Saturday, 31 December 2016

Grantham Housing Crisis? Only 2.2% of Grantham Homes Are For Sale

The Grantham Property Market continues to disregard the end of the world prophecies of a post Brexit fallout with a return to business as usual after the summer break.

The challenge every Grantham property buyer has faced over the last few years is a lack of choice – there simply hasn't been much to choose from when buying (be it for investment or owner occupation). Levels are still well down on what would be considered healthy levels from earlier in this decade, as there is still a substantial demand/supply imbalance. Until we start to see consistent and steady increases in properties coming on to the market in Grantham, the market is likely to see upward pressure on property values continue.

For example, in the last month or so, NG31 has seen an average of 108 new properties coming on to the market, not bad when you consider for some months last year, it was as low as the early 60’s. With the average Grantham property value hitting a record high, reaching almost £202,100 according to my research, this shortage of properties on the market over the last two years has contributed to this ‘fuller' average property figure.

As I write this article, 2.26% of Grantham properties are up for sale. In terms of actual chimney pots, that equates to 330 properties on the market in Grantham (within 2 miles of the centre of Grantham) – which, when compared to only a year ago when that figure stood at 328, so not much has changed in the number of properties available to buy. Split down into the type of property, it makes even more fascinating reading...
·      Detached Properties in Grantham  - 140 on the market a year ago compared to 107 on the market now – a decrease of 24%
·      Semi Detached Properties in Grantham - 69 on the market a year ago compared to 75 on the market now - an increase of 9%
·      Terraced Properties in Grantham - 60 on the market a year ago compared to 80 on the market now - an increase of 33%
·      Flats / Apartments Properties in Grantham  - 49 on the market a year ago compared to 55 on the market now - an increase of 12%

This is evidence of strength in the Grantham housing market that many didn't expect. Many believed that the Grantham property market wasn't going to be strong enough post Brexit - as what was a sellers' market before the Brexit vote and Buyers' market in the early months after it, may now be somewhere in between and the market might just be coming back into balance.

However, all this will mean property values won't continue to grow at the same extent they have been over the last 12 to 18 months, and in some months (especially on the run up to Christmas and early in the New Year), values might dip slightly. This won't be down to Brexit but a re-balancing of the Grantham Property Market – which is good news for everyone.

Thursday, 15 December 2016

Private Renting set to grow by 1,410 Grantham households by 2025

I was having a most interesting chat the other day with a Grantham landlord when we were looking at a property. As I am sure you are aware, I am always happy to cast my eye over any potential buy to let purchase in Grantham, be that you emailing me a Rightmove link, a brochure in the post or even treading the carpet and seeing it together. I don't charge for that, and you don't even need to be a client of mine. We got talking about the Grantham Property Market and this landlord brought up the subject of a report he had read from the Royal Institution of Chartered Surveyors (RICS) and PricewaterhouseCoopers (PwC) that stated almost 1.8m new rental homes are needed by 2025 to keep up with current demand from tenants. He wanted to know what this meant for Grantham.

Well my blog reading friends, some commentators said last Winter that buy to let was about to die, what with the new stamp duty changes and how mortgage tax relief will be calculated. Others even said 500,000 rental properties would flood the market nationally in the 12 months after the new Stamp Duty rules came into force on the 1st April 2016 as landlords left the rental market. Well, all I can say is, I wish all the landlords of those half a million properties would hurry up and put them on the market – because I have plenty of other potential landlords wanting to buy them!

Back to the matter in hand.. if the RICS and PwC are indeed correct, what does this mean for Grantham? The fact is, as a country, we are facing a precarious rental shortage and need to get Grantham building in a way that benefits a cross-section of Grantham society, not just the fortunate few. I call on the Prime Minister to drop the higher stamp duty tax on buy to let purchases to ease the pressure on the rental market.

Of the 17,900 households in Grantham, currently 7,500 tenants live in 3,410 private rented properties. If we apportion those 1.8m households equally around the Country, that means in nine years’ time, the number of rental properties in Grantham needs to rise by 1,410 (i.e. 42.8%) .. taking the total number of rented properties in the city to 4,820.

That means Grantham landlords need to buy around 200 properties a year between now and 2025 to meet that demand – because according to my calculations, an additional 3,200 people will want to live in all those 'additional' Grantham rental properties – so why is the government penalising landlords?

Thankfully the new housing minister Gavin Barwell detached Teresa May's new administration from the Cameron/Osborne laser-like focus of just home ownership to solve our housing issues, saying "we need to build more homes for every single type of person needing a home and not focus on one single tenure". The private rented sector became a stooge under David Cameron's watch and still, with increasingly unaffordable Grantham house prices, the majority of new Grantham households will be relying on the rental sector in the future to house them. I can only say Westminster must put in place the measures that will allow the rental sector to flourish. Any restrictions on the supply of rental property will push up rents (bad news for tenants), thus side-lining those members of Grantham society who are already struggling. Let's hope this new Government continues to see the contribution landlords give to the country as a whole.

Thursday, 17 November 2016

5.9% of Grantham People live in Shared Households

I had an interesting chat the other day with a Grantham landlord. He said he had been chatting with an architect friend of his who said back in the mid 2000’s, the developments he was asked to draw were a balance of one and two bed properties, compared to today where the majority of the buildings he is designing are more towards two and sometimes three bedrooms. Now of course, this was all anecdotal but it made me think if similar things were happening in the Grantham property market?

