Southampton Property Market: Is Sell to Rent the new Buy to Let?

It doesn’t seem two minutes ago that it was 90 degrees Fahrenheit in the shade (32 degrees Celsius for my younger readers), hosepipe bans looked likely and it was simply too hot to sleep at night, yet early indications were, that as the temperatures soared, the Southampton property market appeared to be doing the reverse and was already starting to cool down.

21.47% less people moved home in the Southampton area in the first part of 2018, when compared to the average number of people moving home (in the same time frame) between 2014 and 2017

The average number of households who sold and moved locally between 2014 and 2017 in the winter and spring months was 303 homes a month.. yet in the same time frame in 2018, only 238 (on average) sold and moved.

So, what is the issue? Many have cited Brexit as the issue – but I think its deeper than that.

Brexit seems to be the “go to excuse” for everything at the moment – my neighbour even blamed it for the potholes! Anyway a few weeks ago, I was out for a family get together in another part of the UK when one of my extended family said that they were planning on buying their first home this autumn most of those present said they were stupid to do so because of Brexit. Nonetheless, half an hour later, another distant cousin said to the same family crowd that they were planning to sell their home; to which most said they were also daft to do so because of Brexit.

Both sides of the argument can’t be right! So, what exactly is happening?

Well if you have been reading my blog on the Southampton property market over the last few months, I have been discussing the threats and opportunities of the current state of fluidity in the Southampton property market, including the issue of OAPs staying in homes that are too big for them as their children have flown the nest, interest rates, inflation, lack of new homes being built and the long term attitude to homeownership.. yet I have noticed a new trend in the last few months.. the emergence of the ‘sell to renter’.

Sell to Renter?

I have seen a subtle, yet noticeable number of Southampton homeowners that have been selling their Southampton homes, renting and wagering that, in the next few years, the Southampton property market will tumble by more than what they spend on their short-term rental home, before they buy another Southampton home in a couple of years i.e. a ‘sell to renter’. This type of ‘sell to renter’ is mostly predominant at the middle to upper end of the Southampton property market – so I’m not too sure if it will catch on in the main ‘core’ market?

So, what does this all mean for Southampton homeowners and Southampton Buy To Let landlords?

Well, in the short term, demand for middle to upper market Southampton rental properties could increase as these ‘sell to renters’ demand such properties. I would however give a note of caution to Southampton landlords buying in this sector of the Southampton property market as yields in this sector can be quite low. However, for homeowners of middle to upper market Southampton properties, you might have less people wanting to buy your type of property, as some buyers are turning to renting?

Like I have always said, Southampton properties are selling if they are realistically priced (realistic for the market – not a rose-tinted version where someone will pay 10% over the odds because everyone has access to the market stats with the likes of Rightmove and Zoopla!).

P.S Notice the spike in the graph, where the number of property sales jumped to 607 in the month of March 2016? That was all the Southampton buy to let landlords snapping up buy to let properties before the stamp duty rules changed! 

If you are thinking of selling your Southampton home or if you are a Southampton landlord, hoping to sell your buy to let property (with tenants in), either way, if you want a chat to ensure you get a decent price with minimal fuss ... drop me a message or pick up the phone.

If you are looking for an agent that is well established, professional and communicative, 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.

Don't forget to visit the links below to view back dated deals and Southampton Property News.

Blog, http://southamptonproperty.blogspot.co.uk/

Facebook, https://www.facebook.com/belvoirsouthampton/

Twitter, https://twitter.com/sotonbelvoir
LinkedIn, https://www.linkedin.com/in/brianlinehan

Website, https://www.belvoir.co.uk/letting-agents-southampton  

Southampton House Prices vs Southampton Rents since 2006

The Southampton housing market is a fascinating beast and has been particularly interesting since the Credit Crunch of 2008/9 with the subsequent property market crash. There is currently some talk of a ‘property bubble’ nationally as Brexit seems to be the ‘go-to’ excuse for every issue in the Country. Upon saying that, looking at both what we do as an agent, and chatting with my fellow property professionals in Southampton, the market has certainly changed for both buyers and sellers alike (be they Southampton buy to let landlords, Southampton first time buyers or Southampton owner occupiers looking to make the move up the Southampton property ladder).

Southampton House Values are 3.1% higher than a year ago, and the rents Southampton tenants have to pay are 1.5% higher than a year ago

When we compare little old Southampton to the national picture, national property values have risen by 0.4% compared to last month and risen by 3.0% compared to a year ago, and this will surprise you even more, as nationally, property values are 19.8% higher than January 2015 (compared to 11.4% higher in the EU in the same time frame).

