Southampton Property Owners Reap £7,224 Yearly Gains Since 2001

  As we are now nicely into 2024, it’s certain the Southampton housing market over the last 18 months has been a little more restrained than 2020, 2021 and early 2022, and I believe that the ‘steady as she goes’ outlook will continue into the rest of 2024 and beyond.

As property ownership is a medium to long-term investment, it is important to see what has happened to Southampton house prices.

Since the start of the Millennium (Jan 2001), the average Southampton homeowner has seen their property’s value rise by an average of 173%.

This is important as house prices are a national obsession and tied into the health of the UK economy as a whole. Most of that gain has come from the overall 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 types of property in Southampton and the profit made by each type, it makes interesting reading:

• Overall Average For All Homes in Southampton. The average price of all homes in Southampton in 2001 was £98,084. Now it’s 2024, it has risen to £264,233. This is a total profit of £166,149 (which is £7,224 profit per year per home or an annual growth of 7.5% per year).
• Apartments in Southampton. The average price of an apartment in Southampton in 2001 was £73,007. Now it’s 2024, it has risen to £146,608. This is a total profit of £73,601 (which is £3,200 profit per year per home or an annual growth of 4.4% per year).
• Terraced/Town Houses in Southampton. The average price of a terraced/town house in Southampton in 2001 was £85,197. Now it’s 2024, it has risen to £258,663. This is a total profit of £173,466 (which is £7,542 profit per year per home or an annual growth of 8.9% per year).
• Semi-Detached Homes in Southampton. The average price of a semi-detached home in Southampton in 2001 was £103,331. Now it’s 2024, it has risen to £304,635. This is a total profit of £201,304 (which is £8,752 profit per year per home or an annual growth of 8.5% per year).
• Detached Homes in Southampton. The average price of a detached home in Southampton in 2001 was £180,444. Now it’s 2024, it has risen to £488,879. This is a total profit of £308,435 (which is £13,410 profit per year per home or an annual growth of 7.4% per year).

However, we can’t forget there has been 79% inflation over those 23 years, which eats into the ‘real’ value (or true spending power of that profit) … so if we take into account inflation since 2001, the true ‘spending power’ of that profit has been lower.

• Overall Average For All Homes in Southampton. The total ‘real profit’ (i.e., after inflation has been removed) for the average Southampton home is £92,459 for the last 23 years. This equates to £4,020 ‘real’ profit per annum.
• Southampton Apartments. The total ‘real profit’ (i.e., after inflation has been removed) for the average Southampton apartment is £40,958 for the last 23 years. This equates to £1,780 ‘real’ profit per annum.
• Southampton Terraced/Town Houses. The total ‘real profit’ (i.e., after inflation has been removed) for the average Southampton terraced/town house is £96,531 for the last 23 years. This equates to £4,197 ‘real’ profit per annum.
• Southampton Semi-Detached Homes. The total ‘real profit’ (i.e., after inflation has been removed) for the average Southampton semi-detached home is £112,022 for the last 23 years. This equates to £4,870 ‘real’ profit per annum.
• Southampton Detached Homes. The total ‘real profit’ (i.e., after inflation has been removed) for the average Southampton detached home is £171,639 for the last 23 years. This equates to £7,462 ‘real’ profit per annum.

Thus, the annual profit for an average Southampton home, adjusted for inflation, stands at £4,020.

I wanted to illustrate that despite the 2008/09 Credit Crunch property market crash, which saw Southampton property values plummet by 15% to 20% over 18 months, homeowners in Southampton have still fared better over the long term than those renting.

Looking ahead, a common question I get asked is about the future trajectory of the Southampton property market.

The primary influence on maintaining house price growth in Southampton over the medium to long term will be the construction of new homes locally and nationally. Although we have yet to get the figures for 2023, government sources indicate that the number of new households is expected to be between 210,000 and 220,000. Considering the annual need is for 300,000 new households to meet demands arising from factors such as immigration, increased life expectancy, higher divorce rates, and later cohabitation, it’s clear that demand will continue to outstrip supply unless the government heavily invests in building council houses.

This can only be good news for Southampton homeowners.

What about Southampton landlords, though?

Even though the number of landlords liquidating their property portfolios has increased in the last couple of years and the number of landlords buying is lower than in the 2000s and 2010s, there is still net growth in the size of the private rented sector each year. This is all despite facing higher taxes. The simple fact is many Southampton landlords remain keen on expanding their portfolios in the long term.

The younger generation in Southampton views renting as a choice that offers flexibility and alternatives that homeownership does not provide. This means that demand for rentals will keep growing, allowing landlords to enjoy rising rents and capital appreciation. However, Southampton buy-to-let landlords must adopt more thoughtful strategies to maintain profitable returns from their investments.

