Stoke on Trent Semi Detached House Prices rise by 219% in 20 years

The semi-detached house with its bay windows and net curtains has long been ridiculed as an emblem of safe, lacklustre and desperately uncool suburban life; the homes of the likes of Hyacinth Bucket in Keeping up Appearances and more latterly Alan Partridge – but they could have the last laugh - having enjoyed the highest price growth of any property type in Stoke on Trent, up by an average 219% increase in the last twenty years.
The semi can now laugh in the face of its posher detached counterpart, which saw a rise of only 200% in the same 20-year period. Looking at smaller properties, flats/apartments only rose 131%, whilst terraced houses did better at 207% (although they were starting from a lower base and demand from buy to let landlords has had a big part in driving the values on that type of house (i.e. the price a buy to let landlord is prepared to pay is driven by the rent the landlord can achieve).

In 1996 the average value of a Stoke on Trent semi stood at £37,700,

today it stands at £120,000

Such is the attractiveness of semis, which are cheaper than detached houses but have most of the same benefits for families. Semi-detached houses were built in their hundreds of thousands by the Victorians and Edwardians between the wars and through to the present day. Interestingly in the late 19^th Century and early 20^th century – they often weren’t referred to as semi-detached – but as villas!
So whilst Europeans live on top of each other in apartments us British chose, in the late Victorian and early Edwardian times, suburban comfort, being near … but not too near, the neighbours! I once heard someone say the semi-detached house was a peculiar crossbreed that doesn’t stand on its own — it is inseparable from its neighbour — yet somehow still embodies a dream of suburban independence.

Nearly one in two houses in Stoke on Trent is a semi-detached house

 There are 53,317 semi-detached properties in Stoke on Trent and they represent 45.69% of all the households in Stoke on Trent. Stoke on Trent has such a mix of semi-detached properties with the older classic bay fronted semis to more modern ones built in the last couple of decades. Especially with the older ones, the semi offered a hall to provided separation between the reception rooms and privacy for their occupants. Also the downstairs offered larger rooms to accommodate dining tables, whilst upstairs, bedrooms were smaller, yet cosy.

However, probably the most overlooked aspect of popularity for semis is the garden. The front garden, designed to separate the house from the world, and the back garden designed for private relaxation. The semi in the suburbs was relaxing, well presented, plumbed and enhanced by a garden so that when a window was opened the air had a chance of being genuinely fresh… and it’s for all those reasons why 775 semi-detached houses have been sold in Stoke on Trent since March 2016 alone.  Still as popular today as they were with the Victorians all those years ago – some things just stand the test of time!

Another possible investment property

I have just got back to the office from a morning of appointments and managed to get caught in the rain again.  Whilst I dry off I thought I would have a look at what has come to the market recently that would make a good investment/rental property.  Have a look at this one!

 http://www.rightmove.co.uk/property-for-sale/property-54875434.html

 

 

 

 

 

Anyone who speaks to us will know that there is a real shortage of good quality 3 bed rental property and if the pictures do it justice then we always have tenants looking for properties like this.  Outside needs a bit of a tidy but rent would be in the region of £575 -£595 giving a gross yield of around 6-7%.  It is the type of property where void periods are minimised and as the local economy picks up it should increase in value.

Today's investment property

Here’s one that caught my eye because we have just rented one out just down the road.  It’s a bit dated inside and needs modernising but is larger than the one we rented recently and once done should get a rent of £525 - £550pcm (maybe even more depending on the quality of the finish).

http://www.rightmove.co.uk/property-for-sale/property-60645425.html

As always with good quality 3 bed semi’s we can find tenants relatively quickly so it wouldn’t sit empty for long.  This would make a great longer term investment and whilst the yield may be a more modest 5-6% to start with over time this is the type of property in demand and rents are likely to go up and you should see a decent level of capital growth

Stoke-on-Trent First Time Buyers Are Paying 6.5% More Than 12 Months Ago

Figures released by the Bank of England, show that for the first half of 2016, £128.73bn was lent by UK banks to buy UK property - impressive when you consider only £106.7bn was lent in the first half of 2015. Even more interesting, was that most of the difference was in Q2, as £68.12bn was lent by UK banks in new mortgages for house purchase, which is the highest it has been for two years. Looking locally, in Stoke-on-Trent last quarter, £467.9m was loaned on ST3 properties alone! 

