Local property market information for the serious investor

Month: August 2016

New House Building in Edgware slumps by 54.6% in the last year

Let me speak frankly, even with Brexit and the fact immigration numbers will now be reduced in the coming years, there is an unending and severe shortage of new housing being built in the London Borough of Barnet area (and the UK as a whole). Even if there are short term confidence trembles fuelled by newspapers hungry for bad news, the ever growing population of London Borough of Barnet with its high demand for property versus curtailed supply of properties being built, this imbalance of supply/demand and the possibility of even lower interest rates will underpin the property market.

When the Tories were elected in 2015, Mr. Cameron vowed to build 1,000,000 new homes by 2020. If we as a Country hit those levels of building, most academics stated the UK Housing market would balance itself as the increased supply of property would give a chance for the younger generation to buy their own home as opposed to rent. However, the up-to-date building figures show that in the first three months of 2016 building starts were down. Nationally, there were 35,530 house building starts in the first quarter, a long way off the 50,000 a quarter required to hit those ambitious targets.

Looking closer to home, over the last 12 months, new building in the London Borough of Barnet Council area has slumped. In 2014/15, for every one thousand existing households in the area, an additional 14.92 homes were built. For 2015/16, that figure is now only 6.77 homes built per thousand existing households. Nationally, to meet that 1,000,000 new homes target, we need to be at 7.12 new homes per thousand.

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To put those numbers into real chimney pots, over the last 12 months, in the London Borough of Barnet Council area,

• 650 Private Builders (e.g. New Homes Builders)
• 320 Housing Association
• 40 Local Authority

These new house building numbers are down to the fact that not enough is being done to fix the broken Edgware housing market. We are still only seeing 1,010 new homes being built per year in the London Borough of Barnet Council area, when we need at least 1,062 a year to even stand still!

I am of the opinion Messer’s Cameron and Osborne focused their attention too much on the demand side of the housing equation, using the Help to Buy scheme and low deposit mortgages to convert the ‘Generation Rent’ i.e. London Borough of Barnet ‘20 somethings’ who are set to rent for the rest of their lives to ‘Generation Buy’. On the other side of the coin, I would strongly recommend the new Housing Minster, Gavin Barwell, should concentrate the Government’s efforts on the supply side of the equation. There needs to be transformations to planning laws, massive scale releases of public land and more investment, as more inventive solutions are needed.

However, ultimately, responsibility has to rest on the shoulders of Theresa May. Whilst our new PM has many plates to spin, evading on the housing crisis will only come at greater cost later on. What a legacy it would be if it was Mrs. May who finally got to grips with the persistent and enduring shortage of homes to live in. The PM has already referenced the ‘need to do far more to get more houses built’ and stop the decline of home ownership. However, she has also ruled out any changes to the green belt policy – something I will talk about in a future up and coming article. Hopefully these statistics will raise the alarm bells again and persuade both residents and Councilor’s in the London Borough of Barnet Council area that housing needs to be higher on its agenda.

In the meantime, for more thoughts and opinion on the London Borough of Barnet Property Market, please visit the London Borough of Barnet Property Blog www.edgwarepropertyblog.com

 

If you are a landlord or thinking of becoming one for the first time, and you want to read more articles like this about the Edgware Property Market together with regular postings on what I consider the best buy to let deals in Edgware, out of the many of properties on the market, irrespective of which agent is selling it, then feel free to get in touch! email me on Steve@benjaminstevens.co.uk

If you are in the area feel free to pop into the office we are based at 194 Station Road Edgware Middlesex HA8 7AT- the kettle is always on.

Don’t forget to visit the links below to view back dated deals and Edgware Property News.

Blog – http://www.benjaminstevens.co.uk/edgware-property-blog
Facebook – https://www.facebook.com/BenjaminStevensEstateAgents
Twitter – https://twitter.com/BenjamStevensEA
Website – http://www.benjaminstevens.co.uk/

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71.7% of Edgware Properties have 3 or more bedrooms – Problem or Opportunity?

The orthodox way of classifying property in the UK is to look at the number of bedrooms rather than its size in square metres (although now we are leaving the EU – I wonder if we can go back to feet and inches?). It seems 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 it is likely to be. The reason being not only the actual additional bedroom space, but the properties with more bedrooms tend to have larger / more reception (living) rooms. However, if you think about it, this isn’t so astonishing given that properties with more bedrooms would typically accommodate more people and therefore require larger reception rooms.
In today’s Edgware property market; the Edgware homeowners and Edgware 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 Edgware, location is still the No. 1 factor affecting the value of property, and a property in the best neighbourhoods, say St Margaret’s or Mill Hill can command a price nearly 50% higher than a similar house in an ‘average’ area.

