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According to the Land Registry's latest House Price Index for Rochester and the surrounding locality, the value of apartments/flats are rising at a faster rate than terraced/town houses, semi-detached properties and even detached property.
Values of apartments in Rochester have increased by 13.67% over the past year, which is proportionally 21% more than the Rochester average rise of 11.33%. The last time flats/apartments in Rochester out performed all the other types of property, by such a gulf, was back in the spring/summer of 2003. For comparison, the other property types performed as follows :
D Detached homes rose by 11.56%
· Semi-detached homes rose by 11.04%
· Terraced/Town-Houses rose by 10.71%
This moderately increasing rate of property value growth is opportune – but no one should confuse it with a strong and vigorous healthy Rochester property market. Instead, it is somewhat an indicator of the long-lasting lack of property on the market. In fact, I have spoken about the lack of homes for sale in Rochester on a number of occasions in my Rochester Property Blog and whilst it isn’t as bad as it was 12 months ago – choice is quite limited for buyers.
The average property value in Rochester
now stands at £283,600.
When split down into property types :
· Rochester Apartments at £175,400
· Rochester Detached at £461,500
· Rochester Semi-Detached at £283,200
· Rochester Terraced/Town-House at £231,900
Why have Rochester apartments performed so well, and is it just a Rochester thing? When I scrutinised the figures for the rest of the UK, it appears that apartments are pacemakers in the clear majority of the country. Of the 379 local authority areas in the UK, the value of apartments is rising faster than detached, semi-detached and terraced houses in 320 of them.
Should Rochester apartment owners be getting out the Champagne? Well, I would keep it on ice as the Land Registry figures are notorious for short term fluctuations. It’s hard to have faith in the fact that Rochester house values rose rapidly last month given that, in the last six months, the Land Registry has frequently made downward revisions to their first published House Price Index figures.
Thankfully, the bigger picture from the Council of Mortgage Lenders (CML) stated that home buying activity last month was up 2% over the same month in 2016 – not bad as we have had the Autumn, Winter and now Spring since Brexit. The CML stated first time buyer’s levels of affordability was being squeezed and that the average amount borrowed by those first-time buyers dropped slightly last month, but the overall amount borrowed (by all buyers) was an impressive 12% higher than the same month in 2016.
And what next for the Rochester Property market? I believe the uplift in the values of apartments is a short-term blip. The real issue is with the way wage growth might not keep up with inflation as the effects of 2016 exchange rate sucks in inflation (meaning real wage growth stagnates). This will mean buyer demand growth will be curtailed and with property values already so full, I believe a renewed hastening in house price growth is unlikely.
I believe we are starting to return to the housing market we saw in the mid 1990’s, Steady demand, steady supply – nothing silly when it comes to house price growth. Therefore, I believe, with what is happening around us – this isn’t a bad thing at all.
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In my last article I wrote about the plight of the Medway 20-something’s often referred to by the press as Generation Rent. Attitudes to renting have certainly changed over the last twenty years and as my analysis suggested, this change is likely to be permanent. In the article, whilst a minority of this Generation Rent feel trapped, the majority don’t – making renting a choice not a predicament. The Royal Institution of Chartered Surveyors (RICS) predicted that the private rental sector is likely to grow by 1.8m households across the UK in the next 8 years, with demand for rental property unlikely to slow and newly formed households continuing to choose the rental market as opposed to buying.
However, my real concern for Medway homeowners and Medway landlords alike, as I discussed a couple of months ago, is for our mature members of the population of Medway. In that previous article, I stated that the current OAP’s (65+ yrs in age) in Medway were sitting on £1.51bn of residential property. However, I didn’t talk in depth about the Baby Boomers, the 50yr to 64yr old population and what their properties are worth – and more importantly, how the current state of affairs could be holding back those younger Generation Renters.
In Medway, there are 5,749 households whose owners are aged between 50 and 64 years old and about to pay their mortgage off. That property is worth, in today’s prices, £1.38bn. There are an additional 4,769 mortgage free Medway households, owned by the same age sector, worth around £1.14bn in today’s prices, meaning...
