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Category: Property Market Research

159% increase in Property Values in Exeter since the Millennium!

Exeter house prices since the Millennium have risen by 159.46%, whilst average salaries in Exeter have only grown by 51.27% over the same time frame. This has served to push homeownership further out of reach for many Exeter people as they have to battle against raising considerable deposits and meet sterner lending criteria, as a result of new mortgage regulations introduced in 2014/5. The private rental market in Exeter has grown throughout the last twenty years with buy-to-let investors purchasing a high proportion of newly built residential properties that were built and designed for the owner occupier sales markets. For example, in the Exeter Constituency, roll the clock back 20 years and there were 41,367 properties in the Constituency, whilst the most recent set of figures show there are 43,900 properties – a growth of 2,533 properties.

However, evidence suggests that a large majority of those 2,533 were bought by Exeter buy-to-let landlords, as over the same 20-year time frame, the number of rental properties has grown from 2,839 to 9,482 in the Constituency – a rise of 6,643 properties.

Nevertheless, some say this historic growth of the Exeter rental market might start to change with the new tax rules for landlords introduced by Mr. Osborne over the last seven or eight months. Yet the numbers tell another story. Across the board, mortgage borrowing climbed to a 9 year zenith in March this year as the British property markets traditional Easter rush corresponded with landlords hurrying to beat George Osborne’s new stamp duty changes – buy-to-let landlords borrowed £7.1bn in March 2016 (the latest set of figures released) which was 163% up on the £2.7bn borrowed in the previous March.

You see, from my point of view, I don’t think things will get worse in the buy-to-let market in Exeter and these are the reasons why I believe that:

Firstly, what else are Exeter landlords going to invest in if it isn’t property – the stock market? Since the Millennium, the stock market has risen by an unimpressive total of 5.54%, quite different to the 159.46% rise in Exeter property prices?

Secondly, its true the 3% stamp duty is the first blow on top of a number of other tax changes to be phased in between 2017 and 2021, such as landlords facing a constraint in their ability to offset mortgage interest and, if sizeable numbers of landlords do take the decision to sell their portfolios, this will lead to a substantial amount of second hand properties being put up for sale. Yet that might not be a bad thing, as I have mentioned in previous articles there is a serous shortage of properties to buy at the moment in Exeter: the stock of property for sale being at a six year all time low.

.. Thirdly, if there are fewer rental properties in Exeter, as supply drops and demand remains the same (although ask any letting agent in Exeter and they will say demand is constantly rising) this will create a squeeze in the Exeter rental market and as a result rents will rise. In fact, I predict even if landlords don’t sell up, Exeter rents will rise as Exeter landlords seek to compensate for increased costs, which means more landlords will be attracted back.

For more thoughts on the Exeter Property market to read articles like this, you might find the Exeter Property Market blog of interest www.exeterpropertyblog.com

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55.3% of Exeter Voters voted to stay in the EU – What now for the 37,871 Exeter Landlords and Homeowners?

55.3% of Exeter Voters voted to stay in the EU – What now for the 37,871 Exeter Landlords and Homeowners?

It’s 7am as I start to type this article and David Dimbleby has announced the UK will be leaving the EU as the final votes are counted. As most of the polls suggested a Remain Vote, it came as a surprise to most people, including the City. The Pound has dropped 6% this morning after the City Whiz kids got their predictions wrong.

MP’s from the Remain camp are using words like “challenging times ahead”. .. and now the vote has been made .. what next for the 27,895 Exeter homeowners especially the 14,110 of those Exeter homeowners with a mortgage?

The Chancellor in the campaign suggested property prices would drop by 18%. Using Treasury estimates, their method of calculating this was tenuous at best, but focused around the abrupt and hasty increase in UK interest rates, which in turn would raise the cost of mortgages, and therefore lower demand for property, causing a drop in property prices.… and I would say, yes .. that will probably happen.

Exeter Property Values

Exeter property values in the short term may be effected, however in the long term they are likely to recover bearing in mind the UK property market is quite a monster. Since the last In/Out EU Referendum in June 1975, property values in Exeter have risen by 1911.5%

(That isn’t a typo) and whilst property prices did drop nationally by 18.7% between the peak of 2007 and bottom of the market in 2009, when one compares property values today in the country, compared to that all-time high of 2007, (the period before the financial crisis of the Credit Crunch of 2008/9) .. they are still up 10.14% higher.