As a Southampton buy-to-let landlord, the question for you is how to ensure this growth continues.

Since the 1990s, generating profits from buy-to-let property investments was straightforward. Moving forward, with changes in the tax laws and the balance of power, achieving similar returns will be more effortful. Over the past decade, I’ve observed the evolution of agents from mere rent collectors to strategic portfolio managers. I, along with a select few agents in Southampton, am adept at providing comprehensive, strategic portfolio leadership. This service offers a structured overview of your investment goals across short, medium and long-term horizons, focusing on your expected returns, yields and capital growth. If you seek such advice, feel free to contact your current agent or me directly at no cost or obligation.

Southampton Q1 2024 Property Market Report

 

In the articles on the Southampton property market, we like to provide an insight into the real story of what is happening in our Southampton (and national) property market and address the misconceptions that some of the ‘doom monger’ media have been spreading.

Despite almost daily reports of a housing market crash since September 2022, the data shows that the British (and Southampton) property market is doing OK.

So, let’s dive into the stats and start with the life blood of the housing market – new properties coming on to the market.

Nationally, 444,668 UK properties came onto the market in Q1 2024.

(Q1 = Jan & Feb & March)

Interesting when compared to 407,946 UK properties in Q1 2023 and the 7-year Q1 average (2017 to 2023) of 403,105 new properties on the market.

New properties coming onto the market are a vital bellwether of the property market.

Why? Well in 2008, the number of properties coming on the market in Q1 was double that of 2007, this meant supply (number of homes on the market) vastly outstripped demand and hence economics dictated, and house prices fell.

The balance of houses coming on the market and how many sell determine what happens to property prices.

So how do you know if we are heading for another Southampton house price crash as we did in 2008 or not, as the case maybe?

Let me share a quick and easy way to find out before anyone else.

Initially, perform a Rightmove search in Southampton and write down the number of properties for sale every week. Next, carry out the same search, yet this time include sold subject to contract properties and make a note of that. The difference between the two numbers will show the number properties sold subject to contract. The final step is to calculate the ratio between the first two numbers: i.e., what’s available versus what’s been sold.

If the ratio of sold property to available property rises monthly, the market is improving. If the ratio is falling, the market is slowing.

If you really wish to go deep into this; you could split the search into property type (and bedrooms) you are selling and buying e.g., detached, semi, terraced/town house or apartments. This will help you to judge demand and supply and time the market to your advantage.

Next, looking at house sales nationally,302,382 properties sold (stc) in Q1 2024.

However, the devil is in the data. Comparing with previous stats, in Q1 2023, 276,482 properties sold stc whilst the 8-year Q1 average (2017 to 2024 inclusive) was 304,363.

Obviously, the medium term 8-year UK average includes Q1 2021, where 397,402 properties had sold stc and Q1 2022 when 341,888 properties sold stc. Both of those years were exceptional; however, when we compare Q1 2024 to the Q1 average of 2017/18/19/20, a more reasonable 282,488 houses were sold stc on average.

Next, I wish to look at what is selling nationally by price band.

• 35.4% of the properties that came on the market in Q1 2024 were up in the price band up to £250k, yet 42.9% of the home sales (SSTC) were in this band.
• 41.0% of the properties that came on the market in Q1 2024 were in the £250k to £500k price band, yet only 39.6% of the home sales (SSTC) were in this band.
• 13.4% of the properties that came on the market in Q1 2024 were in the £500k to £750k price band, yet only 10.7% of the home sales (SSTC) were in this band.
• 5.1% of the properties that came on the market in Q1 2024 were in the £750k to £1m price band, yet only 3.7% of the home sales (SSTC) were in this band.
• 5.1% of the properties that came on the market in Q1 2024 were in the £1m + price band, yet only 3.1% of the home sales (SSTC) were in this band.

Looking locally at the Q1 stats, starting with the number of properties in the Southampton area (SO14 to SO19) that came onto the market in Q1 2024 …

1,664 properties came onto the market in Q1 2024 in the Southampton area.

The average price of those Southampton properties coming to the market was £308,655.

The price range/band that saw the most listings was the £250k to £300k range, where 342 Southampton area properties came onto market (followed by the £150k to £200k range, where 248 properties came onto the market).

Now, looking at sales in Southampton …

1,180 properties were sold in Q1 2024 in the Southampton area.

The average price of those Southampton properties selling was £278,435.

The price range/band that saw the most sales was the £250k to £300k range, where 276 Southampton area properties were sold (followed by the £150k to £200k range with 184 Southampton area properties sold subject to contract).

