New Home Building in Southampton 2018 rises to 4.5% above the post Millennium average

Nationally, the number of new homes created in 2018 was 222,194, the highest since 1989. Yet since 2002, the average number of properties built in the UK has only been 146,700 per year. You would think, seeing all the new homes sites around, you could ask are we building too many houses, especially off the back of those impressive 2018 build figures? However, to keep up with the ever-growing population, lifestyles and people living longer, official reports state the Country actually needs 240,000 new homes built every year to just stand still.

It is estimated, by the Chartered Institute of Housing, that the current national backlog of new homes required is in the order of 4.7 million (i.e. because of the bottled-up household formation by younger adults living with parents, shared housing and unaffordability). As a Country, we cannot meet all these needs immediately and it will take time to build up an effectual plan to address these issues.

Looking closer to home, you will also see from the graph below the long-term trend of new homes building (the yellow dotted line) has been going in an upward direction. In fact, the 2018 new homes build stats for Southampton are 4.5% above the post Millennium average.

But, we still need more homes… yet who is going to build (and pay) for them. Some Southampton people will say why can’t the local authority build most of them?

In 2018, 826 new dwellings were created in the Southampton Council area and of those 826; interestingly 45 were Council and Housing Association homes

So, if our local authority had a more ambitious annual target of say an additional 500 homes on top of those figures, where could they be built and how would they be paid for? Of course, there are the normal apprehensions about infrastructure issues such as roads, schools, hospital capacity and doctors’ surgeries but our local authority has a Local Plan and that has the locations of where they envisage the new housing will be built (and the infrastructure that goes with it).

The Tories lifted the cap on what local authorities could borrow to build Council houses in late 2018 meaning Councils could borrow more money to build more Council houses. Let’s say we built those 500 homes a year for the next 5 years in Southampton, that would cost the local authority £375 million to build, which would produce in total £17.4 million in rent. At current interest rates, the interest would be £9.5m per year leaving a surplus of £7.9m for property maintenance and management – meaning the Council houses pay for themselves!

Therefore, what does all this mean for Southampton homeowners and Southampton buy-to-let landlords?

Well, the chances of our local authority getting the full funding for an extra 500 homes a year is slim as there is only so much money to borrow. If every UK local authority got funding for 500 additional homes a year for the next 5 years, an impressive 867,500 homes would be built in those 5 years but that would require the councils to borrow £130.1bn – and Central Government doesn’t have that kind of money for Councils to borrow (more like £10bn to £15bn).

The 4.7million long term housing shortage means house prices will remain strong in the long term (despite blips like Brexit etc). Demand for private rental properties will continue to grow and if you read my recent article on Southampton rents, this can only be good news for Southampton landlords. This attention on the housing crisis by the Government is good news for all Southampton homeowners and Southampton buy to let landlords, as it will encourage more fluidity in the market in the longer term, sharing the wealth and benefits of homeownership for all. However, in the short term, demand still outstrips supply for homes and that will mean continued upward pressures on rents for tenants and stability on house 

If you would like to pick my brains on the Southampton Property Market – pop in for a coffee or drop me a line on social media or email. 

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@belvoir.co.uk 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 Buy To Let Annual Returns Hit 12.6% in Last 10 Years

Many Southampton people ponder the best places to invest their hard-earned savings and the best piece of advice I can give you is to do your homework and speak to lots of people. It depends on your attitude to risk versus reward. Normally, the lower the risk, the lower the reward whilst a higher risk is normally associated with the possibility of higher returns, yet nothing is guaranteed. At the same time, higher risk also means higher possible losses on your investment - yet if one looks at the bigger picture, the biggest threat to investing, predominantly when the investment is made in the short term, isn’t risk but actually volatility.

So where should you invest? Building society, the stock market, gold or property are options. This article isn’t designed to give you advice – just show you how different investments have performed over the last decade.

Let me start with the humble semi-detached house in Southampton ... which in 2009 was worth £185,300 … so assuming I bought that property for that figure, then I looked at what if I had invested the same amount of money in a building society, into gold and finally the stock market…

Putting your money into the stock market (FTSE100) would have brought a return of 30.2% on your capital over those 10 years and an average of 3.79% a year in dividends (making an overall increase of 74%).

