As the memory of a glorious summer starts to dwindle some interesting statistics have come to light on the Locks Heath Property Market which will be thought provoking for both homeowners and buy to let Landlords alike.

Over the last 12 months 193 households have changed hands in Locks Heath, interesting when compared with the 10-year average of 199 households per year.

Yet, for the purpose of this week’s article, I want to discuss the pricing of the current crop of Locks Heath’s property sellers and the prices they are asking for their homes and the prices they are achieving (or not as at the case may be).  It is so important for all property owners to know the real story, so they can judge for themselves where they stand in the current Locks Heath housing market, thus enabling them to make suitable and informed decisions… and that is why, in my blog about the Locks Heath Property Market, I pride myself in telling the people of Locks Heath the real answers, not just the ones they want to hear.

The national average of homes selling at or above the asking price currently stands at around 10%, so around 90% go below the asking price – but by how much?  Well according to Rightmove, in the Locks Heath area, the average difference between the ‘FINAL asking price’ to the price agreed is 3.1%… yet note I highlighted the word FINAL in the last statement.

You see some Estate Agents will deliberately over inflate the suggested initial asking price to the house seller, because it gives them a greater chance to secure the property on that agent’s books, as opposed to a competitor.  This practice is called overvaluing. Now of course, each homeowner wants to get the most for their property, it is quite often their biggest asset – yet some agents know this and prey on those house sellers.  You might ask, what is the issue with that?

Well, you only get one chance of hitting the market as a new property.  Everyone has access to the internet, Rightmove and Zoopla etc, and your potential buyers will know the market like the back of their hand.  If you have a 3 bed semi that is on the market for a 3 bed detached house price those buyers will ignore you.  Your Locks Heath property sticks on the market, potential buyers will keep seeing your Locks Heath property on Rightmove each week, then start to think there is something wrong with it, dismiss it even further, until you as the house seller have to reduce the asking price so much (to make it appear inexpensive) to get it away.  According to our own research, the average house buyer only views between 4 and 5 houses before buying – so don’t assume viewers will come round to your optimistically priced (i.e. overvalued) property, thinking they will knock you down – no quite the opposite!

So how widespread is overvaluing in Locks Heath? The results might surprise you…

39.3% of properties in Locks Heath, currently on the market, have reduced their asking price by an average reduction of 5.2% (which equates to £18,700 each)

So, all I ask is this… be realistic and you will sell at a decent price to a decent buyer.  First time, every time, enabling you to move on to the next chapter of your life.

We’ve reached number 20 on our list of The Top 30 Most Saleable Streets in SO31, PO14 & PO15.

Did your street make the cut?

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

For more articles about the local property market please visit The Locks Heath Property Blog.

I have been asked a number of times recently what a hard Brexit would mean to the Locks Heath property market.  To be frank, I have been holding off giving my thoughts, as I did not want to add fuel to the stories being banded around in the national press.  However, it’s obviously a topic that you as Locks Heath buy to let Landlords and Locks Heath homeowners are interested in… so I am going to try and give you what I consider a fair and unbiased piece on what would happen if a hard Brexit takes place in March 2019.

After the weather and football, the British obsession on the UK property market is without comparison to any other country in the world.  I swear The Daily Mail has the state of the country’s property market on its standard weekly rotation of front-page stories!  Like I have said before on my blog, there are better economic indexes and statistics to judge the economy (and more importantly) the property market.  If you recall, I said the number of transactions was just as important, if not more, as a bellwether of the state of the property market.

Worries that the Brexit referendum would lead to a fast crash in Locks Heath (and national) property values were unfounded.  Although the growth of property values in Locks Heath has reduced since the referendum in the summer of 2016.

Now, it’s true the Locks Heath property market is seeing less people sell and move and the property values are rising at a slower rate in 2018 compared to the heady days of the first half of this decade (2010 to 2015).  But before we all start panicking, let’s ask ourselves, what exactly has happened in the last couple of years since the Brexit vote?

Fareham and Locks Heath House prices have risen by 11.94%

since the EU Referendum

 …and yes, in 2018 we are on track (and again this is projected) to finish on 2,052 property transactions (i.e. the number of people selling their home) which is less than 2017.  But still higher than the long term 12 year average of 1,959 transactions in the local council area.

