Stoke on Trent’s New 3 Speed Property Market

“What’s happening to the Stoke on Trent Property Market” is a question I am asked repeatedly.  Well, would it be a surprise to hear that my own research suggests that there isn’t just one big Stoke on Trent property market – but many small micro-property markets?

According to recent data released by the Office of National Statistics (ONS), I have discovered that at least three of these micro-property markets have emerged over the last 20+ years in the town.

For ease, I have named them the …

1. ‘lower’ Stoke on Trent Property Market.
2. ‘lower to middle’ Stoke on Trent Property Market.
3. ‘middle’ Stoke on Trent Property Market.

The ‘lower’ and ‘lower to middle’ sectors of the Stoke on Trent property market have been fuelled over the last few years by two sets of buyers. The first set, making up the clear majority of those buyers, are cash rich landlord investors who are throwing themselves into the Stoke on Trent property market to take advantage of alluringly low prices and even lower interest rates. The other set of buyers in the ‘lower’ and ‘lower to middle’ Stoke on Trent property market are the first-time buyers (FTB), although the FTB market is in a state of unparalleled deadlock as it’s been trampled into near-immobility and incapacity by the new 2014 stricter mortgage affordability regulations and also fewer mortgages with low deposits. 

Some of you may be interested to know how I have classified the three sectors ..

1. ‘lower’ Stoke on Trent housing market – the bottom 10% (in terms of value) of properties sold
2. ‘lower to middle’ Stoke on Trent housing market – lower Quartile (or lowest 25% in terms of value) of properties sold
3. ‘middle’ Stoke on Trent housing market - which is the median in terms of value

 …. and if one looks at the figures for Stoke on Trent City Council area you can see the three different sectors (lower, lower/middle and middle) have performed quite differently.

 

Stoke on Trent City Council Property Market – Sold Prices	Price Paid in 1995	Price Paid in 2017	Percentage Uplift 1995 - 2017
Lower (Bottom 10%)	£15,000	£55,000	266.67%
Lower to Middle (Lower Quartile)	£22,000	£72,500	229.55%
Middle (The Median)	£33,752	£112,865	234.40%

 

You can quite clearly see that it is the ‘lower’ market that has performed the best.

You might ask, what do all these different figures mean to homeowners and landlords alike?  Quite a lot – so let me explain. The worst performing sector (with the lowest Percentage uplift) was the ‘lower to middle’ housing market. Therefore, interestingly, if we applied the best percentage uplift figure (i.e. from the ‘lower’ market percentage uplift), to the ‘lower to middle’ 1995 housing market figure, the 2017 figure of £72,500, would have been £80,667 instead – quite a difference you must agree?

Now, I have specifically not mentioned the upper reaches of the Stoke on Trent housing market for several reasons.  Firstly, the lower or middle market is where most of the buy to let investment landlords buy their property and where the majority of property transactions take place. Secondly, due to the unique and distinctive nature of Stoke on Trent’s up-market property scene (because every property is different and they don’t tend to sell as often as the lower to middle market), it is much more difficult to calculate what changes have occurred to property prices in that part of the Stoke on Trent property market - looking at the stats for the up-market Stoke on Trent property market from Land Registry, only 28 properties in Stoke on Trent (and a 5 mile radius around it) have sold for £1,000,000 or more since 1997.

So, what should every homeowner and buy to let landlord take from the information that there are many micro-property markets? Well, when you realise there isn’t just one Stoke on Trent Property Market, but many Stoke on Trent “micro-property markets”, you can spot trends and bag yourself some potential bargains. Even in this market, I have spotted a number of bargains over the last few months that I have shared in my Property Blog and to my landlord database, especially in the ‘lower’ and ‘lower/middle’ market.


If you want to be kept informed of those buy to let bargains, keep an eye on my regular blog updates, it’s free to do so and I’m sure you wouldn’t want to miss out – would you?  If you see anything of interest, please give us a call on 01782 262880.

 

Stoke-on-Trent Homeowners and their £2.57 billion Debt

Over the last 12 months, the UK has decided to leave the EU, have a General Election with a result that didn’t go to plan for Mrs May and to add insult to injury, our American cousins elected Donald Trump as the 45th President of the United States. It could be said this should have caused some unnecessary unpredictability into the UK property market.

