Stoke on Trent Flats Out Perform Property Market Average by 59%

According to the Land Registry's latest House Price Index for Stoke on Trent 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 Stoke on Trent have increased by 6.19% over the past year, which is proportionally 59% more than the Stoke on Trent average rise of 3.9%. The last time flats/apartments in Stoke on Trent out performed all the other types of property, by such a gulf, was back in the spring of 2003. For comparison, the other property types performed as follows ..

·         Detached homes rose by 4.66%

·         Semi-detached homes rose by 3.65%

·         Terraced/Town-Houses rose by 3.62%

 This moderately increasing rate of property value growth is opportune – but no one should confuse it with a strong and vigorous healthy Stoke on Trent 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 Stoke on Trent on a number of occasions in my Stoke on Trent 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 Stoke on Trent

now stands at £140,100.

When split down into property types ..

·         Stoke on Trent Apartments at £101,000

·         Stoke on Trent Detached at £231,800

·         Stoke on Trent Semi-Detached at £128,800

·         Stoke on Trent Terraced/Town-House at £88,600

 

So why have Stoke on Trent apartments performed so well, and is it just a Stoke on Trent 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.

So, should Stoke on Trent 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 Stoke on Trent 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.

So, what next for the Stoke on Trent 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. HMS Stoke on Trent Property Market…. “Nice and steady as she goes”, says the Captain

Cycling London to Blackpool!



This one of the very few occasions where I will post an article that isn't about the local Stoke-on-Trent or Newcastle under Lyme property market or the housing market in general but it is a subject very dear to my heart.  Plenty more articles about the property market in the pipeline which I will be posting over the next days and weeks.

Mark and Liz, the owners of the Martin and Co Stoke-on-Trent and Newcastle under Lyme offices, are once again tackling the 100km ride from Manchester to Blackpool.  They put together a small team last year and managed to raise a good amount of money, Liz in particular found it a real challenge having only recovered from a broken ankle 3 weeks before the ride but we still managed to complete it.  For 2017 Liz has organised a team of 50 riders with a far more ambitious target of raising £10,000 in support of Parkinson's Research

Liz’s day job is with Mercedes Benz where a number of the riders also work and the rest of the team come from various customers and the MB commercial vehicle network.  Mercedes Benz has been kind enough to provide entry fees for the whole team, transport, cycling gear and sustenance on the day so every penny raised will go to our chosen charity.  Whilst no Chris Froome or Laura Trott Mark and Liz are better prepared this year and are looking to put in a more respectable time than last year.  The team is made up of a mixture of abilities, some have even gone out and bought a bike for the first time in years! 

Once again, the event will start from the iconic Imperial War Museum on Salford Quays and is an “invigorating” ride. The route covers 100km from Manchester, along the scenic country lanes of Lancashire, and then finishes on the South Promenade in Blackpool.

There are personal reasons for choosing to support Parkinson's Research this is an awful condition with currently no cure and the whole team wants to raise as much money as possible.  If you have been touched by Parkinson’s in any way or just want to help to support this brilliant cause and wish to donate then you can do so via our JustGiving page https://www.justgiving.com/fundraising/mb-vans 

9.69 Babies Born for Each New Home Built in the Stoke on Trent area

As more babies are being born to Stoke on Trent mothers, I believe this increase will continue to add pressure to the over stretched Stoke on Trent property market and materially affect the local property market in the years to come.

On the back of eight years of ever incremental increasing birth rates, a significant 9.69 babies were born for every new home that was built in the Stoke on Trent council area in 2016.  I believe this has and will continue to exacerbate the Stoke on Trent housing shortage, meaning demand for housing, be it to buy or rent, has remained high.  The high birth rate has meant Stoke on Trent rents and Stoke on Trent property prices have remained resilient – even with the challenges the economy has felt over the last eight years, and they will continue to remain so in the years to come.

This ratio of births to new homes has reach one its highest levels since 1945 (back in the early 1970’s the average was only one and a half births for every household built).  Looking at the local birth rates, the latest figures show we in the Stoke on Trent council area had an average of 69 births per 1,000 women aged 15 to 44.  Interestingly, the national average is 61.7 births per 1,000 women aged 15 to 44 and for the region its 63.9 births per 1,000 women aged 15 to 44.