So it appears the EU vote hasn’t caused many major issues so far, however, if there was a large economic jolt that could be a different game.  Yet how likely is that?

The property market is mostly influenced by interest rates and salaries.

A hard Brexit would subdue wage growth to some degree, yet the level of the change will depend on the undetermined type of Brexit deal (or no deal).  If trade barriers are imposed on a hard Brexit imports will become more expensive, inflation will rise and growth will fall, although at least we are not in the Euro, meaning this could be tempered by the exchange rate of the Pound against the Euro.  In plain language, a hard Brexit will be worse for house prices than a deal.

So why did the Governor of the Bank of England suggest a disorderly hard Brexit would affect house prices by up to 35%?

I mean it was only nine years ago we went through the global financial crisis with the credit crunch.  Nationally, in most locations including Locks Heath, property values dropped in value by 16% to 19% over an 18-month period.  Look at the graph and if we had a similar percentage drop, it would only take us back to the property value levels we were achieving in 2015.

And let’s not forget that the Bank of England introduced some measures to ensure we didn’t have another bubble in any future property market.  One of the biggest factors of the 2009 property crash was the level of irresponsible lending by the banks.  The Bank of England Mortgage Market Review of 2014 forced Banks to lend on how much borrowers had left after regular expenditure, rather than on their income.  Income multipliers that were 8 or 9 times income pre-credit crunch were significantly curtailed (meaning a Bank could only offer a small number of residential mortgages above 4.5 times income), and that Banks had to assess whether the borrower could afford the mortgage if interest rates at the time of lending rose by three percentage points over the first five years of the loan.  Meaning all the major possible stumbling blocks have been mostly weeded out of the system.

So, what next?

A lot of Locks Heath homeowners might wait until 2019 to move, meaning less choice for buyers, especially in the desirable areas of Locks Heath.  For Locks Heath Landlords, Locks Heath Tenants are also likely to hang off moving until next year, although I suspect (as we had this on the run up to the 2015 General Election when it was thought Labour might get into Government), during the lull, there could be some Locks Heath buy to let bargains to be had from people having to move (Brexit or No Brexit) or the usual panic selling at times of uncertainty.

Brexit, No Brexit, Hard Brexit… in the whole scheme of things, it will be another footnote to history in a decade.  We have survived the Oil Crisis, 20%+ Hyperinflation in the 1970’s, Mass Unemployment in the 1980s, Interest Rates of 15% in 1990’s, the Global Financial Crash in 2009… whatever happens, happens.  People still need houses and a roof over their head.  If property values drop, it is only a paper drop in value… because you lose when you actually sell.  Long term, we aren’t building enough homes, and so, as I always say, property is a long game no matter what happens – the property market will always come good.

Growth in UK property values as well as in Locks Heath seems fated to slow over the next five to ten years, whatever sort of Brexit takes place.

I was recently reading a report by Rightmove that a North/South Divide has started to appear in the UK property market – so I wanted to see if Locks Heath was falling in line with those thoughts.  In the North, there are 7.12% less properties on the market than 12 months ago, whilst in contrast, in the South, there are 14.7% more properties on the market than 12 months ago.

With the decline in the number of properties for sale in the North compared to 12 months ago, that means the North is more of a sellers’ market.  However, on the other side of the coin, there is a significant rise in buyer choice in all of the Southern regions, showing there are signs of a buyers’ market, which in some markets is a driving force for a buyers’ market and some downwards price pressure.

So, looking closer to home at asking prices and the number of homes on the market.  In the South East region, according to Rightmove, the average asking prices of new to the market properties are 1.2% higher than 12 months ago and 0.1% higher over the last month.  Now I must stress, this is asking prices – not what is happening to actual property values.  Also, regionally, there are 20% more properties on the market than 12 months ago.

Even closer to home, overall, the number of properties and building plots for sale in Locks Heath has increased by 19%, going from 372 properties for sale a year ago to 441 properties for sale as I write this article, meaning Locks Heath does in fact match the regional trend.