Medway’s Baby Boomers OAPs are sittingon £4.03bn worth of property!
These Medway Baby Boomers and OAP’s are sitting on 16,808 Medway properties and many of them feel trapped in their homes, and hence I have dubbed them Generation Trapped.
Recently, the English Housing Survey stated 49% of these properties owned by the Generation Trapped, as I have dubbed them, are under-occupied (under-occupied classed as having at least two bedrooms more than needed). These houses could be better utilised by younger families, but research carried out by the Prudential suggests that in Britain it is estimated that only one in ten older people downsize while, in the USA for example, one in five do so.
The growing numbers of older homeowners who want to downsize their home are often put off by the difficulties of moving. The charity United for all Ages, suggested recently many are put off by the lack of housing options, 19% by the hassle and cost of moving, 14% by having to de-clutter their possessions and 14% by family reasons such as staying close to children and grandchildren.
Helping mature Medway homeowners to downsize at the right time will also enable younger Medway people to find the homes they need – meaning every generation wins, both young and old. However, to ensure downsizing works, as a Country, we need more choices for these last time buyers.
Theresa May and Philip Hammond can do their part and consider stamp duty tax breaks for downsizers, our local Council in Medway and the Planning Department should play their part, as should landlords and property investors to ensure Medway’s Generation Trapped can find suitable property locally, close to friends, family and facilities.
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Thanks for reading.
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Who remembers the good ol’ days of the 1970’s and 1980’s? With such
highlights lowlights as 24% inflation, 17% interest rates, a 3 day working week, 13% unemployment and power cuts, but at least people could afford to buy their own home. So why aren’t the 20 and 30 something’s buying in the same numbers as they were 30 or 40 years ago?
Many people blame the credit crunch and global recession of 2008, which had an enormous impact on the Medway (and UK) housing market. Predominantly, the 20-something first-time buyers who, confronting a problematic mortgage market, the perceived need for big deposits, reduced job security and declining disposable income, discovered it simply too challenging to get on to the Medway property ladder.
However, I would say there has been something else at play other than the issue of raising a deposit - having sufficient income and rising property prices in Medway. Whilst these are important factors and barriers to homeownership, I also believe there has been a generational change in attitudes towards home ownership in Medway (and in fact the rest of the Country).
Back in 2011, the Halifax did a survey of thousands of tenants and 19% of tenants said they had no plans to buy a home for themselves. An almost identical survey of tenants, carried out by The Deposit Protection Service revealed, in late 2016, that figure had risen to 38.4%. It seems that many no-longer equate home ownership to success and believe renting to be better suited to their lifestyle.
You see, I believe renting is a fundamental part of the housing sector, and a meaningful proportion of the younger adult members of the Medway population choose to be tenants as it better suits their plans and lifestyle. Local Government in Medway (including the planners – especially the planners), land owners and landlords need an adaptable residential property sector that allows the diverse choices of these Kent-based 20 and 30 year olds to be met.
This means, if we applied the same percentages to the current 14,687 Medway tenants in their 5,657 private rental properties, 5,640 tenants have no plans to ever buy a property – good news for the landlords of those 2,172 properties. Interestingly, in the same report, just under two thirds (62%) of tenants said they didn’t expect to buy within the next year.
So does that mean the other third will be buying in Medway in the next 12 months?
Some will, but most won’t. In fact, the Royal Institution of Chartered Surveyors (RICS) predicts that, by 2025, the number of people renting will increase, not drop. Yes, many tenants might hope to buy ,but the reality is different for the reasons set out above. The RICS predicts the number of tenants looking to rent will increase by 1.8 million households by 2025, as rising house prices continue to make home ownership increasingly unaffordable for younger generations. So, if we applied this rise to Medway, we will in fact need an additional 2,424 private rental properties over the next eight years (or 303 a year), meaning the number of private rented properties in Medway is projected to rise to an eye watering 8,081 households.
Do you own a property in Medway and would like some impartial advice about the future of the housing market? Simply sign up to my Medway property newsletter and once a month you will receive a free copy, full of useful facts and figures, just like this very article. You can sign up, for FREE. by clicking HERE
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As ever, thanks for reading.