Southampton OAPs are Getting Jobs and Downsizing Properties to Beat the Cost-of-Living Crisis

Southampton OAP retirees have to make tough choices with the onset of the cost-of-living crisis.

 

Growing inflation, unpredictable financial markets and the high cost of living mean many former retired Southampton people are returning to work in what has been dubbed the ‘great unretirement’. Some are even bringing forward their downsizing house move.

Looking at the changing job market, July saw the most significant month-on-month rise in OAPs working since records began in the 1990s when 1 in 23 of all the UK’s OAPs went back into employment.

That now means ….

 4,106 Southampton over 65s are in gainful employment

 (i.e., 1 in 8 of them).

As a backdrop, the number of working 65-year-olds and above has been increasing since the mid-nineties when 1,765 Southampton OAPs were employed. Yet, July's figures were the largest monthly jump on record by quite a distance.

Looking at the changing property market, I have been speaking to many Southampton OAP homeowners who are having to bring their downsizing plans forward several years to survive the cost-of-living crisis. The money generated from the downsizing will cover their housekeeping and massive energy bills.

So why would someone want to downsize? Mostly, their homes are too big for their needs as their children have flown the nest decades before. The government classifies a property as under-occupied if it has two or more spare bedrooms.

 

How big is the under-occupation issue in the UK?

 

Of the 4.52 million British homes owned by those aged 65 and over, 3.04 million have at least two spare bedrooms (i.e., under-occupied). Looking locally…

12,824 of the 29,791 Southampton OAPs have two or more spare bedrooms.

 You might ask why this is important.

Well, to start, it's holding back Southampton families that need the bedrooms and space these larger houses offer if the older occupants won't move on. Also, these larger homes cost more to run in terms of energy bills and other things such as building insurance and council tax.

 

From October (even with the recent energy bill cap) it will cost on average £354 per month in gas and electricity alone for a large Southampton 4-bed detached home (where occupants are home all day).

 

So why are there so many mature homeowners in their 70s, 80s and even 90s still living in houses that are too large for their day-to-day requirements? There are several reasons for this. One is the obvious emotional attachment to the family home they have often owned since the 1970s and 1980s. The second is to escape the hassle and costs of the house move, and finally, the small number of suitable Southampton properties for them to buy to attract them to make a move.

The growing energy bills have provoked many of those mature Southampton homeowners, who maybe can’t or do not wish to get a job, to re-evaluate their home life strategy. I am seeing an ever-increasing number of mature Southampton homeowners downsizing (or, as I prefer, rightsizing) to diminish their monthly expenditures.

So how much could mature Southampton homeowners gain by downsizing?

The numbers are intriguing when looking at the average difference between the sale price and the subsequent purchase price of the average downsizer.

Southampton downsizers could unlock an average of £175,400 per household.

Not only will Southampton homeowners earn this lump of cash for their extended retirement, but they will also save themselves around £176 per month in lower energy bills, buildings insurance and council tax bills.

So, what are the options for mature Southampton homeowners?

Waiting 12 months to make a move might mean you are putting your Southampton home on the market as every other OAP homeowner puts their home on the market, meaning the dynamics of the local property market will probably be a lot different. Thus, the equity you release on the downsize could be much lower.

Yet some of you will be worried about finding your next home. Not to worry.

At our agency, we do things differently than many other Southampton estate agents. We can find you a buyer, then put everything on ice and go and find you a property to buy. We guarantee you won't be made homeless if you or we can't find another home for you to move to.

We call it peace of mind!

If you would like a chat about this, without any obligation, feel free to call Belvoir on 02380018222 or email me brian.linehan@belvoir.co.uk.

Will the Southampton Property Market Continue to Boom?

 

All the signs are that the Southampton housing market is sat on good foundations, yet one key hazard could still scupper the market.

 

‘UK Property Prices Rising at Record Levels’ is the headline of many newspapers. In the last few weeks, the Halifax reported they had grown by 6.5% in the last 12 months, whilst the Nationwide said 7.1% and not to be outdone, the Government’s own Land Registry said 8.6%. Nothing new there then you might think, don’t UK house prices always increase?

 

Actually, they don’t, as many Southampton homeowners will remember 2009, when they dropped by 19%. Also, some more mature Southampton homeowners will remember the early 1990’s where house prices dropped just over 40% over 4 years (after the 1989 property crash). So, the increase in UK house prices over the last 12 months has mystified all the forecasts made by most economists as…

 

house prices were forecast to drop during the pandemic because during the previous six UK recessions experienced since WW2, house prices have always fallen sharply in real terms.