Looking at the individual types of Locks Heath property, you can quite clearly see the different markets within Locks Heath.  The two sets of figures that stand out are the increase in Terraced/town houses for sale, rising 57% and the decrease in Apartments by 3%.

Type	Properties for Sale 12 months ago	Properties for Sale Today	Change
Detached Property in Locks Heath	178	176	-1%
Semi Detached Property in Locks Heath	59	84	42
Terraced/Town House in Locks Heath	28	44	57%
Apartments in Locks Heath	78	76	-3%

(NB There are a handful more Building plots and other types of property that can’t be placed into the four categories… and it’s those that make up the total numbers in the paragraph above the table)

Although these figures don’t tell the whole story because in certain areas of Locks Heath certain types of properties (particular locations and Primary school catchment areas) are in short supply.  This has caused some frustration with buyers of those types of properties with this lack of supply, which in turn has sparked some very localised asking price growth within those hot spot areas, although sometimes to levels where sellers’ optimism turns into silly over the top asking prices.

This means the property sticks, which isn’t sustainable, therefore as a consequence there are certain parts of the Locks Heath housing market with upward asking price movements being offset in part by intermittent asking price reductions where home owners or their estate agents have been over optimistic with their initial marketing asking price.

What does this mean for homeowners and Landlords in Locks Heath?

If you are planning to sell your home or buy to let investment, the key for determined sellers is to set your asking price correctly from the start.  It is so vital to be competitive to attract buyers.  Everyone has access to three main property portals (Rightmove, On the Market and Zoopla) so can easily compare your property against similar ones.  When you do search these portals, make sure you ask the website to show properties that are sold subject to contract as well to check what properties are selling for in your neighbourhood. Unless you have something highly unusual or unique, this perhaps isn’t the best market to set an optimistic asking price in hoping to find someone who would pay that silly price.

And if you are buying in Locks Heath?  The numbers of buyers are lower than a few years ago, although those buyers that are in the market have become quite serious.  The times of time wasters are long gone.  Those buyers that are in the market are real buyers, wanting to buy, but only at the right price.  We live in a 21^st century society that is “time-poor” so nobody is wanting to even view a house, let alone pay over the odds if they believe the asking price is too high.  So, if you are buying, do your homework and ask plenty of questions of the agent to find out the motivation of the sellers and the real reasons behind why they are moving… and you might just bag a good deal.

The number of residential property transactions in Fareham will be 1.7 per cent lower in 2018, compared to 2017.

According to my research, the seasonally adjusted statistics for our local authority area suggest with the number of properties already sold in 2018, and the number of properties currently under offer or sold subject to contract (allowing for property sales to fall through before exchange of contracts) we, as an area, will end the year 1.68 per cent lower compared to 2017.

So why are transaction numbers so important to Locks Heath homeowners, Locks Heath Landlords and potential first-time buyers?

Many economists and property market commentators believe transaction numbers give a more precise and truthful indicator of the health of the property market than just house values.  In the six years before the Credit Crunch in 2007/8, the average number of completed property transactions in the local area (the local authority covered by Fareham) stood at 2,663 per year.  Yet in the three years following the Credit Crunch, on average, only 1,580 homes were changing hands per year in the area.

Roll the clock forward to more recent times and last year, in 2017, 2,049 homes changed hands (i.e. transacted and sold) in the area, not far off the local authority’s 23 year overall average of 2,330 homes per year.

In the past, a reduction in the number of properties selling has often been believed to be the first signal of a down turn in the housing market as a whole.  Although, the down turn of the credit crunch years (2007/2008) was more a free-fall than a subtle down turn.  Look at the graph and the ‘so-called’ halcyon days of the 2000 to 2006 property market were a roller coaster when it came to the number of transactions.  House prices were rising in the six/seven years before the credit crunch (2000 to 2006), albeit, the rate of growth of Locks Heath house prices did slow in late 2005 and 2006 (which does fit in nicely with the graph).