Gold doesn’t earn interest – yet it has increased in value by 26.9% over the same 10 years whilst putting your money in the building society, the money hasn’t increased in value, but would have earned you interest of 24.46% or the equivalent of 2.21% per year.

Investing in an average semi-detached house in Southampton over the last 10 years has seen the capital increase by 53% (an equivalent of 4.34% per annum) and the income (i.e. the rent) has provided a return, based on the original purchase price, of 121.15% or the annual equivalent of 8.26% … meaning the overall return, based on the original purchase price of an average semi-detached property in Southampton, is 12.6% per annum.

Notwithstanding No.11 Downing Street’s grab at the profits of buy to let landlords by hitting the buy to let sector with several fiscal punishments with a 3% stamp duty level, a decrease in high rate tax relief for landlords and an increase in rate of CGT on residential property profits, the facts remain that ‘bricks and mortar’ is still one of the preeminent and most constant investments available.

The bottom line is, the buy to let investment remains the mainstay of the British property market, serving to support aspiring homeowners as they work to conquer the, sometimes difficult, financial obstacles of home ownership. With Central Government over the last 30 years only paying lip service to address the lack of new homes being built or tackling the affordability on a consequential scale, it is highly probable this will continue for the next 5/10/15 years as there will always be a call for a respectable, and above all, honest buy to let landlords delivering decent housing to those that need it.

If you would like to pick my brains on the Southampton Property Market – pop in for a coffee or drop me a line on social media or email. 

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@belvoir.co.uk 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  

Which Southampton Properties are Selling the Best?

Moving home is said to be the third most stressful life event, following a member of your family dying or getting divorced. So it is always best to keep your stress levels down by investigating and doing your homework on both the particular area of Southampton (or nearby conurbations) where you live (i.e. where you are selling) and where you want to search for your next Southampton home. Being mindful of how fast (or slow) the different aspects of the Southampton property market is moving is key.. because it could save you much heartache and many thousands of pounds.

You see, if you know you are selling a property in a sluggish price range and buying in a faster moving price range in Southampton then putting your property on the market first is vital, otherwise you will always find the one you want to buy tends to sell before your property sells - there is nothing worse than pondering over a property only to find that someone else has bought it. Being primed with all the knowledge is key. On the other side of the coin, if you are selling in a fast moving market and buying in a sluggish market .. you can probably get a better deal on the one you are buying.

For buy to let landlords in Southampton, this evidence is particularly critical as purchasing a high-demand property in a well-liked area of Southampton will safeguard a surfeit of availability of tenants, as well as respectable house price growth. 

Being an agent in Southampton, I like to keep an eye on the Southampton property market on a daily basis because it enables me to give the best advice and opinion on what (or not) to buy in Southampton; be that a buy to let property for a landlord or an owner occupier house.  So, I thought, how could I scientifically split the Southampton housing market into sections, so I could analyse which part of the Southampton property market was doing the best (or the worst).

I took the decision that the preeminent way was to fragment the Southampton property market into roughly four uniform size price bands (in terms of properties for sale). Each price band would have roughly around 25% of the property in Southampton available for sale .. then add up all the sold (stc) properties and see which sector of the Southampton property market was performing best? … And these were the results ..

The best performing price range in Southampton is the lower market up to £180,000 where 46.2% of all property in that price range has a buyer and is sold stc.

It’s not unexpected that the upper end of the property market (the top 25%) in Southampton is finding things a little tougher compared to the others. Even though the number of first time buyers in 2018 did increase over the 2017 levels, it was from a low starting point and the large majority of 20 to 30yo’s don’t want to or can’t buy their first home and the local authority has no money to build Council houses meaning an increase in demand as private landlords take up the slack – because everyone needs a roof over their head!

If you would like to pick my brains on the Southampton Property Market – pop in for a coffee or drop me a line on social media or email. 

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@belvoir.co.uk 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