The number of births from Stoke on Trent women between the ages of 20 to 29 are significantly higher than the national average, but those between 35 and 44 were much lower.  However overall, the birth rate is still increasing, and when that fact is combined with the ever-increasing life expectancy in the Stoke on Trent area, the high levels of net migration into the area over the last 14 years (which I talked about in the previous articles) and the higher predominance of single person households … this can only mean one thing ... a huge increase in the need for housing in Stoke on Trent.

Again, in a previous article a while back, I said more and more people are having children as tenants because they feel safe in rented accommodation.  Renting is becoming a choice for Stoke on Trent people.

The planners and Politian’s of our local authority, central Government and people as a whole need to recognise that with individuals living longer, people having more children and whilst divorce rates have dropped recently, they are still at a relatively high level (meaning one household becomes two households) ... demand for property is simply outstripping supply.

The simple fact is more Stoke on Trent properties need to be built

… be that for buying or renting.

Only 1.1% of the Country is built on by houses.  Now I am not suggesting we build apartment blocks in the middle of the Cotswolds, but the obsession of not building on any green belt land should be carefully re-considered.

Yes, we need to build on brownfield sites first, but there aren’t hundreds of acres of brownfield sites in Stoke on Trent, and what brownfield sites there are, building on them can only work with complementary public investment.  Many such sites are contaminated and aren’t financially viable to develop, so unless the Government put their hand in their pocket, they will never be built on.

I am not saying we should crudely go ‘hell for leather’ building on our Green Belt, but we need a new approach to enable some parts of the countryside to be regarded more positively by local authorities, politicians and communities and allow considered and empathetic development.  Society in the UK needs to look at the green belts outside their leisure and visual appeal, and assess how they can help to shape the way we live in the most even-handed way.  Interesting times!

What will the General Election do to 72,123 Stoke-on-Trent Homeowners?

In Stoke-on-Trent, of the 116,820 households, 35,475 homes are owned without a mortgage and 36,648 homes are owned by a mortgage. Many homeowners have made contact me with asking what the General Election will do the Stoke-on-Trent property market?  The best way to tell the future is to look at the past.

I have looked over the last five general elections and analysed in detail what happened to the property market on the lead up to and after each general election. Some very interesting information has come to light.

Of the last five general elections (1997, 2001, 2005, 2010 and 2015), the two elections that weren’t certain were the last two (2010 with the collation and 2015 with unexpected Tory majority). Therefore, I wanted to compare what happened in 1997, 2001 and 2005 when Tony Blair was guaranteed to be elected/re-elected versus the last knife edge uncertain votes of 2010 and 2015 ... in terms of the number of houses sold and the prices achieved.

Look at the first graph below comparing the number of properties sold and the dates of the general elections

 

It is clear, looking at the number of monthly transactions (the blue line), there is a certain rhythm or seasonality to the housing market. That rhythm/seasonality has never changed since 1995 (seasonality meaning the periodic fluctuations that occur regularly based on a season - i.e. you can see how the number of properties sold dips around Christmas, rises in Spring and Summer and drops again at the end of the year).

To remove that seasonality, I have introduced the red line. The red line is a 12 month ‘moving average’ trend line which enables us to look at the ‘de-seasonalised’ housing transaction numbers, whilst the yellow arrows denote the times of the general elections. It is clear to see that after the 1997, 2001 and 2005 elections, there was significant uplift in number of households sold, whilst in 2010 and 2015, there was slight drop in house transactions (i.e. number of properties sold).

Next, I wanted to consider what happened to property prices. In the graph below, I have used that same 12-month average, housing transactions numbers (in red) and yellow arrows for the dates of the general elections but this time compared that to what happened to property values (pink line).

It is quite clear none of the general elections had any effect on the property values.  Also, the timescales between the calling of the election and the date itself also means that any property buyer’s indecisiveness and indecision before the election will have less of an impact on the market.

 
So finally, what does this mean for the landlords of the 16,020 private rented properties in Stoke-on-Trent? Well, as I have discussed in previous articles (and just as relevant for homeowners as well) property value growth in Stoke-on-Trent will be more subdued in the coming few years for reasons other than the general election. The growth of rents has taken a slight hit in the last few months as there has been a slight over supply of rental property in Stoke-on-Trent, making it imperative that Stoke-on-Trent landlords are realistic with their market rents. But, in the long term, as the younger generation still choose to rent rather than buy ... the prospects, even with the changes in taxation, mean investing in buy-to-let still looks a good bet

Hard Brexit could cause 1,300 properties to be dumped onto the Stoke-on-Trent Property market

So all cards up in the air! A general election will be on the books, but one thing is for sure ... whoever gets the job to deal with Brexit has a hard job on their hands (I'm just glad its not me!) As it currently stands, by not assuring the rights of EU citizens in the UK, Theresa May has squandered an opportunity to give peace of mind to our EU co-workers working and living in Stoke-on-Trent (and the rest of the UK). No.10 Downing Street’s point of view is that in promising the rights of EU citizens in the UK, it will postpone the same guarantee to the 1.5 million UK citizens living in the other nations of the EU.

