this trend will continue for years (and decades to come).

Another factor is that whilst Locks Heath Landlords have been hit with higher taxes to enable them to actually be a Landlord most, in every national survey, still intends to increase their portfolio in the medium to long term. The youngsters of Locks Heath see renting as a choice, giving them flexibility and options that being tied to a home cannot give… thus meaning demand will continue to grow and Landlords will be able to enjoy increased rents and capital growth, although those very same Locks Heath buy to let Landlords will have to work smarter in the future to continue to make decent returns (profits) from their buy to let investments. Even with the tempering of house price inflation in Locks Heath in 2018, most Locks Heath buy to let Landlords (and homeowners) are still sitting on a copious amount of growth from previous years.

The question is, how do you, as a Locks Heath buy to let Landlord, ensure that continues?

Since the 1990’s, making money from investing in buy to let property was as easy as falling off a log. Looking forward though, with all the changes in the tax regime and balance of power, making those similar levels of return in the future won’t be so easy. Over the last ten years, I have seen the role of the forward thinking agents evolve from a person collecting the rent to a more all-inclusive role; I call it, ‘strategic portfolio leadership’.

Whether you are a Landlord of ours or not, without any cost or commitment, we can give you a balanced structured overview of your short, medium and long-term goals, in relation to your required return on investment, yield and capital growth requirements. If you would like such advice feel free to drop me a line.

It’s now commonly agreed amongst economists and the general public that the dramatic rise in Locks Heath property prices of the last six years has come to an end.

Read the National newspapers, and they talk of doom and gloom in the British housing market with such things as strained buyer affordability (as property prices have increased over the past six years at a far faster pace than average salaries), a lack of new properties being built and the Brexit uncertainties over the last two and half years being blamed for the slow down – yet in the last 12 months, people have still been moving, buying and selling in Locks Heath at levels similar to the last six years – something tells me we have a case of ‘bad news selling newspapers’.

So instead, let me share with you what, exactly, is happening in the Locks Heath property market, and more specifically, who is moving and why in Locks Heath.  In the last twelve months most of the property sales in Locks Heath involved detached properties, which sold for on average £429,900.  Semi-detached properties sold for an average price of £308,700, while flats fetched approximately £154,800.

In Locks Heath, in the homeowner sector in 2018 (i.e. owner occupation), 79 households moved within the tenure (i.e. sold the home they owned and bought another one) and 15 new households were created (i.e. they moved from living with family/friends and bought their first home without privately renting).

What does this mean for Locks Heath buy to let Landlords?  Well, looking at the graph, it appears bad news for Landlords. There were 37 households that moved into the home owning (owner occupation) tenure from the private rented sector, whilst on the other side of the coin, 29 Locks Heath households moved to the private rented sector from owner occupation… which appears on the face of it, a reduction in the private sector.

My research has calculated that in 2018, an additional 39 new households in the Locks Heath private rental sector were created

…and it will continue to grow at those levels for the foreseeable future.

I have one final thought and opportunity for you Locks Heath property investors. 19 owner occupied households in Locks Heath sold in last year where the homeowners had passed away.  These properties can be a potential goldmine and offer great returns.  The reason being is some members of the older generation who have owned these homes for decades have spent money on high capital items (double glazing / central heating etc.) but not spent money on more superficial low-ticket items such as up to date carpets, kitchen, bathroom and decorating (vital if you want to sell your property for top money).  These properties can often be bought cheaply because most buyers can’t see past the avocado or brown bathroom suite from the 1970’s and the dated decor, so if you were to buy wisely and do the works, you could sell it on for a healthy profit.

So, whatever is happening in the world with Brexit, Trump, China, and the Stock Market the Locks Heath housing market is in decent shape for the medium to long term.  If we do have small corrections in values in the next 12 to 18 months, in the long term, house prices have always returned… and returned with vengeance.  Like I say to anyone buying a property, be they a first time buyer, Landlord or homeowner… property is a long game… and if you play the long game, you will always win (although isn’t that true in most aspects of life?).

We have reached number 19 on our countdown of the Top 30 Most Saleable Streets in SO31, PO14 & PO15.

Are we in your street?

A few months ago I wrote an article on the Locks Heath Property Blog about the length of time it took to sell a property in Locks Heath and the saleability of the different price bands (i.e. whether the lower/middle or upper local property markets were moving slower or quicker than the others).  For reference, a few months ago it was taking on average 62 days from the property coming on the market for it to be sold subject to contract (and that was based on every Estate Agent in Locks Heath)… and today… 108 days… does that surprise you with what is happening in the UK economy?

