The Land Registry have just released their latest set of
figures for the Stoke-on-Trent Property market. It makes interesting reading,
as average property values in Stoke-on-Trent rose by 0.7% in May. This leaves
average property values 0.6% lower than 12 months ago. When we compare Stoke-on-Trent
against the regional picture, West Midlands property values rose by 0.1%,
leaving them 3.5% higher than a year ago.
Obviously this is a far cry from the price rises we were
experiencing in Stoke-on-Trent throughout 2014. At one point (January 2014 to
be exact) property values were rising by 3.6% a year. All the same, even with
the tempering of the Stoke-on-Trent property values in 2015, property values
are still higher. This is good news for local homeowners who had been affected
by the downturn after 2007 and still find themselves in negative equity.
However, the thing that concerns me is that the average number
of properties changing hands (ie selling) has dropped substantially over the
last 12 months in the City. In April 2014, 196 properties sold in Stoke-on-Trent
but in April 2015, that figure dropped to 169.
I have been in the Stoke-on-Trent property market for quite a while now and
the one thing I have noticed over the last few years has been the subtle change
in the traditional seasonality of the Stoke-on-Trent property market. It has
been particularly noticeable this year in that the normal post Easter flood of
properties coming onto the market was not seen. This has made an imbalance
between supply and demand, with less houses coming onto the market there is simply
not as much choice of properties to buy in Stoke-on-Trent and with the
population of Stoke-on-Trent ever increasing, this will generally strengthen house
price growth for the foreseeable future.
So what does all this mean for Stoke-on-Trent landlords or
those considering dipping their toe into the buy to let market for the first
time? For many people, buy to let looks
a good investment, providing landlords with a decent income at a time of low interest
rates and stock market unpredictability.
However, if you are thinking
of investing in bricks and mortar in Stoke-on-Trent, it is important to do
things correctly. As an investment to provide you with income, for those
with enough savings to raise a big deposit, buy to let looks particularly good,
especially compared to low savings rates and stock market yo-yo’s. I must also
remind readers, landlords have two opportunities to make money from property,
not only is there the rent (income), but with the property market bouncing back
over the last few years, property value increases has spurred on more investors
to buy property in the hope of its value continuing to rise.
Savvy landlords with decent deposits can fix their mortgages
at just over 3% for five years, making many deals stack up. Nevertheless, low
rates cannot stay low forever, because one day they must rise and you need to
know your property can stand that test. I saw some Stoke-on-Trent landlords
struggling in the mid noughties, when interest rates rose from 3.5% in July
2003 to 5.75% in July 2007. That might not sound a lot, but that was the
difference of making a £100 a month profit in 2003 to having to make up a
shortfall in the mortgage payments of £100 per month in 2007.
Its true many landlords were thrown a life raft when the
base rate dropped to 0.5% in March 2009. Whilst interest rates have remained
there since, mark my words, they will rise again in the future. However, even
with the potential for costs to rise, demand for decent rental properties
remains high as there are ever more tenants in the market, driving up demand
and thus rents. The British love of bricks and mortar plus improving mortgage
deals also add up to fuel the buoyant Stoke-on-Trent property market.
If you are planning on investing in the Stoke-on-Trent or
Newcastle under Lyme property market, or just want to know more things to
consider for a successful buy to let investment then please just call us or pop
in for an informal chat
No comments:
Post a Comment