This is a really important point as I explained to this landlord, as knowing when and where the demand of tenants is going to come from in the coming decade is just as important as knowing the supply side of the buy to let equation, in relation to the number of properties built in Grantham, Grantham property prices, Grantham yields and Grantham rents.

In 2001, there were 51,500 households with a population of 124,800 in the South Kesteven District Council area. By 2011, that had grown to 57,300 households and a population of 133,800.

.. meaning, between 2001 and 2011, whilst the number of households in the South Kesteven District Council area grew by 11.36%, the population grew by 7.21%

Nothing surprising there then. But, as my readers will know, there is always a but! My analysis of the 2011 Census results, using the most recent in-depth data on household formation (eg ‘one person households’, ‘couples/ family households’ or ‘couple + other adults households and multi -adult households’), has displayed a sudden and unexpected break with the trends of the whole of the 20th Century. There has been a seismic change in household formation in Grantham between 2001 and 2011.

Between 2001 and 2011, the population of Grantham grew, as did the number of Grantham properties (because of new home building). However, the growth rate of new properties built in Grantham was much lower than expected though, but still the population has grown by what was expected, meaning the average household size was larger than anticipated in Grantham. In fact, average household size (ie the number of people in each property) in 2011 was almost exactly the same as in 2001, the first time for at least 100 years it had not fallen between censuses. (Since 1911, household size has decreased by around 20% every decade).
Looking at figures specifically for Grantham itself,

·       One person households – 28.8%        
·       Couples/family households – 65.3%
·       Couple + other adults/multi-adult households – 5.9%

This decline was reflected in large scale shifts in the mix of household types. In particular, there were far more “couple + other adults households and multi -adult households” than expected (5.9% is quite a lot of households). It can be put down to two things; increased international migration and changes to household formation. A particularly important reason for the difference can probably be attributed to the evidence that migrants initially form fewer households (ie two couples share one property) than those who have lived in the UK all their lives. Also, changes to household formation patterns amongst the rest of the population, including adult children living longer with their parents and more young adults living in shared accommodation (as can be seen in the growth of HMO properties (Homes of Multiple Occupation).

So, what does all this mean for Grantham Homeowners and Landlords? Quite a lot in fact. There has been a subtle shift to slightly larger households in the last decade, meaning smart landlords might be tempted to buy slightly larger properties to rent out – again good news for homeowners who will get top dollar for their home as they sell on. But now with Brexit, household formation might swing the other way in the next decade? Who knows? Watch this space!

Friday, 11 November 2016

House Prices in Grantham rise by more than 12% in the last 18 months

Over the last month, the Grantham property market has seen some interesting movement in house prices, as property values in the South Kesteven District Council area rose by 1.6% in the last month, to leave annual price growth at 5.7%. These still compare well to the national figures where property prices across the UK saw a monthly uplift of 0.42%, meaning the annual property values across the Country are 8.3% higher, this is all despite the constraining factors of Stamp Duty changes in the spring and more recently our friend Brexit.

Looking at the figures for the last 18 months makes even more fascinating reading, whereby house prices are 12.7% higher, again thought provoking when compared to the national average figure of 13.6% higher.

However, it gets more remarkable when we look at how the different sectors of the Grantham market are performing. Over the last 18 months, in the South Kesteven District Council area, the best performing type of property was the semi, which outperformed the area average by 0.36% whilst the worst performing type was the apartment, which under-performed the area average by 1.44%.

Now the difference doesn’t sound that much, but remember two things, this is only over eighteen months and the gap of 1.8% (the difference between the semi at +0.36% and apartments at -1.44%) converts into a few thousand pounds disparity, when you consider the average price paid for a semi-detached property in Grantham itself over the last 12 months was £147,000 and the average price paid for a Grantham apartment was £101,600 over the same time frame.

I know all the Grantham landlords and homeowners will want to know how each of the property types have performed, so this is what has happened to property prices over the last 18 months in the area...

·      Overall Average          +12.7%
·      Detached                     +12.7%
·      Semi Detached           +13.1%
·      Terraced                      +12.6%
·      Apartments                 +11.1%

So what does all this mean to Grantham homeowners and Grantham landlords and what does the future hold? 

When I looked at the month-by-month figures for the area, you can quite clearly see there is a slight tempering of the Grantham property market over these last few months. I have mentioned in previous articles that the number of properties on the market in Grantham has increased this summer, something that hasn’t happened since 2008. Greater choice for buyers means, using simple supply and demand economics, that top prices won’t be achieved on every Grantham property. You see, some of that growth in Grantham property values throughout early 2016 may have come about because of a surge in house purchase activity, an indirect result of the increase in stamp duty on second homes from April, thus providing a temporary boost to prices.

However, it may be possible the recent pattern of robust employment growth, growing real earnings and low borrowing costs will tilt the demand/supply seesaw in favour of sellers and exert upward pressure on prices once again in the quarters ahead.

...And Grantham property values, assuming that everything goes well with Brexit, I believe in twelve months’ time we should see values in the order of 3% to 4% higher.