Another Credit Crunch?

And so, notwithstanding the Credit Crunch, the worst global economic outlook since the 1930s and the recession it brought us, a matter of a few years later, the Government were panicking in 2012/3/4 that the housing market was a runaway train.

Now the same Credit Crunch doom-mongers and Sooth-Sayers that predicted soup kitchens in 2008/9 are predicting Brexit meltdown. Bad news sells newspapers. Stock markets may rise, stock markets may fall, yet the British public continued to buy property in 2009/10 and beyond. Aspiring first time buyers and buy to let landlords dusted themselves down, took a deep breath and carried on buying… because us Brit’s love our Bricks and Mortar .. we need a roof over our head.

However, as mentioned previously, if the value of the pound drops, in the past UK Interest Rates have risen to reverse that drop. However, whilst a cheaper pound will make your pint of Sangria a little more expensive on your Spanish holiday this year and make your brand new BMW pricier .. it will make British export cheaper! Which is great for the economy.

Interest rates

… and what of interest rates? Since 2009, interest rates have been at 0.5% and lots of people have become accustomed to those sorts of levels. So what if interest rates rise .. end of the world? Interest rates in the 1986/88 property boom were on average 9.25%, the 1990’s they were on average around 6.5% and uber-boom years (when UK property values were rising by 20% a year for three or four straight years across the UK) .. 4.5%. Many of you reading this who are in their 50’s and older will remember interest rates at 15%.

But I suspect interest rates won’t rise that much anyway, as Mark Carney (Chief of the Bank Of England) knows, raising interest rates causes deflation – which is the last thing the British economy needs at the moment. In fact they have been printing money (aka Quantitative Easing) for the last few years (which causes inflation) to the tune of £375bn a month. A bit of inflation because the pound has slipped on the money markets (not too much mind you) might be a good thing?

.. because whilst property values might drop in the country, they will bounce back. It’s only a paper loss.. because it only becomes real if you sell. And if you have to sell, again as most people move up market when they sell, whilst your property might have dropped by 5% or 10%, the one you want to buy would have dropped by the same 5% to 10% .. and here is the best part – (and work your sums out) you would actually be better off because the more expensive property you would be purchasing would have come down in value (in actual pound notes) than the one you are selling.

The Exeter landlords of the 4,701 Exeter buy to let properties have nothing to fear neither, nor do the 24,762 tenants living in their properties.

Buy to let is a long term investment. I think there might even be some buy to let bargains in the coming months as some people, irrespective of evidence, panic. Even if we pull up the drawbridge at Dover and immigration stopped today, the British population will still increase at a rate that will exceed the current property building level. Britain is building 139,600 properties a year, but needs according to the eminent ‘Barker Review of Housing Supply Report’, the country needs to build about 250,000 properties a year to even stand still, and as the birth rate is increasing, the population is living longer and just under a quarter of all UK households now are occupied by a single person demand is only going up whilst supply is stifled. Greater demand than supply equals higher prices. That is definitely a fact.

So, what will happen next?

Well, there are many challenges ahead. The country has spoken and we are now in unchartered territory – but we have been through a couple of World Wars, an Oil Crisis, Black Monday, Black Wednesday, 15% interest rates and a Credit Crunch … and we survived!

And the value of your Exeter property? It might have a short term wobble… but in the long term -it’s safe as houses regardless.

For more advice or articles about the Exeter property market … visit the Exeter Property Blog www.exeterpropertyblog.com or pop into Northwood Estate Agent and speak to our experienced team for further advice.

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What would Brexit mean to the 27,900 Exeter Property owners?

What would Brexit mean to the 27,900 Exeter Property owners?

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 Exeter, not Marylebone, Mayfair or any part of Zone 1 London. We are in Exeter and central London is 199 miles away via the M4 and M5. We are hometown to the Charles Babbage, Matthew Goode and Chris Martin and whilst the central London property market exploded after 2009, that explosion really and honestly didn’t affect the Exeter property market. So, putting central London aside, what would an ‘in’ or ‘out’ vote really mean for the 27,895 property owners of Exeter?
Post vote, should the UK opt to leave Brussels on Friday 24th June, there would be a much more noteworthy impact. I believe that a vote to stay in the EU would see the Exeter property market return to a status quo very quickly, but the contrasting result could lead to some changes. The principal menace to the Exeter (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. Also, according to the Bank of England, 80.33% of all new mortgages taken out in 2015 were fixed rate. Looking at all mortgages as a whole, according to the Bank of England, 44% of all UK mortgagees have a fixed rate mortgage, but 56% don’t, so if you aren’t on a fixed rate … talk to your mortgage broker now, because they can only go in one direction!