 

Yet 2020 was different with house price growth increasing at its highest rate since 2014 as the substantial Government support programmes (including Bounce Back Loans, grants and furlough) has mollified the hit to household incomes. Add to that the pent-up demand from the Boris Bounce, all the people working from home wanting an extra room for an office and therefore needing to move, plus the stamp duty tax holiday, with the cherry on the cake of 0.1% Bank of England interest rates keeping borrowing affordable. This has meant…

 

Southampton property values are 7.8% higher than a year ago.

 

Yet the affordability of property is a big issue going forward. By the time of the height of the last property boom in 2008, the national ratio of average property values to earnings had risen from 5.1 in 2000 to 8.8 (i.e. the average house price was 8.8 times the size of the UK’s average person’s annual earnings). We then had the property crash in the proceeding years, and the ratio dropped to around late six’s/early sevens. However, over the last few years, the ratio has been steadily rising and now with the recent growth in demand for property (the five reasons mentioned in the previous paragraph), the ratio has now smashed past nine. Looking locally…

 

the ratio of average property values to earnings in Southampton as a comparison was 3.9 in 2000, rising to 6.0 in 2008, dropping to 5.3 the year later when the Credit Crunch hit, and now currently stands at 6.8.

So, are we heading for another house price crash? Maybe, maybe not - because the House Price to Earnings ratio only tells us part of the story. Another indicator of the property market is mortgage affordability, which measures the proportion of mortgage payments to average incomes. For all mortgage holders, in 2015, this stood at 24.13% and today it is only just above the national long-term average of 25%, demonstrating that property is still affordable.

 

Yet, the life blood of the property market are first-time buyers. The long-term average percentage of income which goes on mortgage payments for first-time buyers is 33%. Just before the 1989 property market crash, this stood at 54%. Whilst just before the 2008 property crash, it reached 49%. Today, it stands at 31.7% (and the reason it’s so low even with record high property prices is low interest rates, because when mortgage interest rates are low, this permits people to afford larger mortgages, which enables them to bid up house prices).

 

So why aren’t more first-time buyers buying more homes? Well in fact they are buying more homes. At the turn of the Millennium, just over half of 25yo to 35yo were homeowners and by 2014, this had dropped to just a third, although since then it has increased to 41%. Now with the reintroduction of the Government backed 95% mortgages in April, this demand will continue further.

 

Once furlough ends, unemployment will doubtless rise in the following 12 months, yet the economy is more than likely to be in a boom phase, so by the spring/summer of 2021, the unemployment rate should start to fall.

 

So, does everything look great for the Southampton property market?

 

Before you get the Champagne out, there is a cloud on the horizon - the possibility of higher interest rates.

 

Undoubtedly, for the next few years, interest rates will not go up (and if they do – it will only be nominally). However, down the line it may be a different tale. Interest rates are used to control a number of economic factors, one being the currency and secondly inflation.

 

As many suggest, if we get an economic boom in the next 12 to 18 months, as we come out of lockdown, this will put upward pressure on the price of goods and services. Normally, when prices go up (inflation), to ensure that inflation doesn’t get out of control, interest rates are normally increased to dampen down the inflation.

 

So, will interest rates rise? Undoubtably they will. Southampton homeowners and buy-to-let landlords should seriously consider protecting themselves with fixed rate mortgages (yet 3 in 10 mortgagees are still on variable rate mortgages!). I believe we will see some inflation in the order of 3% to 5% in the coming 24 to 36 months, yet the interest rates won’t be enabled to bring it down. We had a similar case in the early 2010’s when we had a mis-match of demand and supply of goods, and inflation spiked to 5%, before returning back to its long term 2% average quite quickly thereafter.

 

The Chancellor will also encourage some inflation to reduce the ‘real’ cost of the Billions he has borrowed because of the pandemic, yet won’t want to see interest rates increase to take the cost of the borrowing upwards.

 

If you are considering moving home or buying/selling a buy-to-let property in Southampton in the next 12 to 18 months, and want a chat about your options, don’t hesitate to drop me a line.

 

Finally, these are interesting times ahead – I would love your thoughts on this matter. Please do share them in the comments.

CLICK HERE TO FIND OUT HOW MUCH YOUR SOUTHAMPTON PROPERTY IS WORTH

 

If you would like to pick my brains on the Southampton Property Market – Just drop me a line on social media or email me @ brian.linehan@belvoir.co.uk you can also call me on 023 8001 8222.

 

If you are looking for an agent that is well established, professional and communicative, then contact me to find out how we can get the best out of your investment property.

