Southampton Unemployment Drops to 6.3% and its effect on the Southampton Property Market

It was late May 2016, The Right Hon. Member for Tatton, Mr George Osborne, published an official HM Treasury analysis stating UK house prices would be lower by at least 10% (and up to 18%) by the middle of 2018 compared with what is expected if the UK remained in the European Union. So, eight months on from the Referendum, are we beginning to show signs of that prophecy? The simple answer is yes and no.

Good barometers of the housing market are the share prices of the big UK builders. Much was made of Barratt’s share price dropping by 42.5% in the two weeks after Brexit, along with Taylor Wimpey’s equally eye watering drop in the same two weeks by 37.9%. Looking at the most recent set of data from the Land Registry, property values in Southampton are only 0.76% up month on month (and the month before that, they had decreased by 0.86%) – so is this the time to panic and run for the hills?

Doom and Gloom then? Well, let me consider the other side of the coin.

Well, as I have spoken about many times in my blog, it is dangerous to look at short term. I have mentioned in several recent articles, the heady days of the Southampton property prices rising quicker than a thermometer in the desert sun between the years 2011 and late 2016 are long gone – and good riddance. Yet it might surprise you during those impressive years of house price growth, the growth wasn’t smooth and all upward. Southampton property values dropped by an eye watering 2.56% in December 2012 and 0.39% in May 2015 – and no one batted an eyelid then.

You see, property values in Southampton are still 9.02% higher than a year ago, meaning the average value of a Southampton property today is £280,550. Even the shares of those new home builders Barratt have increased by 43.3% since early July and Taylor Wimpey’s have increased by 37.3%. The Office for Budget Responsibility, the Government Spending Watchdog, recently revised down its forecast for house-price growth in the coming years - but only slightly.

The Southampton housing market has been steadfast partly because, so far at least, the wider economy has performed better than expected since Brexit. There is a robust link between the unemployment rate and property prices, and a flimsier one with wage growth. Unemployment in the Southampton City Council area stands at 8,600 people (6.3%), which is considerably better than a few years ago in 2013 when there were 10,200 people unemployed (8%) in the same council area.

However, inflation is the only thing that does worry me. Looking at all the pundits, it will get to at least 3% (if not more) in the latter part of 2017 as the drop in Sterling in late 2016 renders our imports with higher prices. If that transpires then the Bank of England, whose target for inflation is 2%, may raise interest rates from 0.25% to 2%+. However, that won’t be so much of an issue as 81.6% of new mortgages in the UK in the last two years have been fixed-rate and who amongst us can remember 1992 with Interest rates of 15%!

Forget Brexit and yes inflation will be a thorn in the side – but the greatest risk to the Southampton (and British) property market is that there are simply not enough properties being built thus keeping house prices artificially high. Good news for those on the property ladder, but not for those first-time buyers that aren’t! In the coming weeks in my articles on the Southampton Property Market, I will discuss this matter further!

If you are a landlord or thinking of becoming one for the first time and you want to read more articles like this about the Southampton Property Market, together with regular postings on what I consider the best buy to let deals in Southampton (out of the many of properties on the market, irrespective of which agent is selling it) then feel free to get in touch.

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/belvoirlettingssouthampton/

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

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

£24.37bn – The total value of all Southampton Property Market

“How much would it cost to buy all the properties in Southampton?”

This fascinating question was posed by the 11-year-old son of one of my Southampton landlords when they both popped into my offices before the Christmas break (doesn’t that seem an age away now!). I thought to myself, that over the Christmas break, I would sit down and calculate what the total value of all the properties in Southampton are worth … and just for fun, work out how much they have gone up in value since his son was born back in the autumn of 2005.

In the last 11 years, since the autumn of 2005, the total value of Southampton property has increased by 47% or £7.79 billion to a total of £24.37 billion. Interesting, when you consider the FTSE100 has only risen by 30.78% and inflation (i.e. the UK Retail Price Index) rose by 37% during the same 11 years.

When I delved deeper into the numbers, the average price currently being paid by Southampton households stands at £244,542.… but you know me, I wasn’t going to stop there, so I split the property market down into individual property types in Southampton; the average numbers come out like this ..