However, if we look further back...

Since 2006, Southampton House Values are 42.7% higher, yet the rents Southampton tenants have had to pay for their Southampton rental property are 26.4% higher

...which sounds a lot, yet UK inflation in those 12 years has been 42%, meaning Southampton tenants are 15.6% better off in ‘real spending power terms’.

Looking at the graph, the rental changes have been much gentler than the roller coaster ride of property values. I particularly want to bring to your attention the dip in Southampton house values (in red) in the years of 2008 and 2009 ... yet as Southampton property values started to rise after the summer of 2009, see how Southampton rents dipped 6/12 months later (the yellow bars)…. Fascinating!

So, we have a win for tenants and a win for the homeowners, as they are also happy due to the increase in the value of their Southampton property.

However, maybe an even more interesting point is for the long-term Southampton buy to let landlords. The performance of Southampton rental income vs Southampton house values has seen the resultant yields drop over time (if house prices rise quicker than rents – yields drop).

Whilst, it’s true Southampton landlords have benefited from decent capital growth over the last decade –with the new tax rules for landlords – now more than ever, it’s so important to maximise one’s yields to ensure the long term health of your Southampton buy to let portfolio. More and more I am sitting down with both Southampton landlords of mine and landlords of other agents who might not be trained in these skills - to carry out an MOT style check on their Southampton portfolio, to ensure your investment will meet your future needs of capital growth and income. If you don’t want to miss out on such a MOT check up, drop me a line – what have you got to lose? 30 minutes of time against peace of mind - the choice is yours.

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.

Don't forget to visit the links below to view back dated deals and Southampton Property News.

Blog, http://southamptonproperty.blogspot.co.uk/

Facebook, https://www.facebook.com/belvoirsouthampton/

Twitter, https://twitter.com/sotonbelvoir
LinkedIn, https://www.linkedin.com/in/brianlinehan

Website, https://www.belvoir.co.uk/letting-agents-southampton  

Southampton Property Market - Summer 2018 Update

I was recently reading a report by Rightmove that a North South Divide has started to appear in the UK property market – so I wanted to see if Southampton was falling in line with those thoughts.  In the North, there are 7.12% less properties on the market than 12 months ago, whilst in contrast, in the South, there are 14.7% more properties on the market than 12 months ago.

With the decline in the number of properties for sale in the North compared to 12 months ago, that means the North is more of a sellers’ market.  However, on the other side of the coin, there is a significant rise in buyer choice in all of the Southern regions, showing there are signs of a buyers’ market, which in some markets is a driving force for a buyers’ market and some downwards price pressure.

So, looking closer to home at asking prices and the number of homes on the market. In the South East region, according to Rightmove, the average asking prices of new to the market properties are 1.2% higher than 12 months ago and 0.1% higher over the last month.  Now I must stress, this is asking prices – not what is happening to actual property values.  Also, regionally, there are 20% more properties on the market than 12 months ago.

Even closer to home, overall, the number of properties and building plots for sale in Southampton has increased by 36%, going from 1,356 properties for sale a year ago to 1,838 properties for sale as I write this article, meaning Southampton does in fact match the regional trend.

Looking at the individual types of Southampton property, you can quite clearly see the different markets within Southampton.  The two sets of figures that stand out are the increase in Terraced/town houses for sale, rising 50% and the decrease in Apartments by 19%.

Type	Properties for Sale 12 months ago	Properties for Sale Today	Change
Detached Property in Southampton	304	389	28%
Semi Detached Property in Southampton	286	418	46%
Terraced/Town House in Southampton	142	213	50%
Apartments in Southampton	550	653	19%

(NB There are a handful more Building plots and other types of property that can’t be placed into the four category’s ... and it’s those that make up the total numbers in the paragraph above the table)

Although these figures don’t tell the whole story because in certain areas of Southampton, certain types of properties (particular locations and Primary school catchment areas) are in short supply.  This has caused some frustration with buyers of those types of properties with this lack of supply, which in turn has sparked some very localised asking price growth within those hot spot areas, although sometimes to levels where sellers optimism turns into silly over the top asking prices.

This means the property sticks, which isn’t sustainable, therefore as a consequence, there are certain parts of the Southampton housing market with upward asking price movements being offset in part by intermittent asking price reductions where home owners or their estate agents have been over optimistic with their initial marketing asking price.

What does this mean for homeowners and landlords in Southampton?