However, after location, the next characteristic that has a significant influence on the desirability, and thus price, of property is the number of bedrooms and the type (i.e. Detached/ Semi/Terraced/Flat).
In previous articles, I have analysed the Edgware housing stock into bedrooms and type of property, but never before now have I cross-referenced type against bedrooms. These figures for the Barnet London Borough Council area make fascinating reading. It shows 71.7% of all properties in the area have 3 or more bedrooms
Detached      Semi-detached   Terraced        Flat
1 bedroom       81                     215                 143          2,426
2 bedrooms     646                 2,212                2,798      15,498
3 bedrooms     2,431             13,911                 8,324       4,714
4 bedrooms    3,913             10,361                 3,766          599
5+                   5,354             6,291                  1,121          213

I was genuinely surprised at the low numbers of one and two bed properties, especially 2 bed semis detached houses, especially as tenants like the smaller one and two bed properties in Edgware. You see, it might interest the homeowners and landlords of Edgware, that there has been a change in the numbers of properties on the market and the split in bedrooms on the market over the last 12 months

 

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• 12 months ago, 31 one bed properties were for sale in Edgware, today 28, a drop of 10%
• 12 months ago, 88 two bed properties were for sale in Edgware, today 79, a drop of 10%
• 12 months ago, 85 three bed properties were for sale in Edgware, today 130, a rise of 53%
• 12 months ago, 70 four bed properties were for sale in Edgware, today 67, a drop of 4%
• 12 months ago, 29 five + bed properties were for sale in Edgware, today 54, a rise of 86%

 

It can quite clearly be seen more Edgware properties have become available, which can only be good news for Edgware first time buyers and Edgware buy to let landlords looking for a bargain (especially post Brexit) as property prices have stopped rising at the silly rates they were 12/18 months ago.
For several years Edgware buy-to-let investors have been the only buyers at the lower end (starter homes) of the market, as they have been enticed by high tenant demand and attractive returns. Some Edgware 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 Edgware 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 Edgware property market Blog www.edgwarepropertyblog.com

 

 

If you are a landlord or thinking of becoming one for the first time, and you want to read more articles like this about the Edgware Property Market together with regular postings on what I consider the best buy to let deals in Edgware, out of the many of properties on the market, irrespective of which agent is selling it, then feel free to get in touch! email me on Steve@benjaminstevens.co.uk

If you are in the area feel free to pop into the office we are based at 194 Station Road Edgware Middlesex HA8 7AT- the kettle is always on.

Don’t forget to visit the links below to view back dated deals and Edgware Property News.

Blog – http://www.benjaminstevens.co.uk/edgware-property-blog
Facebook – https://www.facebook.com/BenjaminStevensEstateAgents
Twitter – https://twitter.com/BenjamStevensEA
Website – http://www.benjaminstevens.co.uk/

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Post Brexit – Edgware Property Prices set to drop £51,200 in the next 12 months?

Even the most sane person in Britain has to admit the Brexit vote will, in one shape or another, affect the UK Property market. Excluding central London which is another world, most commentators are saying prices will be affected by around 10%. So looking at the commentators’ thoughts in more detail, property values in Edgware will be 10% lower than they would have been if we hadn’t voted to leave the EU.

As the average value of a property in the Barnet Council area is £511,600, this means property values are set to drop for the average Edgware property by £51,160 … batten down the hatches .. soup kitchens and mega recession here we come ..it’s going to get rough.

.. but before we all go into panic mode in Edgware .. the devil is always in the detail

Look at the phrase again, and I have highlighted the relevant part “Property values in Edgware will be 10% lower than they would have been if we hadn’t voted to leave the EU”

Property values today, according to the Land Registry are 8.38% higher than a year ago in the Barnet Council area. The 12 months before that they rose by 13.78% and the 12 months before that, they rose by 14.63%. If we hadn’t voted to leave, I believe on these figures, we could have safely assumed Edgware House prices would have been 9% higher by the Summer of 2017.

… and that’s the point, we won’t see a house price crash in Edgware, it’s just that house prices in a years time will be 1% lower than they are now (ie 9% less the 10% lower figure because of Brexit). Let’s look at the historic figures and how that compares to today’s figures for the Barnet Council area and Edgware as a whole.

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Average Value of a property 20 years ago £ 92,400
Average Value of a property 10 years ago £283,200
Average Value of a property 2 years ago £414,900
Average Value of a property 1 year ago £472,000
Average Value of a property today £511,600
Projected Value of a property in 12 months’ time £506,500

 

Therefore, I believe the average value of an Edgware property will be £5,100 lower in 12 months’ time than today.