 

 

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/offices/southampton

𝐄𝐢𝐠𝐡𝐭 𝐖𝐚𝐲𝐬 𝐒𝐨𝐮𝐭𝐡𝐚𝐦𝐩𝐭𝐨𝐧 𝐋𝐚𝐧𝐝𝐥𝐨𝐫𝐝𝐬 𝐂𝐚𝐧 𝐆𝐞𝐭 𝐭𝐡𝐞 𝐁𝐞𝐬𝐭 𝐈𝐧𝐬𝐮𝐫𝐚𝐧𝐜𝐞 𝐃𝐞𝐚𝐥

In this three-minute read, we look at how landlords can avoid getting a bad insurance deal

If you’re a landlord looking to take out insurance or renew a current policy, there are a few things you should know.

The insurance market is “hardening”, or in other words, insurers are tightening their belts.

The rising costs of claims due to extreme weather events such as last year’s Storm Dennis and low interest rates (meaning insurance firms make less on their investments) have hit the industry hard.

As a result, insurers are upping the cost of premiums and employing other – less obvious – tactics to increase their bottom line.

𝐁𝐮𝐭 𝐟𝐢𝐫𝐬𝐭, 𝐚 𝐪𝐮𝐢𝐜𝐤 𝐫𝐞𝐦𝐢𝐧𝐝𝐞𝐫

Landlords need specific insurance; a standard home and contents policy will not suffice. Landlord insurance is usually a condition of a buy-to-let mortgage, but even if you’re debt-free, it’s worth getting. (You hope the worst won’t happen, but if it does, you’ll be covered.)

Standard policies include buildings and liability cover, although you can also opt to include things like legal costs, accidental damage, or loss of rent.

𝐈𝐧𝐬𝐮𝐫𝐚𝐧𝐜𝐞 𝐭𝐢𝐩𝐬 𝐟𝐨𝐫 𝐒𝐨𝐮𝐭𝐡𝐚𝐦𝐩𝐭𝐨𝐧 𝐥𝐚𝐧𝐝𝐥𝐨𝐫𝐝𝐬 𝐅𝐨𝐥𝐥𝐨𝐰 𝐭𝐡𝐢𝐬 𝐜𝐡𝐞𝐜𝐤𝐥𝐢𝐬𝐭 𝐭𝐨 𝐠𝐞𝐭 𝐭𝐡𝐞 𝐛𝐞𝐬𝐭 𝐝𝐞𝐚𝐥:

- If you already have a policy, read it thoroughly before you start your research. It might not be the most exciting few hours of your life, but your diligence could save you time and money in the long run.

- Note in your diary when your policy is due to expire and leave yourself enough time to shop around. You won’t get the best deal if you’re in a last-minute panic.

- Look at what the premium covers. Is there a gaping omission that could leave you exposed? If it’s an existing policy, has your coverage been reduced?

- Check the standard excess (excess rates have been creeping up). The policy premium might be appealingly low, but if the excess is high, you could wind up paying more in the long run.

- Be aware that some types of claims have a higher excess. For example, escape of water (which covers leaks and burst pipes) has a higher excess as it’s a more common occurrence.

- Check the rules around vacancy as some policies become void if the property is empty. As there could be a rise in tenant turnover when furlough ends later this year, ensure your policy gives you a bit of leeway on vacancy periods.

- Have your paperwork to hand when talking to insurers. They’ll want to know (and see proof of) the age of the property, state of repair, and claims history.

- Some policies only cover certain types of tenants – for example, professionals – who are viewed as low risk. It may pay to include other tenant groups, such as students, in your policy to give you more flexibility.

For more advice about protecting your rental property, get in touch with us here at Belvoir.

COPYRIGHT Belvoir Southampton 2021

Will Southampton House Prices Fall in 2022?

One of the most astounding things that has happened in the last 12 months was something that did not happen. Even after the country saw the deepest recession since the Great Freeze of 1709 with GDP dropping 28% in one quarter, one would have expected a large fall in Southampton house prices would follow. Yet…

 

Southampton house prices are 7.8% higher than 12 months ago.

 

Even though buying and selling Southampton property was put on ice for the first time in the history of the Southampton property market last spring due to the Covid 19 outbreak, as the Southampton property market wobbled on the edge of a deep recession, it stepped back in early summer and now it is rocketing upwards as…

 

13.4% of Southampton homes are selling within a fortnight of coming to market.

 

Some commentators have suggested the end of the Stamp Duty holiday together with the ending of the furlough scheme on the 30^th September 2021 could be the catalyst for a drop in house prices. Even the Government’s own regulator of finances expects UK house prices to fall around a couple of percentage points in 2022 whilst some others have predicted a drop of around 5% as unemployment levels increase post furlough.