The reality is that the housing and mortgage market (for the time being) has shown a noteworthy resilience. Indeed on the back of the Monetary Policy pursued by the Bank of England there has been a notable improvement of macro-economic conditions! In July for example it was announced that we are witness to the lowest levels of unemployment for nearly 50 years. Furthermore, despite the UK construction industry building 21% more properties than same time the previous year, there has still been a disproportionate increase in demand for housing, particularly in the most thriving areas of the Country. Repossessions too are also at an all-time low at 3,985 for the last Quarter (Q1 2017) from a high of 29,145 in Q1 2009. All these things have resulted in...

Property values in Stoke-on-Trent according to the

Land Registry are 3.1% higher than a year ago

So, what does all this mean for the homeowners and landlords of Stoke-on-Trent, especially in relation to property prices moving forward?

One vital bellwether of the property market (and property values) is the mortgage market. The UK mortgage market is worth £961,653,701,493 (that’s £961bn) and it representative of 13,314,512 mortgages (interestingly, the UK’s mortgage market is the largest in Europe in terms of amount lent per year and the total value of outstanding loans). Uncertainty causes banks to stop lending – look what happened in the credit crunch and that seriously affects property prices.

Roll the clock back to 2007, and nobody had heard of the term ‘credit crunch’, but now the expression has entered our everyday language.  It took a few months throughout the autumn of 2007, before the crunch started to hit the Stoke-on-Trent property market, but in late 2007, and for the following year and half, Stoke-on-Trent property values dropped each month like the notorious heavy lead balloon, meaning …

The credit crunch caused Stoke-on-Trent property values to drop by 19.3%

Under the sustained pressure of the Credit Crunch, the Bank of England realised that the UK economy was stalling in the early autumn of 2008. Loan book lending (sub-prime phenomenon) in the US and across the world was the trigger for this pressure. In a bid to stimulate the British economy there were six successive interest rates drops between October 2008 and March 2009; this resulted in interest rates falling from 5% to 0.5%!

Thankfully, after a period of stagnation, the Stoke-on-Trent property market started to recover slowly in 2011 as certainty returned to the economy as a whole and Stoke-on-Trent property values really took off in 2013 as the economy sped upwards. Thankfully, the ‘fire’ was taken out of the property market in Spring 2015 (otherwise we could have had another boom and bust scenario like we had in the 1960’s, 70’s and 80’s), with new mortgage lending rules. Throughout 2016, we saw a return to more realistic and stable medium term property price growth. Interestingly, property prices recovered in Stoke-on-Trent from the post Credit Crunch 2009 dip and are now 17.2% higher than they were in 2009.

Now, as we enter the summer of 2017, with the Conservatives having been re-elected on their slender majority, the Stoke-on-Trent property market has recouped its composure and in fact, there has been some aggressive competition among mortgage lenders, which has driven mortgage rates down to record lows. This is good news for Stoke-on-Trent homeowners and landlords, over the last few months a mortgage price war has broken out between lenders, with many slashing the rates on their deals to the lowest they have ever offered.  For example, last month, HSBC launched a 1.69% five-year fixed mortgage!

Interestingly, according to the Council of Mortgage Lenders, the level of mortgage lending had soared to an all-time high in the UK. 

In the Stoke-on-Trent postcodes of ST1 to ST4, ST6 & ST9, if you added up everyone’s mortgage, it would total £2,570,316,463!

Since 1977, the average Bank of England interest rate has been 6.65%, making the current 323 year all time low rate of 0.25% very low indeed. Thankfully, the proportion of borrowers fixing their mortgage rate has gone from 31.52% in the autumn of 2012 to the current 59.3%. If you haven’t fixed – maybe you should follow the majority?

In my modest opinion, especially if things do get a little rocky and uncertainty seeps back in the coming years (and nobody knows what will happen on that front), one thing I know is for certain, interest rates can only go one way from their 300 year ultra 0.25% low level ... and that is why I consider it important to highlight this to all the homeowners and landlords of Stoke-on-Trent. Maybe, just maybe, you might want to consider taking some advice from a qualified mortgage adviser? There are plenty of them in Stoke-on-Trent.

If you are interested in the Stoke-on-Trent Property Market, please have a look at my other blogs on the subject, or give us a call on 01782 262880 for help and advice