That’s not to say Edgware property prices might not dip slightly in the run up to Christmas (in fact they always have done just about every year since the year 2000 and most of those were boom years) .. but in 12 months time this is my considered opinion of where Edgware property values will be.. and looking at the historic prices, even if I (and many other property market commentators) are wrong and they drop 10% from TODAY’S figure .. in the whole scheme of things, we have been through a Credit Crunch, Black Monday and 15% interest rates over the last 20 to 30 years .. and still Edgware house prices have always bounced back.

Whilst the UK’s vote for Brexit has created an uncertainty in the Edgware housing market, there is no need to panic and prospective buyers should merely use common sense about their purchases. I always say to people to be prudent and if you are taking out a mortgage, at some stage during the life of that mortgage, circumstances will be difficult. We won’t have a 2008 Credit crunch fire sale of properties because after the Mortgage Market Review which took place in the Spring of 2013, mortgage borrowers are not as highly leveraged this time around. As a result of this, with any luck there will not be too many distressed sales, which cause widespread price reductions.

.. and Edgware landlords? They have recently been thrashed by Osborne’s tax changes, but yields could rise if Edgware house prices fall/stablise and rents grow, and this might also make it easier to obtain mortgages, as the income would cover more of the interest cost. If prices were to level or come down that could help Edgware landlords add to their portfolio, as rental demand for Edgware property is expected to stay strong as more people find it more and more difficult to obtain mortgages.

For more thoughts on the Edgware Property market .. visit the Edgware Property Blog www.edgwarepropertyblog.com

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27.9% Of Edgware Homes Are One Person Households

I was having an interesting chat with an Edgware buy to let landlord the other day when the subject of size of households came up in conversation. For those of you who read my Brexit article published on the morning after the referendum, one of the reasons on why I thought the Edgware property market would, in the medium to long term, be OK, was the fact that the size of households in the 21st Century was getting smaller – which would create demand for Edgware Property and therefore keep property prices from dropping.

Looking at the stats going back to the early 1960’s, when the average number of people in a home was exactly 3, it has steadily over the years dropped by a fifth to today’s figure of 2.4 people per household. Doesn’t sound a lot, but if the population remained at the same level for the next 50 years and the we had the same 20% drop in household size, the UK would need to build an additional 5.28 million properties (or 105,769 per year) .. When you consider the Country is only building 139,800 properties a year … it doesn’t leave much for people living longer and immigration. Looking closer to home…

In the Barnet London Borough Council area, the average number of occupants per household is 2.6 people

When we look at the current picture nationally and split it down into tenure types (i.e. owned, council houses and private renting, a fascinating picture appears.

The vast majority of homeowners who don’t have a mortgage are occupied by one or two people (81% in fact), although this can be explained as residents being older, with some members of the family having moved out, or a pensioner living alone. People living on their own are more likely to live in a Council house (43%) and the largest households (those with 4 or more people living in them are homeowners with a mortgage – but again, that can be explained as homeowners with families tend to need a mortgage to buy. What surprised me was the even spread of private rented households and how that sector of population are so evenly spread across the occupant range – in fact that sector is the closest to the national average, even though they only represent a sixth of the population.

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When we look at the Barnet London Borough Council figures for all tenures (Owned, Council and Private Rented) a slightly different picture appears…

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But it gets even more interesting when we focus on just private rental properties in Edgware, as it is the rental market in Edgware that really fascinates me. When I analysed those Barnet London Borough Council private rental household composition figures, a slightly different picture appears. Of the 23,175 Private rental properties in the Barnet London Borough Council area:

• 24.0% of Private Rental Properties are 1 person Households
• 29.5% of Private Rental Properties are 2 person Households
• 18.6% of Private Rental Properties are 3 person Households
• 15.6% of Private Rental Properties are 4 person Households
• 12.1% of Private Rental Properties are 5+ person Households

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As you can see, Edgware is not too dissimilar from the national picture but there is story to tell. If you are considering future buy to let purchases in the coming 12 to 18 months, I would seriously consider looking at 2 or 3 bed apartments/houses. Even with the numbers stated, there are simply not enough 2 or 3 bed apartments/houses to meet the demand. They have to be in the right part of Edgware and priced realistically, but they will always let and when you need to sell, irrespective of market conditions at the time, will always be the target of buyers. To read more articles on the Edgware Property Market and where I consider best buy to let deals are in Edgware, please visit the Edgware Property Market Blog www.edgwarepropertyblog.com

 

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