 

However, other property market forecasters believe that property values in 2022 won’t drop against the background of robust British economic recovery in Q3 and Q4 of 2021.

 

What do I think will happen to the Southampton property market in the next 12 months?

 

On the positive side, what I do know is the Stamp Duty holiday enabled Southampton homebuyers to spend those tax savings on the price paid for their Southampton home and that certainly accounts for some of the uplift in house prices mentioned above.

 

Also, the historically low interest rates that have supported Southampton homebuyers’ affordability for the last 13 years since the Credit Crunch has continued. Secondly, with people spending many months working from home, this has seemed to have polarised people’s inclination to make lifestyle changes. Finally, the Government has recently introduced 5% deposit mortgages for first-time buyers. All these factors will fuel demand and hence may cause house prices to rise.

 

On a more cautious note, I do not believe these very sturdy Southampton house value rises of the past year will persist at these levels for the next 12 months. With buyers having to use many thousands of pounds on Stamp Duty, the price they pay for their Southampton home will be curtailed, meaning property values by definition will ease. 

 

The simple fact is the British economy has yet to feel the full effect of its largest recession since 1709, and we must remain considerate about the long-term effects of the economy (and unemployment levels) on the property market.

 

These are interesting times for the Southampton property market. If the price you want to achieve for your Southampton home is the most important thing, now as opposed to 2022 might be a good time to consider placing your property on the market.

 

Don’t forget, you can still put your Southampton property on the market, find a buyer and then go and see what is available to buy. Many buyers will wait for you to find a property, yet if they can’t/won’t – you won’t be made homeless. English property law means you can still come away from the sale and you won’t be forced to sell. If you would like to know a bit more about that or any aspect of buying or selling property in Southampton, drop me a message or call me.

CLICK HERE TO FIND OUT HOW MUCH YOUR SOUTHAMPTON PROPERTY IS WORTH

 

If you would like to pick my brains on the Southampton Property Market – Just drop me a line on social media or email me @ brian.linehan@belvoir.co.uk you can also call me on 023 8001 8222.

 

If you are looking for an agent that is well established, professional and communicative, then contact me to find out how we can get the best out of your investment property.

 

 

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/offices/southampton

Lessons for landlords in Southampton from the wealthiest person in the world

A landlords’ advice article published recently said property investors need to think more like the Amazon founder Jeff Bezos.

The billionaire businessman is renowned for his long-term thinking. He thinks decades ahead, and let’s face it, he’s not doing too bad, is he?

The article said landlords should retain good tenants at a reasonable rate rather than aim to get the highest rents in the short term. It’s wise advice and something we believe in.

When a landlord adopts a short-term view of their property investment, it can often lead to lasting headaches. The advice you are given can often depend on your letting agent’s philosophy.

Some agents will say things like: ‘The rental market in Southampton is on fire now. We can get you even higher rents and squeeze out every penny from tenants.’

That’s not the way we approach things. Why? Because if you hike up a person’s rent whenever possible, it may mean more money in the short run but can be more costly in the long run.

Our advice to clients and indeed anyone thinking of investing in rental property is this:

Getting higher monthly rents isn’t as crucial in the mid to long term as finding and looking after good quality tenants paying a fair rate.

Here are some of the plus points a good longer term tenant brings:

Fewer void periods.

Fewer unnecessary repair or maintenance call outs mean a reduction in the property’s running expenses.

Good tenants appreciate they are being treated fairly and respectfully, and they look after their home.

Never to be underestimated is that having a good tenant in your property reduces your stress levels.

Going for the highest monthly rent charge as a property rental strategy can often be a mistake. It is more about maximising the overall return for our landlords.

At Belvoir Southampton, we take the time to find, vet and keep good quality tenants for our landlords. This is the best way forward in the long term.

So, take a leaf out of the wealthiest person in the World’s book (Bezos was ranked #1 by Forbes magazine last month) and think further ahead when it comes to achieving rental property success.

 

*Copyright Belvoir Southampton

Are You Ready for Life after Lockdown in Southampton?

In this two-minute read, we look at how to get ready for the changes that lie ahead as restrictions continue to ease.

With the end to our arduous Covid hibernation in sight, it’s time to prepare for life in the “new normal”.

While the prospect of restrictions easing is exciting – we can’t wait to eat at Jehangir’s Restaurant and drink at The Dancing Man Pub – it will also take a little getting used to.

That’s because many of us have grown used to lockdown living; we now work from home, live in tracksuit bottoms, and tell ourselves that cutting our own hair is a good idea.