Well, a number of Locks Heath Landlords and homeowners who are looking to sell in the coming months contacted me following that article to enquire what difference the type of property (i.e. Detached/Semi/Terraced/Apartment) made to saleability and also the saleability of property by the number of bedrooms).  As I have said before, whether you are a Locks Heath Landlord looking to liquidate your buy to let investment or a homeowner looking to sell your home, finding a buyer and selling your property can take an annoyingly long time… but anything you can do to mitigate that is helpful to everyone.

So I did some research on the whole of the Locks Heath property market and these were my findings… to start with by type (i.e. Detached/Semi/Terraced/Apartment):

As you can see, the star players are the terraced/town house and semi-detached variants of Locks Heath property, whilst apartments seem to be sticking in Locks Heath.

Next I looked at what the number of bedrooms does to the saleability of Locks Heath property..

As you can see the one and five bedroom properties seem to be taking the longest time to sell.

And to answer the question in the title….. it is three bed properties!

So, what does this mean for Locks Heath buy-to-let Landlords and homeowners?

There is no doubt that there is a plethora of properties on the market in Locks Heath compared to 18 months ago…  it is not because more houses are coming on to the market, it is because they are also taking a little longer to sell.  This makes it slightly more a buyer’s market than the seller’s market we had back in 2014/5/6.  Therefore, in some sectors of the Locks Heath property market, it is much tougher to sell, especially if you want to sell your Locks Heath home fast.

Therefore, to conclude, on the run up to the New Year, if you are looking to buy and plan to stay in the buy to let market a long time, perhaps take a look at the Locks Heath properties that are sticking as there could be some bargains to be had there(?).  Want to know where they are?  Drop me a line and I will tell you a nifty little trick to find all the properties that are sticking.

The Locks Heath housing market is a fascinating beast and has been particularly interesting since the Credit Crunch of 2008/9 with the subsequent property market crash.  There is currently some talk of a ‘property bubble’ nationally as Brexit seems to be the ‘go-to’ excuse for every issue in the Country.  Upon saying that, looking at both what we do as an agent, and chatting with my fellow property professionals in the area, the market has certainly changed for both buyers and sellers alike (be they Locks Heath buy to let Landlords, Locks Heath first time buyers or Locks Heath owner occupiers looking to make the move up the Locks Heath property ladder).

Locks Heath House Values are 4.97% higher than a year ago, and the rents Locks Heath Tenants have to pay are 1.5% higher than a year ago

When we compare little old Locks Heath to the national picture, national property values have risen by 0.4% compared to last month and risen by 3.0% compared to a year ago, and this will surprise you even more, as nationally, property values are 19.8% higher than January 2015 (compared to 11.4% higher in the EU in the same time frame).

However, if we look further back…

Since 2006, Locks Heath House Values are 57.84% higher, yet the rents Locks Heath tenants have had to pay for their Locks Heath rental property are 26.4% higher

… which sounds a lot, yet UK inflation in those 12 years has been 42%, meaning Locks Heath Tenants are 15.6% better off in ‘real spending power terms’.

Looking at the graph, the rental changes have been much gentler than the roller coaster ride of property values.  I particularly want to bring to your attention to the dip in Locks Heath house values (in red) in the years of 2008 and 2009… yet as Locks Heath property values started to rise after the summer of 2009, see how Locks Heath rents dipped 6/12 months later (the yellow bars)….  Fascinating!

So, we have a win for tenants and a win for the homeowners, as they are also happy due to the increase in the value of their Locks Heath property.

However, maybe an even more interesting point is for the long-term Locks Heath buy to let Landlords.  The performance of Locks Heath rental income vs Locks Heath house values has seen the resultant yields drop over time (if house prices rise quicker than rents – yields drop).

Whilst, it’s true Locks Heath Landlords have benefited from decent capital growth over the last decade, with the new tax rules for landlords, now more than ever, it’s so important to maximise one’s yields to ensure the long term health of your Locks Heath buy to let portfolio.  More and more I am sitting down with both Locks Heath Landlords of mine and Landlords of other agents who might not be trained in these skills – to carry out an MOT style check on their Locks Heath portfolio, to ensure your investment will meet your future needs of capital growth and income.  If you don’t want to miss out on such a MOT check up, drop me a line – what have you got to lose?  30 minutes of time against peace of mind – the choice is yours.