Market Comment from Lee Fenn-Tripp Director of Downer & Co
To the landlords and homeowners of Newbury – some thoughts… The tightrope of being a Newbury buy-to-let landlord is a balancing act many achieve well. Talking to some Newbury landlords, they are very conscious of their tenants’ capacity and ability to pay the rent, and their own need to raise rents on their rental properties (as Government figures shows, ‘real pay’ has dropped 1% in the last six months). Evidence suggests that many landlords feel more assured than they were in the spring about pursuing higher rents on their properties.
During the summer months, evidence has suggested that the rents new tenants have had to pay on move-in have increased. June/July/August is a time when renters like to move, demand surges and the normal supply and demand seesaw mean tenants are normally prepared to pay more to secure the property they want, in the place they want to be. This is particularly good news for Newbury landlords as average Newbury rents have been on a downward trend recently. Look at the figures here…
Rents in Newbury on average for new tenants moving in have risen 0.9% for the past month, taking overall annual Newbury rents 0.9% lower for the year
However, several Newbury landlords have expressed their apprehensions about a slowing of the housing market in the area. I think this negativity may be exaggerated. The other side of the coin to property investing is capital values (which will also be of interest to all the homeowners in Newbury as well as the Newbury buy-to-let landlords). I believe the Newbury property market has been trying to find some level of equilibrium since the New Year. According to the Land Registry…Property Values in Newbury are 3.44% higher than they were 12 months ago, even with a drop of 0.43% last month.
Whether you are a homeowner or landlord, if you are planning to sell your Newbury property in the short term, it is crucial, that you realistically price your property when you bring it to the market. If there in an increase in choice of properties, the balance of power during negotiation generally tips towards the buyer. Given that everyone now has access to property details, including historic statistics for sale prices, buyers may be more astute during the offer and negotiation stages of a purchase.
However, even if there is an increase in the number of properties for sale in Newbury, property prices will remain stable and strong in the medium to long term. This is because the number of properties on the market today is still way below the peak of summer of 2008, when there were 472 properties for sale compared to the current level of 256 (if you recall, prices dropped by nearly 20% in Credit Crunch years of ‘08 and ‘09). Compared to 2008, today’s lower supply of Newbury properties for sale will keep prices relatively high…and they will continue to stay at these levels for the medium to long term.
Fewer people are moving than a couple of years ago, meaning not as many properties are for sale. This means prices remain relatively high perhaps because of some underlying reasons. Firstly, buy-to-let landlords tend not to sell their properties as often as owner-occupiers, consequently removing stock out from the housing market. Secondly, for home buyers, Stamp Duty is much higher than 10 years ago (meaning it costs more to move). Thirdly, there is a dearth of local authority rental homes so demand for private rented housing will remain high. Then we have the UK’s maturing owner occupier population, meaning these older people are less likely to move (compared to when they were younger). Another reason is the lack of new homes being built in the country (we need 240k houses a year to be built in the UK and we are currently only building 145k a year!). Finally the new mortgage rules introduced in 2014 about how much a person can borrow on a mortgage has curtailed demand.
Some final thought’s; to all the Newbury homeowners that aren’t planning to sell, price changes is only represent paper profit or loss. To those that are moving, most vendors become purchasers as well, so price changes may be reflected in your purchase (swings and roundabouts as Mum used to say!)
To all the Newbury landlords; keep your eyes peeled since there may be some decent buy-to-let deals coming to the market in the near future.
If you want to know more about property in West Berkshire, then one place for such information would be the Newbury Property Blog. Please visit www.newburypropertynews.co.uk view our pages on Facebook or pop into our office in Cheap Street in Newbury.