In other articles, I have mentioned the change in the number of houses for sale today compared to last year and further back.  Although, the market has seen in recent months (i.e. the short term) an increase in the number of properties for sale, fundamentally, in the medium term, there has been an underlying trend in the reduction of properties coming onto the market for sale in Locks Heath (and nationally) and this has been one of the main drives behind the lack of properties selling.  Locks Heath people aren’t moving as much as they were 30 years ago meaning fewer houses are selling each year.

However, this short-term increase in properties for sale hasn’t been even across the board. In certain sectors of the Locks Heath property market, there is a glut of properties on the market at the moment and so prices and values are dropping on those types as sellers compete for the limited amount of buyers… yet, there are other sectors of the Locks Heath property market where there is a dearth, a shortage of property, and buyers are fighting tooth and nail with silly offers to try and secure the sale.  This means, there are some bargains for you Locks Heath buy to let Landlords.  If you look hard enough, you could spot the same trends I have seen in Locks Heath and find the individual property micro markets that fall into that first sector (with its glut).

So, if you want the inside track on the Locks Heath property market, whether you are a Landlord of ours or another agent, I am more than happy to guide you in the right direction if you drop me a line or an email (and I don’t bite or do hard sell – promise!).

So, to conclude, I believe we will finish on 2,015 housing transactions by the end of the year in the area… not too far off last year’s figure or the long-term 23-year average.  Looking at the short term future, now it’s true some (not all) but some potential purchasers of property in Locks Heath may be exhibiting more caution because of concerns that the Bank of England will continue to put up interest rates– to which I reply – yes of course they will when they are only ultra-low at 0.75%.  Anyway, that is the reason why 90%+ of new mortgages over the last nine months have been on a fixed rate.  Also, if they do go up a few percentage points – they are nothing compared to the 12%, 14%, even 15% mortgage rates many of my landlords saw in the early 1990’s.

We can all speculate (and I appreciate the irony of that as I write this article) but all I say to any Locks Heath Landlords, Locks Heath homeowners or Locks Heath first time buyers is act according to your own life cycle, budget on a modest increase in interest rates in the coming few years (yet protect yourself by fixing it), consider your own circumstances and finally, what you can afford.

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.  It is a step-by-step process that can take months and months.  In fact, one of the worst parts of the house selling process is the not knowing how long you might be stuck at each step.  At the moment, looking at every estate agent in Locks Heath, independent research shows it is taking on average 62 days from the property coming on the market for it to be sold subject to contract.

But trust me… that is just the start of a long journey on the house selling/buying process. The journey is a long one and therefore, in this article, I want to take you through the standard itinerary for each step of the house selling procedure in Locks Heath.

Step 1 – Find a Buyer

You need to instruct an estate agent (of course we can help you with that) who will talk through a marketing strategy and pricing strategy to enable you to find a buyer that fits your circumstances. 62 days might be the average in Locks Heath, yet as I have said many times, the Locks Heath property market is like a fly’s eye, split up into lots of little micro markets.

Looking at that independent research, (which only focused on Locks Heath – or rather SO31 to be precise), it was interesting to see how the different price bands (i.e. different micro markets) are currently performing, when it comes down to the average number of days it takes to find a buyer for a property in Locks Heath.

Asking Price (Locks Heath)	Average Time to Find a Buyer in Locks Heath (days)
Under £100,000	45
£100,000 to £200,000	76
£200,000 to £300,000	58
£300,000 to £400,000	51
£400,000 to £500,000	92
£500,000 to £1,000,000	68
Over £1,000,000	88

Interestingly, I thought I would see which price band had the highest proportion of properties sold (stc).  Again – fascinating!

So, now you have a buyer… what next?

There are a variety of distinctive issues at play when selling your property in Locks Heath, together with the involvement of a wide and varied range of professionals who get involved in that process.  That means there are enormous differences in how long it takes from one property to another.  Moving forward to the next steps, these are the average lengths of time it takes for each step to give you some idea of what to expect.

Step 2  – Sort Solicitors (and Mortgage)

Again, something we can point you in the right direction to, but it will take a good few weeks for your buyer to apply and sort their mortgage and for your solicitors to prepare the legal paper work to send to the buyer.