If you are planning to sell your home or buy to let investment, the key for determined sellers is to set your asking price correctly from the start.  It’s so vital to be competitive to attract buyers.  Everyone has access to three main property portals (Rightmove, On the Market and Zoopla) so can easily compare your property against similar ones.  When you do search these portals, make sure you ask the website to show properties that are sold subject to contract as well to check what properties are selling for in your neighbourhood. Unless you have something highly unusual or unique, this perhaps isn’t the best market to set an optimistic asking price in hoping to find someone who would pay that silly price.

And if you are buying in Southampton?  The numbers of buyers are lower than a few years ago, although those buyers that are in the market have become quite serious.  The times of time wasting “carpet treaders” (estate agency slang for the same type of people car dealers call tyre kickers) are long gone.  Those buyers that are in the market are real buyers, wanting to buy, but only at the right price.  We live in a 21^st century society that is “time-poor” so nobody is wanting to even view a house, let alone pay over the odds if they believe the asking price is too high.  So, if you are buying, do your homework, ask plenty of questions of the agent, find out the motivation of the sellers and the real reasons behind why they are moving ... and you might just bag a good deal?

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.

Don't forget to visit the links below to view back dated deals and Southampton Property News.

Blog, http://southamptonproperty.blogspot.co.uk/

Facebook, https://www.facebook.com/belvoirsouthampton/

Twitter, https://twitter.com/sotonbelvoir
LinkedIn, https://www.linkedin.com/in/brianlinehan

Website, https://www.belvoir.co.uk/letting-agents-southampton  

Great(er) Expectations: Why Southampton Home Sellers are Having to Reduce Their Asking Prices by an Average of £12,300 Each

As we leave the memorably hot summer behind us, some interesting statistics have come to light on the Southampton Property Market which will be thought provoking for both homeowners and buy to let landlords alike.

Over the last 12 months 5,143 households have changed hands in Southampton, interesting when compared with the 10-year average of 5,855 households per year.

Yet, for the purpose of this week’s article, I want to discuss the pricing of the current crop of Southampton’s property sellers and the prices they are asking for their homes and the prices they are achieving (or not as at the case may be). It is so important for all property owners to know the real story, so they can judge for themselves where they stand in the current Southampton housing market, thus enabling them to make suitable and informed decisions… and that is why, in my blog about the Southampton Property Market, I pride myself in telling the people of Southampton the real answers, not just the ones they want to hear.

The national average of homes selling at or above the asking price currently stands at around 10%, so around 90% go below the asking price – but by how much? Well according to Rightmove, in the Southampton area, the average difference between the ‘FINAL asking price’ to the price agreed is 3.1% … yet note I highlighted the word FINAL in the last statement.

You see some Estate Agents will deliberately over inflate the suggested initial asking price to the house seller, because it gives them a greater chance to secure the property on that agent’s books, as opposed to a competitor. This practice is called overvaluing. Now of course, each homeowner wants to get the most for their property, it is quite often their biggest asset – yet some agents know this and prey on those house sellers. You might ask, what is the issue with that?

Well, you only get one chance of hitting the market as a new property. Everyone has access to the internet, Rightmove and Zoopla etc, and your potential buyers will know the market like the back of their hand. If you have a 3 bed semi that is on the market for a 3 bed detached house price.. those buyers will ignore you. Your Southampton property sticks on the market, potential buyers will keep seeing your Southampton property on Rightmove each week, then start to think there is something wrong with it, dismiss it even further, until you, as the house seller have to reduce the asking price so much (to make it appear inexpensive) to get it away. According to our own research, the average house buyer only views between 4 and 5 houses before buying – so don’t assume viewers will come round your optimistically priced (i.e. overvalued) property, thinking they will knock you down – no quite the opposite!

So how widespread is overvaluing in Southampton? The results might surprise you …

40.8% of properties in Southampton, currently on the market, have reduced their asking price by an average reduction of 4.8% (which equates to £12,300 each)

So, all I ask is this.. be realistic and you will sell at a decent price to a decent buyer. First time – every time – enabling you to move on to the next chapter of your life.

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.

Don't forget to visit the links below to view back dated deals and Southampton Property News.

Blog, http://southamptonproperty.blogspot.co.uk/

Facebook, https://www.facebook.com/belvoirsouthampton/

Twitter, https://twitter.com/sotonbelvoir
LinkedIn, https://www.linkedin.com/in/brianlinehan

Website, https://www.belvoir.co.uk/letting-agents-southampton