Typical first-time buyer properties are leading the recovery.

Although economic turbulence remains, the UK property market is gradually moving towards pre-pandemic activity levels.

Some of you might have noticed with the national listings and sales figures mentioned above, that the lower priced range of properties are performing better than the higher priced properties. For example, just over a third (35.4%) of UK listings were £250k or below, yet that price band accounted for over 1 in 2.3 house sales (42.9%). Meanwhile, at the other end of the scale, 8.9% of listings in the UK in Q1 ’24 were in the £750k to £2m price band, yet only 6.2% of the sales were in the same band. In the £2m+ price range, even though the numbers are very small, the difference is quite startling, 1.3% of listings were £2m+, but only 0.55% of sales agreed were in the same range.

So, what does this all mean for Southampton homeowners wanting to sell in this market?

Realistic pricing when you put your house on the market is everything!

In Q1 2024, there have been 198,682 price reductions on the 633,417 properties on the market.

In comparison, there were 243,602 price reductions in Q1 2023 on the 590,481 properties on the market and 119,068 price reductions in Q1 2022 on 424,796 properties on the market.

It is better to come on the market at a realistic price to start when the property is fresh to the market, than go on at a high price, lose that initial honeymoon period and then reduce it, only for some people to wonder what was wrong with the property.

Although higher mortgage rates and economic headwinds present challenges, many potential Southampton home buyers who were effectively side-lined in the fierce bidding wars of 2021/22 will find that a slower paced Southampton property market gives them time to plan a strategy for their next move as we go into the traditionally busy post-Easter house buying season.

While the demand for quality Southampton houses is still healthy, if the asking price is above the current market, sellers may need help finding buyers.

Determining a realistic price is crucial but not easy. Many sellers look at similar properties on property portals, but those prices may be over-inflated.

Estate agents have more tools at their disposal, such as comparing sale prices for comparable properties, £/sqft and thinking about prospective purchasers in the market for the type of property under valuation.

Although getting the price right can be difficult, revising it downwards quickly is essential.

Southampton homeowners should ensure that their property looks better value for money than similar properties. If you plan to trade up, it is good sense to sell at realistic prices, as you will gain substantial savings compared to moving in the last few years.

However, if you don’t need to sell urgently, becoming a landlord could be an option – again I can help on that if needs be. Nevertheless, Southampton homeowners-turned-landlords should consider that if property values do drift downwards in the coming 12/18 months, it may take a few more years after that to recover to those values seen last year.

Whatever the rest of 2024 brings, moving home should mostly be based on your circumstances and not solely on what is happening to Southampton property prices.

If you would like an informal chat about your potential move without any obligation or cost, get me around for a chat. I promise I will tell you like it is, without any guff – then you can decide what is best for you and your family.

In the meantime, do let me know your thoughts in the comments.

2024, a New Year – Maybe a new Southampton Home?

As we settle into the first few weeks of 2024, you may contemplate moving home. Whether it’s a quest for more bedrooms or reception rooms, a desire for a larger garden, a view, a move closer to the countryside, or downsizing, the New Year symbolises new beginnings.

In navigating this journey, selecting the right Southampton estate agent becomes crucial to help you move.

Begin by consulting those closest to you. Recommendations from friends and family can provide valuable insights, particularly regarding estate agents in Southampton. Their experiences can highlight agents who are communicative, knowledgeable, and efficient, essential qualities in securing a property that meets or exceeds your price expectations.

Next, turn to the wealth of information available online. Reviews on platforms like Facebook and Google offer a window into the experiences of others with various Southampton estate agents. However, approach these reviews with a balanced perspective, recognising that not all feedback may be entirely objective.

Your research should extend to the agents' websites. Compare their services, fees, and property marketing strategies. Assess their engagement with the Southampton community through social media interactions, demonstrating their local area expertise.

Equally important is understanding the different operational models of estate agents in Southampton – from high street offices to internet based and hybrid models. Each comes with its benefits and drawbacks, tailored to individual needs. Please pay close attention to their terms and conditions. How long is their sole agency agreement (this is particularly important)? Do they have any charges if you withdraw your property from them?

As you narrow down your choices, evaluate the agents' performance and ability to meet your specific requirements, whether the number of viewings, website views, proactive outreach to potential Southampton buyers, or achieving a timely offer.

Remember, the right agent should excel in selling properties like yours and possess in-depth knowledge of the Southampton area, ensuring accurate valuations and effective communication with prospective buyers.

Finally, trust your instincts. The right agent for your Southampton property will often resonate with you beyond just the facts and figures.

For personalised, no-obligation advice on selling your home in Southampton, our expert property team at Belvoir Southampton is ready to assist.