Step 3 – Legal Work and Survey

Once you buyer’s solicitor receives the paperwork from your solicitor, then your buyer’s solicitor applies for local searches from the local authority (to ensure no motorways etc., are going to be built in the back garden!).  These searches can take a number of weeks to be returned to the buyer’s solicitors from the council, from which questions will be raised by the buyer’s solicitor to your solicitor (trust me – you don’t see a tenth of the work that goes on behind closed doors to get the sale through to completion).  Meanwhile, the surveyor will check the property to ensure it is worth the money and structurally sound.  Overall, this step can take between 3 and 6 weeks (sometimes more!).

Step 4 – Exchange of Contracts

Assuming all the mortgage, survey and legal work comes back ok, both the buyer and solicitor sign contracts, the solicitors then perform “Exchange of Contracts”.  When contracts are exchanged, this is the first time both buyer and seller are tied in.  Before then, they can walk away… and you are probably 4 or 5 months down the line from having put up the ‘For Sale’ board – this isn’t a quick process!  BUT hold on… we aren’t there yet!

Step 5 – Completion

Between a week and up to six weeks after exchange of contracts, the buyer’s solicitor sends the purchase money to the seller’s solicitor, and once that arrives, the keys will be given to the buyer.  Phew!

To conclude, all in all, you are looking at a good four, five even six months from putting the for-sale board up to moving out.

If you are thinking of selling your Locks Heath home or if you are a Locks Heath Landlord hoping to sell your buy to let property (with tenants in), either way, if you want a chat to ensure you get a decent price with minimal fuss… drop me a message or pick up the phone.

Over the last twenty years, there has been a shift in the way the Locks Heath (and the UK’s) property market works. In the 1960’s, 70’s, 80’s and 90’s, a large majority of twenty somethings saved up their 5% deposit, went without life’s luxuries of going out and holidays etc., for a couple of years and then bought their first home with their hard earned savings.

By 2000, 65.6% of Locks Heath 25 to 29 years owned their own home (compared to 46% Nationally (and 91.6% of Locks Heath 30 to 34 year olds in 2000 owned their own home – again compared to 64.2% nationally) whilst the remaining youngsters mostly rented from the Council and in some rare cases, privately rented.

Now it’s 2018, and those levels of homeownership have slipped dramatically and now only 35% of Locks Heath 25 to 29 year olds own their own home and 61.7% of Locks Heath 30 to 34 year olds own their own home (interestingly mirroring the National picture of 24.5% for the younger age cohort and 64.2% for the older 30 to 34 year cohort).

There was concern in Government since the late Noughties that this shift from homeownership to private renting wasn’t good for the well-being of the Country and things needed to change, to make it a more level playing field for first time buyers. House prices needed to be more realistic and there needed to be a carrot and stick for both Landlords and first time buyers.

In the 1980’s and 1990’s interest rates were the weapon of choice of Government to cool or heat up the UK housing market – and it did work – up to a point.  It’s just interest rates also affected so many other sectors of the UK economy (and not always in good way). The policy of interest rates to control the economy is called ‘Monetary Policy’.  Monetary policy is primarily concerned with the management of interest rates (and the supply of money) and is carried out by the Bank of England (under direction from the Government).

It’s just in this post Credit Crunch, Brexit environment, the use of higher interest rates wouldn’t directly affect Landlords (as around two thirds of buy to let properties are bought without a mortgage).  Therefore, an increase in interest rates would have hardly any effect on Landlords and hit the first time buyers – the people the Government would be trying to help!

Also, given muted growth of real income (i.e. real income being the growth salaries after inflation) in the past few years, an uplift in interest rates (from their ultra-low 0.5% current levels) would have a massive effect on Brit’s household disposable income.  Yet, over 90% of new mortgages in 2018 being taken are fixed rate and with such low rates, it has made buying a property comparatively attractive.

Instead, over the last 8 years, the Government has encouraged first time buyers and clipped the wings of Landlords with another type of economic policy – Fiscal Policy (Fiscal Policy is the collective term for the taxing (and spending) actions of the Government).  First time buyers have had the Help to Buy Scheme, Stamp Duty Exemption and contributions to their deposit by HMRC.  On the other side of the coin, Landlords have had the way they are able to offset the tax relief of their mortgage payments against income change (for the worse), an increase in Stamp Duty (for the worse) and they will be hit with additional costs as the Government will be phasing out fees to tenants in the next 12 to 18 months.