Even though the Bank won’t be releasing the Q3 figures until December 2016, as I discussed a few weeks ago, HMRC have published their own preliminary data to suggest Q3 will be even better, with a massive growth of buy-to-let landlords to the housing market in that time frame. Fascinating, as it seems to fly in the face of the popular narrative – that the uncertainty surrounding Brexit would negatively impact buyer sentiment. 

And it’s not just buy-to-let landlords that seem to be flourishing. I am finding that first-time buyers are also a lot more confident too. Low, and now negative, inflation has had a tangible impact on household finances and first-time buyers feel more secure in their jobs. Couple with a low interest rate environment and you have all the ingredients for a strengthening property market. To back that up with numbers, of the £68.12bn of mortgages lent in the Quarter (Q2), £14.9bn was lent to first-time buyers (the highest proportion of that overall lending for over two years at 21.99%).

 

 When I looked at the data for Stoke-on-Trent City Council area, the average price paid by first-time buyers (FTB’S) was £94,520, which is a rise of 4.0% from last month and a rise of 6.58% to twelve months ago. The Land Registry then categorise the remaining buyers into cash buyers or those buying with a mortgage. The average price paid by cash buyers was £95,930, a rise of 3.93% from last month and a rise of 6.50% to twelve months ago, whilst buyers with mortgages (but not FTB’s), the average price paid by them was £106,417, a rise of 3.97% from last month and a rise of 6.59% to twelve months ago.

What surprised me with these figures was how close the property prices, values and percentages were to each other. It just goes to show the combination of low mortgage rates and a stable job market will continue to have a positive effect on the Stoke-on-Trent and UK market.  And that is why, while there is undoubtedly more cautiousness in the market at present than a year or so ago (among borrowers and mortgage companies alike) - mortgage rates are so competitive that they are inducing people to commit to a home purchase. 

It seems the great Brexit uncertainty was over hyped, and house price growth as well as mortgage approvals, could pick up pace into 2017.

 

Average Rent Paid by Tenants in Stoke on Trent on the rise

Back in the Spring, there was a surge in Stoke on Trent landlords buying buy to let property in Stoke on Trent as they tried to beat George Osborne’s new stamp duty changes which kicked in on the 1^st April 2016. To give you an idea of the sort of numbers we are talking about, below are the property statistics for sales either side of the deadline in ST1. 

Jan 2016 – 25 properties sold

Feb 2016 – 30 properties sold

March 2016 – 73 properties sold

April 2016 – 30 properties sold

May 2016 – 35 properties sold 

Normally, the number of sales in the Spring months is very similar, irrespective of the month. However, as one can see, this year was a completely different picture as landlords moved their purchases forward to beat the stamp duty increase. You would think that even with a basic knowledge of supply and demand economics, rents would be affected in a downwards direction?

 

 

However, there appears to be no apparent effect on the levels of rent being asked in Stoke on Trent - and more importantly achieved - and this direction of rents is not likely to inverse any time soon, particularly as legislation planned for 2017 might reduce rental stock and push property values ever upward. The decline of buy to let mortgage interest tax relief will make some properties lossmaking, forcing landlords to pass on costs to tenants in the form of higher rents just to stay afloat. Even those who can still operate may be deterred from making further investments, reducing rental stock at a time of severe property shortage. 

.. but it’s not all bad news for tenants. Whilst average rents in Stoke on Trent since 2005 have increased by 14.8%, inflation has been 38.5% over the same time frame, meaning Stoke on Trent tenants are 23.7% better off in real terms when it comes to their rent (which is a sizeable chunk of most people’s monthly household budgets) 

Year	Average Rent in Stoke on Trent per month
2005	343
2006	351
2007	363
2008	374
2009	377
2010	375
2011	381
2012	387
2013	393
2014	397
2015	403
2016	410

I found it particularly interesting looking at the rent rises over the last five years in Stoke on Trent, as it was five years ago we started to see the very early green shoots of growth of the Stoke on Trent economy.  As a whole, following the Credit crunch (2011), rents in Stoke on Trent have risen by an average of 1.4% a year – fascinating don’t you think? 

The view I am trying to portray is that while renting is often portrayed as the unfavourable alternative to home ownership, many young Stoke on Trent professionals like renting as it gives them adaptability with their life. Rents will continue to rise which is good news for landlords as buy to let is an investment but, as can be seen from the statistics, tenants have also had a good deal with below inflation increases in rents in the past. It’s a win-win situation for everyone although on a very personal note, it’s imperative in the future that tenants are not thwarted from saving for a deposit by excessive rental hikes – there has to be a balance.

Stoke-on-Trent Property Values increase by 0.2% ... good or bad news?