But after a year of adapting to a host of unfortunate circumstances, it’s time to adapt again – only for happier reasons. Here are a few ways to prepare for life after lockdown.

Spring clean your wardrobe

If you’ve spent the past year in leggings, jeggings, slankets, and onesies – anything with a forgiving waistline basically – now is the time to dig out your “good” clothes. Try them on and decide if you still like them and if they still fit you. Donate unwanted items to a charity shop and make any necessary purchases. You don’t have to ditch all your comfy stuff, but you will need a few pieces that will look smart in a work meeting or at a catch-up with friends.

Revamp your fitness routine

Many people kicked off the first lockdown in 2020 with a flurry of physical activity that tapered off as the pandemic dragged on and on. They’re now – understandably as it’s been a tough year – carrying a few extra pounds. If you want to shift a little weight, take your time. Start slowly and progress steadily to avoid injury. Also, focus on activities that you enjoy – they will be good for your mental health, and you’re more likely to continue with them long term.

Acknowledge stress

It may seem that with lockdown lifting, all our troubles will be over. But it’s important to be realistic with our expectations. Some of the activities that we’ve avoided over the past year such as long commutes, mingling at parties, making small talk in the work canteen – may make a return and prove stressful. If things you once took for granted now feel challenging, don’t give yourself a hard time. Talk to someone about it (lots of people will be in the same boat), and remember that we’re still navigating our way through a deadly pandemic. Be kind to other people – and yourself.

From all of us here at Belvoir, take care and stay cheerful.

COPYRIGHT BELVOIR SOUTHAMPTON 2021

 

Southampton Property Market Improved by 28.7% Over Pre-pandemic Levels

Has there ever been a better time for Southampton home sellers?

 

The Southampton property market, for people looking to sell, is at its sturdiest for at least the last five years with home buyers jumping onto the Southampton property ladder with abandon.

Southampton house prices are anticipated to rise throughout 2021 after the Stamp Duty cut (and subsequent extension until the autumn) and the newly revealed 95% mortgages for Southampton first-time buyers (and Southampton homeowners with minimal equity).

In addition, the continued low interest rates and the demand for larger homes because of lockdown means the Southampton property market should remain bullish for a while. There is a surge in potential buyers putting themselves on mailing lists with Southampton estate agents, making the biggest disparity between supply and demand for Southampton property for many years.

Fears of a cliff edge for the Southampton housing market at the end of March have dispersed, somewhat due to the Stamp Duty tax deadline extensions, but also because of the elevated level of buyer demand caused by the three lockdowns which has continued to swell since the start of 2021, meaning that today …

 

66% of Southampton properties on the market are Sold (STC)

Interesting, when utilising data from theadvisory.co.uk website, the Southampton average for the last five years has only been 51%, meaning there has been an uplift of 28.7% in the proportion of Southampton properties sold (stc) compared to that five-year average.

  

Yet what can’t be forgotten is that 45% of Southampton house sellers are also house buyers, so whilst they do indeed achieve a higher price for their Southampton property, they also have to pay more for the Southampton property they want to buy.

So, how much will Southampton house prices rise by?

Like all things in life, it’s all about supply and demand. I have discussed the demand, yet what about the supply of properties for sale? Well…..

 

There are 5% more Southampton properties for sale today compared to 6 years ago

Nationally, in most UK towns and cities, the number of properties that are for sale today compared to same pre-Easter property markets of 2015 to 2019 are lower by around 10% to 20%, yet in Southampton the opposite is true. With the easing of lockdown started and the faster rollout of the vaccine, this has persuaded more Southampton homeowners (especially those older Southampton homeowners who have had their jabs) to start making the first steps towards moving home in 2021 and placing their property on the market for sale.

This will mean there will be more Southampton properties available for sale in the conventionally busier post Easter market in the coming weeks and months which should cause more equilibrium and help keep Southampton property prices in check.

These are interesting times for the Southampton property market. If you are a Southampton homeowner or Southampton landlord looking to buy or let your Southampton property in the coming weeks or months, don’t hesitate to drop me a line to discuss what all the points raised in article mean to you.

 CLICK HERE TO FIND OUT HOW MUCH YOUR SOUTHAMPTON PROPERTY IS WORTH

If you would like to pick my brains on the Southampton Property Market – Just drop me a line on social media or email me @ brian.linehan@belvoir.co.uk you can also call me on 023 8001 8222.

If you are looking for an agent that is well established, professional and communicative, then contact me to find out how we can get the best out of your investment property.

 

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/offices/southampton