So, what does this all mean for the 1,201 Locks Heath Landlords?

The days of making money in Locks Heath buy to let with your eyes closed are long gone. There are going to be testing times for Locks Heath Landlords, yet there is still a defined opportunity for those Locks Heath Landlords who are willing to do their homework and take guidance from specialists and experts.

It’s all about looking at your Locks Heath portfolio (or getting a property professional to do so) and ascertaining if your current portfolio, mortgage and gearing are designed to hit what you want from the investment (because that is what it is – an investment) in terms of income now and income in the future, capital growth and when you plan to dispose of your assets.

I have seen many Locks Heath Landlords (both who use me and my competitors) to manage their rental property or find them tenants – and on many occasions recently, I have told them to SELL – yes sell some of their portfolio to either reduce mortgage debt or buy other types of property that match what they want in the short and long-term from their investments.  I know that sounds strange – but my role isn’t just to collect the rent…. it’s also to give strategic advice and opinion on the Landlord’s portfolio to help them meet their current and future investment goals.

The opportunities will appear in the Locks Heath property market for Locks Heath Landlords from gentler growth in property values linked with a restrained Locks Heath property market, meaning if you put in the time, there will be deals and great bargains to be had. Many Landlords in Locks Heath (both clients and non-clients) send me Rightmove links each week, asking my opinion on the suitability of the investment.  Some are exceptional – whilst others are duds. The bottom line is, private renting will continue to outgrow first time buyers in the next 5 to 10 years and as we aren’t building enough homes in the UK, which means rents can only go in one direction – upwards!

Living in our own homes or owning buy to let property in Locks Heath and the surrounding areas, it’s often easy to ignore the regional and national picture when it comes to property. As a homeowner or landlord in Locks Heath consideration must be given to these markets, as directly and indirectly, they do have a bearing on us in Locks Heath.

Locally, the value of property in Locks Heath and the number of people moving remain largely steady overall, although looking across at the different regions, there are certainly regional variations.  Talking to fellow property professionals in the posh upmarket central London areas of Mayfair and Kensington, the number of people looking to buy and registering interest with agents is continuing to climb after 18 months in the doldrums, whilst in other parts of the UK, there is restraint amongst both buyers and sellers in some locations.

The things that affect the national property market are the big economic numbers. Nationally, over the last few months, thankfully, the economic forecast and predictions have improved, notwithstanding the Brexit uncertainties.  Inflation has mercifully throttled back its high growth seen in 2016 to the current level of 2.1% (from 2.7% average last year), coupled with marginally stronger wage growth at 2.5%.  Unemployment is at a 42-year low at 4.2% and UK consumer spending power rose to an all-time high last month to £331.04bn – all positives for consumer sentiment.

Look further afield, a resilient property market depends on the UK’s economic health with the outside world, so if Sterling weakens, that makes imports more expensive, meaning inflation increases, and this matter I talked about recently in in another blog article… interest rates were raised to bring inflation under control, which in turn could seriously affect the property market.  On the assumption Brexit negotiations are successful, economic growth should continue to be upward and positive, meaning confidence would be increased … which is the vital element to a good housing market.

Looking closer to home now, Locks Heath landlords and Locks Heath homeowners might be interested in the how the regional and Locks Heath markets have performed over the last 20 years (compared to the National picture). Let’s look at the regional picture first…

The South East has outperformed the Fareham housing market by 6.84%…

…yet nationally, Fareham has actually outperformed the country by 9.35%

That means a Locks Heath homeowner has profited by an additional £31,600 over the last 20 years compared to the average homeowners across the country.

I found it interesting to see the ups and downs of the Locks Heath, South East and National markets in this graph. How the lines of graphs roughly go in the same direction, with Locks Heath following the regional trend more closely than the national trend to a certain point (as one would expect), how the 2007/08 property crash timings and effects were slightly different between the three lines and finally how the property markets performed in the post-crash years of 2011 to 2014 … fascinating!