I suspect whatever decision the electorate of Exeter and the country as a whole makes, over the long term it won’t have a major effect on the Exeter 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 … hell, we can even go back nearly a century with the 1926 post General Strike slump in property prices…

Today, property prices are 320.32% higher than 21 years ago in Exeter and are 3.93% higher than 12 months ago. So, make your own decision on 23rd of June 2016 safe in knowledge that whatever the result, there might be some short term volatility in the Exeter property market, but in the long term (and property investment is a long term strategy) there aren’t enough houses in Exeter to live in either to buy or rent … and until the Government allow more properties to be built – the Exeter 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 Exeter property market, even where those buy to let bargains could be found now … visit the Exeter Property Blog www.exeterpropertyblog.com or pop into Northwood Estate Agent and speak to our experienced team for further advice.

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781 Exeter Properties lie empty– An injustice for the 4,688 people on the Exeter Council House Waiting List?

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

Problems like Exeter’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 Exeter – 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 of 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 (as I did with those at the dinner table).

The most recent set of figures from 2015 state there are 781 empty homes in the Exeter City Council area. So it begs the question … why not put them back onto the system and help ease the Exeter housing crisis? Whilst they stand empty, 4,688 Exeter 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 781 homes lying empty, only 292 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 Exeter 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 292 long-term vacant properties (those empty more than six months), 48 belong to the council. However, before we all go Council-bashing, anecdotal 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 49,242 properties in the area covered by Exeter City 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 Exeter housing needs

So what does this mean for all the homeowners and landlords of Exeter? 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 Exeter property market!

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37% slump in Exeter East Property Transactions

In this post credit crunch world of sub terrain low interest and annuity rates so low a limbo dancer would smart, the growth of buy to let since 2009 has been phenomenal. So much so, there has been an evolution in purchase of property in the UK from that of just buying the roof over one’s head to that of a buy to let investment where it is seen as a standalone financial asset to fund current and future (ie pensions) investment. So recently, a few days before the release of latest Land Registry data of property transactions, quite a few market commenters were anticipating a huge increase in the number of properties sold in January as the 1st of April 2016 stamp duty deadline got closer.

Looking at the most recent set of data from The Land Registry, it seems there has been a slight rise in the number of completed property sales in the Devon County Council area. Year on year, completed property sales in January (the latest set of data released) rose by 2.28% to 939 compared with 918 in January 2015. Nationally, the number of completed house sales fell by 5% in January 2016 compared with January 2015. Some might say this counters the reports that there was a rush by landlords to buy ‘buy to let’ property ahead of the 1st April 2016 deadline but where was the stampede that many expected?

Looking even closer to home, in the EX1 postcode in January 2016, 17 properties changed hands, whilst 27 properties did so in January 2015. It’s even more interesting when you look at the average price paid, in January 2016, it was £267,794 yet in January 2015, the average price paid was £221,131.

Is the buy to let dream over for Exeter landlords?

.. but as ever my Exeter Property Blog readers, the devil is in the detail. The 3% stamp duty surcharge for buy to let landlords was announced in the Autumn Statement on the 25th November 2015. Anyone who has bought a property knows from their offer being accepted to receiving the keys and monies paid is a long drawn out affair, taking on average 8 to 12 weeks, as the Land Registry only get notified upon completion of the sale. We also need to factor in that Solicitors seem to have the last two weeks of December off anyway.

So if there was a rush in the last few days of November/early December in the Exeter property market, we would only see the results of that in the February figures (released in June) and more probably March’s (released in July).

So why all the doom and gloom? Simple .. bad news sells newspapers and gets the headlines. Let’s be honest, the headline to this article is designed to be eye catching. However, when we look at both the bigger and smaller picture; nationally, property values dropped (month on month) by 0.5%; in the South West region they dropped 0.9%, whilst in Devon they rose by 0.5%. The year on year figures tell a completely different story to that.

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