My thoughts
to the landlords and homeowners of Southampton…
The tightrope
of being a Southampton buy-to-let landlord is a balancing act many do well at.
Talking to several Southampton landlords, they are very conscious of their
tenants’ capacity and ability to pay the rent and their own need to raise rents
on their rental properties (as Government figure shows ‘real pay’ has dropped
1% in the last six months). Evidence does suggest many landlords feel more
assured than they were in the spring about pursuing higher rents on their
properties.
During the summer
months, historic evidence suggests that the rents new tenants have had to pay on
move in have increased. June/July/August is a time when renters like to move,
demand surges and the normal supply and demand seesaw mean tenants are normally
prepared to pay more to secure the property they want to live in, in the place
they want to be. This is particularly good news for Southampton landlords as
average Southampton rents have been on a downward trend recently. So look at
the figures here...
Rents in Southampton on average for new tenants moving in
have risen 0.9% for the month, taking overall annual Southampton rents 0.9% lower
for the year
However,
several Southampton landlords have expressed their apprehensions about a slowing
of the housing market in Southampton. I think this negativity may be exaggerated.
Before we get
the Champagne out, the other side of the coin to property investing is capital
values (which will also be of interest to
all the homeowners in Southampton as
well as the Southampton buy-to-let landlords). I believe the Southampton property market has
been trying to find some level of equilibrium since the New Year. According to the Land Registry…
Property Values in Southampton are 3.39% higher than they
were 12 months ago, rising by 1.96% last month alone!
Yet, I would
take those figures with a pinch of salt as they reflect the sales of Southampton
properties that took place in early Spring 2017 and now are only exchanging and
completing during the summer months.
The reality
is the number of properties that are on the market in Southampton today has
risen by 21.4% since the New Year and that will have a dampening effect on
property values. As tenants have had less choice, buyers now have more choice ...
and that will temper Southampton property prices as we head towards 2018.
Be you a
homeowner or landlord, if you are planning to sell your Southampton property in
the short term, it is crucial, especially with the rise in the number of properties
on the market, that you realistically price your property when you bring it
to the market ... with the increase in choice of properties, the
balance of power during negotiation generally sways towards the buyer. Given that everyone now has access to
property details, including historic stats for how much property have sold for,
they will be more astute during the offer and negotiation stages of a purchase.
However, even with this uplift in the number of
properties for sale in Southampton, property prices will remain stable and
strong in the medium to long term. This is because the number of properties on
the market today is still way below the peak of summer of 2008, when there were
4,023 properties for sale compared to the current level of 1,408 (if you recall, prices dropped by nearly 20%
in Credit Crunch years of ‘08 and ‘09).
Compared to 2008, today’s lower
supply of Southampton properties for sale will keep prices relatively high...and
they will continue to stay at these levels for the medium to long term.
Less people are moving than a few years ago, meaning less
property is for sale. Fewer properties for sale mean property prices remain
relatively high and this is because of a number of underlying reasons. Firstly,
buy-to-let landlords tend not to sell their properties as often than owner-occupiers,
consequently removing the property out of the housing market selling cycle.
Secondly, Stamp Duty is much higher compared to 10 years ago (meaning it costs
more to move). Next, there is a dearth of local authority rental housing so
demand for private rented housing will remain high. Then we have the UK’s
maturing owner occupier population, meaning these older people are less likely
to move (compared to when they were younger). Another reason is the lack of new
homes being built in the country (we need
240k houses a year to be built in the UK and we are currently only building
145k a year!) and finally, the new mortgage rules introduced in 2014 about
how much a person can borrow on a mortgage has curtailed demand.
Some final thought’s before I go – to all the Southampton
homeowners that aren’t planning to sell – this talk of price changes is
only on paper a profit or loss. To those that are moving
... most people that sell, are buyers as well, so as you might not get as much
for yours, the one you will want to buy won’t be as much, (swings and
roundabouts as Mum used to say!)
For more information on the Southampton property market, visit the Southampton Property Market Blog If you are looking for an agent that is well established, professional andcommunicative, then contact us to find out how we can get the best out of your investment property.
Email me on brian.linehan@belvoirlettings.com or call on 023 8001 8222.
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