Putting aside the politics for one second, the simple fact is now Article 50 has been triggered, we have two years to make a deal with the EU; otherwise it will be a ‘hard Brexit’. Now you might not think a hard Brexit will affect you in your home in Stoke-on-Trent ... but nothing could be further from the truth.

Of the 246,075 people who are resident in the Stoke-on-Trent City Council area, 225,574 were born in the UK, 2,239 were born in EU countries from West Europe and 2,750 were born in EU countries from the former Soviet States in East Europe (the rest coming from other countries around the world).

The rights of these EU citizens living in the Stoke-on-Trent area are not guaranteed and will now be part of the negotiation with Europe. It is true a lot of our EU next door neighbours in Stoke-on-Trent will have acquired rights relating to the right to live, to work, to own a business, to possess a property, the right to access health and education services and the right to remain in a UK after retirement… yet those acquired rights are up for negotiation in the next two years.

So, what would a hard Brexit do to the Stoke-on-Trent property market?

Well a hard Brexit could mean the nuclear option when it came to the Stoke-on-Trent housing market. It could mean that every EU citizen would have to leave the UK.

In the Stoke-on-Trent City area, 1,157 of the 2,239 Western European EU citizens own their own home and (so they would all need to be sold) and 1,570 of the 2,750 Eastern European EU citizens rent a property, so again all those rental properties would all come on the market at the same time.

 

Hard Brexit and mass EU Migration would mean c. 1,300 properties being dumped onto the housing market in a short period of time, meaning there would be a massive drop in Stoke-on-Trent property values and rents, causing negative equity for thousands of Stoke-on-Trent homeowners and many buy-to-let landlords would be out of pocket.

While there is no certainty as to what the future will hold, both UK expats in the EU and EU citizens in the UK rights will no longer be guaranteed and will be subject to bilateral renegotiation.

All I ask is that the politicians are sensible with each other in the negotiations. A lot of the success of the Stoke-on-Trent (and UK) property market has been built on high levels of homeownership and more recently in the last 10/15 years, a growth of the rental sector with lots of demand from Eastern Europeans coming to Stoke-on-Trent (and the surrounding area) to get work and provide for their families. Many Stoke-on-Trent people have invested their life savings into buying a buy to let property.

Much will depend on what is politically realistic. Unilateral knee-jerk reactions and measures caused by a hard Brexit would not only likely cause major disruption or suffering to the 3 million EU citizens living in the UK, but also everyone who owns property in the UK ... politics aside - a hard Brexit is in no one’s interests.

Should the 32,279 home owning OAP’s of Stoke-on-Trent be forced to downsize?

This was a question posed to me on social media a few weeks ago, after my article about our mature members of Stoke-on-Trent society and the fact many retirees feel trapped in their homes. After working hard for many years and buying a home for themselves and their family, the children have subsequently flown the nest and now they are left to rattle round in a big house. Many feel trapped in their big homes (hence I dubbed these Stoke-on-Trent home owning mature members of our society, ‘Generation Trapped’).

So, should we force OAP Stoke-on-Trent homeowners to downsize?

Well in the original article, I suggested that we as a society should encourage, through building, tax breaks and social acceptance that it’s a good thing to downsize. But should the Government force OAP’s?

Well, one of the biggest reasons OAP’s move home is health (or lack of it).

Looking at the statistics for Stoke-on-Trent, of the 32,279 Homeowners who are 65 years and older, whilst 15,472 of them described themselves in good or very good health, a sizeable 11,561 home owning OAPs described themselves as in fair health and 5,246 in bad or very bad health.

16.25% of Stoke-on-Trent home owning OAP’s are in poor health

 
But if you look at the figures for the whole of Stoke-on-Trent City Council, there are only 12 specialist retirement homes that one could buy (if they were in fact for sale) and 1,368 homes available to rent from the Council and other specialist providers (again- you would be waiting for dead man’s shoes to get your foot in the door) and many older homeowners wouldn’t feel comfortable with the idea of renting a retirement property after enjoying the security of owning their own home for most of their adult lives.