“How's the Stoke-on-Trent housing market doing?” asked an upbeat Stoke-on-Trent landlord last week.  “Quite strange”, I replied. Our landlord was perplexed! Let me explain... 

Even the Brexit vote has not hindered Stoke-on-Trent’s steady rise in property value, as Stoke-on-Trent property values went up 0.2% last month alone, leaving Stoke-on-Trent values 6.79% higher than a year ago. An increase in demand from buyers and an uninspiring level of supply (i.e. the number of properties on the market) has driven up the value of the Stoke-on-Trent’s housing.

...And that is where the issue is. With Brexit, the coalition of the 2010-15, a double-dip recession and post credit crunch fallout – I was perplexed that the Stoke-on-Trent property market (and values) has remained so strong, still 12.5% higher than 20 months ago. That is until you start to look into the real reasons why we find ourselves in such a great place. 

The Stoke-on-Trent (and the UK) housing market is built on the foundations of basic economic rules that any GCSE Economics student should understand. However, at a time when, as a country, we seem eager to uncouple ourselves from all manner of proven facts, anything is up for grabs.  

Even the wary RICS said throughout the UK, most of its Chartered Surveyors anticipated house prices to increase in the next six months, which seems contradictory given economic cautions from Mr Hammond and HM Treasury. Even though inflation will rise to around 2% to 3% in 2017 and perhaps a little more in 2018 because of Sterling’s devaluation, together with a high probability of a decelerating GDP and a slight rise in unemployment, how can the RICS and most of my landlords be so confident about the value of our homes?

Well, look at from where we are starting. Nationally, a base of low unemployment, low inflation and preposterously low interest rates. Confidence also plays a part. Confidence can supersede basic economic facts for a short time at least, which is why actual property market changes tend to be more exaggerated, as confidence can turn both positive and negative very quickly. The fact is, there is a long-term relationship between property values, wages and unemployment. For example, looking at the graph below, you can quite clearly see the ratio of property values to earnings is nowhere near as high as it reached in 2008 and currently is in the middle of the range for the last 30 years. As a country, we are in a good place.

 

By April 2017, Article 50 will be invoked. This will bring additional political tomfooleries and economic ups and downs. With both purchasers and vendors predisposed by the 24-hour news cycle, which let’s face it, gets more haphazard by the day, it is likely to prove a challenging couple of years … and yes, Stoke-on-Trent property values might drop slightly in 2017, but based on what we know of the UK plc now, the UK and Stoke-on-Trent property values are not projected to move that much over 2017 or 2018.  Going into the next two years, we are in much better financial shape as a country compared to the last two crashes of 1987 and 2008. 

But, on the other side of the coin, what we also know is that we don't know much about the form of our economic future or indeed many other facets of our lives. Confidence will continue to be the key player in the Stoke-on-Trent housing market for a while longer - yet this may spur some much needed second-hand market activity? Now, where is my crystal ball?

Stoke-on-Trent Housing Crisis? Only 1.4% of Stoke-on-Trent Homes Are For Sale

The Stoke-on-Trent 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 Stoke-on-Trent 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 Stoke-on-Trent, the market is likely to see upward pressure on property values continue.

 

 

For example, last month St1 saw 123 new properties coming on to the market, not bad when you consider for the last year the average has been in the 60 to 80 range. With the average Stoke-on-Trent property value hitting a record high, reaching almost £141,200 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, 1.40% of Stoke-on-Trent properties are up for sale. In terms of actual chimney pots, that equates to 1,236 properties on the market in Stoke-on-Trent (within 3 miles of the centre of Stoke-on-Trent) – which, when compared to only a year ago when that figure stood at 1,386, is a slight decrease in the number of properties available to buy. Split down into the type of property, it makes even more fascinating reading...

·         Detached Properties in Stoke-on-Trent  - 178 on the market a year ago compared to 145 on the market now – a decrease of 19%

·         Semi Detached Properties in Stoke-on-Trent - 420 on the market a year ago compared to 338 on the market now – a decrease of 20%

·         Terraced Properties in Stoke-on-Trent - 459 on the market a year ago compared to 502 on the market now - an increase of 9%

·         Flats / Apartments Properties in Stoke-on-Trent  - 176 on the market a year ago compared to 151 on the market now – a decrease of 14%

This is evidence of strength in the Stoke-on-Trent housing market that many didn't expect. Many believed that the Stoke-on-Trent 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 Stoke-on-Trent Property Market – which is good news for everyone.