So, what does this all mean for Locks Heath homeowners and Locks Heath landlords?

Well, house prices going up or down are only an issue when you sell or buy.  In the last 12 months, only 1,076,288 (let’s call it a straight million between friends!) properties changed hands out of 27.2 million households in the UK in 2017, meaning only 3.7% would have been affected if property values had dropped in the last year.

Property values in Locks Heath are 274.6% higher than the summer of 1998

Yet this has been a long-term gain.  The number one lesson in property is that it is a long-term game.  The biggest issue in property isn’t house values or prices… it’s the number of homes built, because the number of households nationally has only increased by 6% since 2007, whilst the population has grown by 7.6%. That doesn’t sound a lot, until you express it another way…

If the UK population had had only grown by the same percentage as the percentage growth in UK households in the last decade, there would be 1,000,000 less people living in the UK today

The final thought for this article is this…  Apart from central London, over the last 20 years it hasn’t mattered what part of the UK you were in with regards to the property market.  Be you a Landlord or homeowner, property is a long game, so look long term and you will win because until they start to build more homes, from the current levels of 180,000 new homes built per year to at least 250,000 households built per year, demand will, over the long term, outstrip supply for owning and renting!

My analysis has shown that up to the end of the last quarter, Locks Heath first time buyers purchased 58 Locks Heath properties.  With wages rising at 2.8%, unemployment at a low rate of 4.2% (down from 4.6% from a year earlier and the joint lowest since 1975), national GDP rising at 1.87% and inflation at 2.3%, tied in with indifferent house price growth (compared to a few years ago), this has given first time buyers a chance to get a foot hold on the Locks Heath property market.

Over the last year, the average purchase price of a Locks Heath first time buyer property has been £260,400 and the average deposit was £42,185.  Furthermore, my calculations show the average Locks Heath parents contributed £18,456 of that £42,185 figure.

You see “The Bank of Mum and Dad (Locks Heath Branch)” is for countless Locks Heath twenty something’s, perceived to be the only way they will ever be able to afford their first home.  In fact, Locks Heath parents put up a substantial £1.07m in the last 12 months to help their nearest and dearest offspring onto the property ladder.  This assistance towards the deposit makes a huge difference, enabling Locks Heath youngsters who thought they couldn’t get on the housing ladder more able to do so.

With mortgage rates at all-time lows, few Locks Heath twenty something’s would struggle to make mortgage repayments, but it is the requirement of the deposit which is the issue, although as parents (and grandparents) are helping out where they can, it does little to address the real problems of the housing market, whether for people renting or buying their first home.

If you think about it, as a Country we have been fortunate that the older generation who control the biggest share of the nation’s wealth are so plentiful to those following after. We need to remember, though, that this generosity is a sign of the issues of the British housing shortage, not its solution.

But before I leave this article… note I used the word PERCEIVED in a previous paragraph. Yes, the average first time buyer deposit is 16.1%, but that is an average.  Did you know 95% mortgages returned to first time buyers in late 2009 and have been available ever since?  Also, lenders like Barclays and many local Building Society’s now offer 100% mortgages (i.e. no deposit) at 2.75% fixed for three years.

The perception is you need 15%, 20% even a 25% deposit to be a first-time buyer – you don’t!  You don’t need any deposit, but (there is always a but!)…

Over the last decade, many renters have upgraded themselves into homes that they (or any generation before them) could never have ever afforded as a first time buyer in the past.  You see the British housing market started to change with the dawn of the new Millennium and I am seeing a slow but steady attitude change when it comes to renting. Those tenants have found the price difference of upgrading from the typical 1970’s TV show Rigsby “Rising Damp” style rental property to plush terraced house or even semi-detached home, with all the mod cons, comparatively inexpensive (when compared to the increase in mortgage payments if they had to make the move as buyers).

Renting isn’t seen as the poor man’s choice, as many young (and increasing older) people are becoming more at ease and comfortable with the flexibility offered by private renting a property rather than jumping ‘lemming like’ into home ownership.  Locks Heath landlords will continue to see growth in sector, and like Germany, today’s renters will become homeowners in 20 years’ time – when they will inherit the wealth of their parent’s home.