My intuition tells me the majority ‘would be’ Stoke-on-Trent downsizers could certainly afford to move but are staying put in bigger family homes because they can't find a suitable smaller property. The fact is there simply aren’t enough bungalows for the healthy older members of the Stoke-on-Trent population and specialist retirement properties for the ones who aren’t in such good health ... we need to build more appropriate houses in Stoke-on-Trent.

The Government's Housing White Paper, published a few weeks ago, could have solved so many problems with the UK housing market, including the issue of homing our aging population. Instead, it ended up feeling annoyingly ambiguous. Forcing our older generation to move with such measures as a punitive taxation (say a tax on wasted bedrooms for people who are retired) would be the wrong thing to do. Instead of the stick – maybe the Government could use the carrot tactics and offered tax breaks for downsizers. Who knows – but something has to happen?

.. and come to think about it, isn’t the word ‘downsize’ such an awful word?  I prefer to use the word ‘decent-size’ instead of ‘down-size’- as the other phrase feels like they are lowering themselves, as though they are having to downgrade themselves in their retirement (and let’s be frank – no one likes to be downgraded).
 

The simple fact is we are living longer as a population and constantly growing with increased birth rates and immigration. So, what I would say to all the homeowners and property owning public of Stoke-on-Trent is ... more houses and apartments need to be built in the Stoke-on-Trent area, especially more specialist retirement properties and bungalows. The Government had a golden opportunity with the White Paper – and were sadly found lacking.

And a message to my Stoke-on-Trent property investor readers whilst this issue gets sorted in the coming decade(s)  – maybe seriously consider doing up older bungalows – people will pay handsomely for them – be they for sale or even rent? Just a thought!

 

2,840,238 People use Stoke on Trent Train Station a year -

How does that affect the Stoke on Trent Property Market?

 

It might surprise you that it isn’t always the poshest villages around Stoke on Trent or the swankiest Stoke on Trent streets where properties sell and let the quickest. Quite often, it’s the ones that have the best transport links. I mean, there is a reason why one of the most popular property programmes on television is called Location, Location, Location!

As an agent in Stoke on Trent, I am frequently confronted with queries about the Stoke on Trent property market, and most days I am asked, “What is the best part of Stoke on Trent and its villages to live in these days?”, chiefly from new-comers.  Now the answer is different for each person – a lot depends on the demographics of their family, their age, schooling requirements and interests etc. Nonetheless, one of the principal necessities for most tenants and buyers is ease of access to transport links, including public transport – of which the railways are very important.

Official figures recently released state that, in total, 3,901 people jump on a train each and every day from Stoke on Trent Train station. Of those, 716 are season ticket holders. That’s a lot of money being spent when a season ticket, standard class, to London is £7,720 a year.

 

So, if up to £5.53m is being spent on rail season tickets each year from Stoke on Trent, those commuters must have some impressive jobs and incomes to allow them to afford that season ticket in the first place. That means demand for middle to upper market properties remains strong in Stoke on Trent and the surrounding area and so, in turn, these are the type of people whom are happy to invest in the Stoke on Trent buy to let market – providing homes for the tenants of Stoke on Trent…

The bottom line is that property values in Stoke on Trent would be much lower, by at least 3% to 4%, if it wasn’t for the proximity of the railway station and the people it serves in the town

And this isn’t a flash in the pan. Rail is becoming increasingly important as the costs associated with car travel continue to rise and roads are becoming more and more congested. This has resulted in a huge surge in rail travel.  

Overall usage of the station at Stoke on Trent has increased over the last 20 years. In 1997, a total of 1,227,517 people went through the barriers or connected with another train at the station in that 12-month period. However, in 2016, that figure had risen to 2,840,238 people using the station (that’s 7,803 people a day).

The juxtaposition of the property and the train station has an important effect on the value and saleability of a Stoke on Trent property. It is also significant for tenants - so if you are a Stoke on Trent buy to let investor looking for a property - the distance to and from the railway station can be extremely significant.

One of the first things house buyers and tenants do when surfing the web for somewhere to live is find out the proximity of a property to the train station. That is why Rightmove displays the distance to the railway station alongside each and every property on their website. 

 
For more thoughts on the Stoke on Trent Property market – please give us a call or pop in to see us