As we go full steam ahead
into 2019, it’s certain that the Southampton housing market in 2018 was a
little more restrained than 2016 and 2017 and I believe this will continue into
2019. Property ownership is a medium to long term investment so, looking at the
long-term, the average Southampton homeowner, having owned their property since
the Millennium, has seen its value rise by more than 168%.
This
is important, as house prices are a national obsession and tied into the health
of the UK economy as a whole. The preponderance of that historical gain in Southampton
property values has come from the growth in Southampton property values, while
some of it will have been enhanced by extending, modernising or developing
their Southampton home.
Taking
a look at the different property types in Southampton, and the profit made by
each type, makes interesting reading..
However, we can’t forget there has been just over 60%
inflation over those 18 years, which eats into the ‘real’ value (or true
spending power of that profit) … so if we take into account inflation since
2000, the true spending power of that profit has been lower.
So the ‘real’ value
of the profit, after inflation, in Southampton has been £5,185 per year.. still
nothing to sniff at.
I wanted to show you that even though we had the 2008/09
Credit Crunch property market crash where, depending on the type of Southampton
property, property values dropped between 15% and 20% in 18 months … Southampton
homeowners over the long term are still better off than those renting.
Moving forward, the question I get asked time and again is
what will happen in the future to the Southampton Property market? Irrespective
of what is happening in the World, Europe or even Central London, the biggest
factor over the medium to long term to ensure that this level
of house price growth is maintained in Southampton is the
building of new homes both locally and in the country as a whole. Whilst we
haven’t had the 2018 stats yet, Government sources suggest this will be nearer
180,000 to 190,000, a decrease from the 2017 figure of 217,350 new households
being created. When you consider that we need to build 240,000 households to
equal demand (immigration, people living longer, higher divorce rates and
people co-habiting later in life etc) … demand will outstrip supply and unless
the Government start to spend billions building council houses .. this trend
will continue for years (and decades to come).
Another factor is that whilst Southampton landlords have
been hit with higher taxes to enable them to actually be a landlord most, in
every national survey, still intends to increase their portfolio in the medium
to long term. The youngsters of Southampton see renting as a choice, giving
them flexibility and options that being tied to a home cannot give… thus
meaning demand will continue to grow and landlords will be able to enjoy
increased rents and capital growth, although those very same Southampton buy to
let landlords will have to work smarter in the future to continue to make
decent returns (profits) from their buy to let investments. Even with the tempering of house price inflation in Southampton
in 2018, most Southampton buy to let landlords (and homeowners) are still
sitting on a copious amount of growth from previous years.
The question is, how do you, as a Southampton buy to let
landlord, ensure that continues?
Since the 1990’s, making money from investing in buy to let
property was as easy as falling off a log. Looking forward though, with all the
changes in the tax regime and balance of power, making those similar levels of
return in the future won’t be so easy. Over the last ten years, I have seen the
role of the forward thinking agents evolve from a person collecting the rent to
a more all-inclusive role; I call it, ‘strategic portfolio leadership’.
Thankfully, along with myself, there are a handful of agents in Southampton
whom I would consider exemplary at this landlord portfolio strategy where they
can give you a balanced structured overview of your short, medium and long-term
goals, in relation to your required return on investment, yield and capital
growth requirements.
If you would like such advice, speak with your current agent
or alternatively – whether you are a landlord of ours or not – without any cost
or commitment, feel free to drop me a line and drop in for a coffee and a chat.
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@belvoir.co.uk or call on 023 8001 8222.
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Twitter, https://twitter.com/sotonbelvoir
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