Southampton Property Market
Average Value of a Detached Property	Average Value of a Semi-Detached Property	Average Value of a Terraced/Town House Property	Average Value of an Apartment
£340,244	£280,929	£211,591	£167,239

... yet it got even more fascinating when I multiplied the total number of each type of property by the average value. Even though detached houses are so expensive, when you compare them with the much cheaper semi-detached houses and apartments, you can quite clearly see detached properties are no match in terms of total pound note value of the semi-detached houses and apartments.

Total Value of all the Southampton Detached Properties	Total Value of all the Southampton Semi-Detached Properties	Total Value of all the Southampton Terraced/Town House Properties	Total Value of all the Southampton Apartments
£5,590,549,164	£7,645,482,735	£4,643,364,495	£6,495,228,282

So, what does this all mean for Southampton?  Well as we enter the unchartered waters of 2017 and beyond, even though property values are already declining in certain parts of the previously over cooked Central London property market, the outlook in Southampton remains relatively good as over the last five years, the local property market was a lot more sensible than central London’s.

Southampton house values will remain resilient for several reasons. Firstly, demand for rental property remains strong with continued immigration and population growth.  Secondly, with 0.25 per cent interest rates, borrowing has never been so cheap and finally the simple lack of new house building in Southampton not keeping up with current demand, let alone eating into years and years of under investment – means only one thing – yes it might be a bumpy ride over the next 12 to 24 months but, in the medium term, property ownership and property investment in Southampton has always, and will always, ride out the storm.

In the coming weeks, I will look in greater detail at my thoughts for the 2017 Southampton Property Market. As always, all my articles can be found at the Southampton Property Market Blog.

If you are a landlord or thinking of becoming one for the first time and you want to read more articles like this about the Southampton Property Market, together with regular postings on what I consider the best buy to let deals in Southampton (out of the many of properties on the market, irrespective of which agent is selling it) then feel free to get in touch.

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/belvoirlettingssouthampton/

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

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

£110m a year black hole in the Southampton Property Market - Is Buy to Let Immoral? (Part 2)

 An Englishman’s Home is His Castle as Maggie Thatcher lauded - everyone should own their own home. In 1971, around 50% of people owned their own home and, as the baby-boomers got better jobs and pay, that proportion of homeowners rose to 69% by 2001. Homeownership was here to stay as many baby boomers assumed it’s very much a cultural thing here in Britain to own your own home.

But on the back of TV programmes like Homes Under the Hammer, these same baby boomers started to jump on the band wagon of Southampton buy to let properties as an investment. Southampton first time buyers were in competition with Southampton landlords to buy these smaller starter homes … pushing house prices up in the 2000’s (as mentioned in Part One) beyond the reach of first time buyers. Alas, it is not as simple as that. Many factors come into play, such as economics, the banks and government policy. But are Southampton landlords fanning the flames of the Southampton housing crisis bonfire?

I believe that the landlords of the 25,247 Southampton rental properties are not exploitive and are in fact, making many positive contributions to Southampton and the people of Southampton. Like I have said before, Southampton (and the rest of the UK) isn’t building enough properties to keep up the demand; with high birth rate, job mobility, growing population and longer life expectancy.

According to the Barker Review, for the UK to standstill and meet current demand, the country needs to be building 8.7 new households each and every year for every 1,000 households already built. Nationally, we are currently running at 5.07 per thousand and in the early part of this decade were running at 4.1 to 4.3 per thousand.

It doesn’t sound a lot of difference, so let us look at what this means for Southampton …

For Southampton to meet its obligation on the building of new homes, Southampton would need to build 917 households each year. Yet, we are missing that figure by around 382 households a year.

For the Government to buy the land and build those additional 382 households, it would need to spend £110,571,916 a year in Southampton alone. Add up all the additional households required over the whole of the UK and the Government would need to spend £23.31bn each year … the Country hasn’t got that sort of money!

With these problems, it is the property developers who are buying the old run-down houses and office blocks which are deemed uninhabitable by the local authority, and turning them into new attractive homes to either be rented privately to Southampton families or Southampton people who need council housing because the local authority hasn’t got enough properties to go around.

The bottom line is that, as the population grows, there aren’t enough properties being built for everyone to have a roof over their head. Rogue landlords need to be put out of business, whilst tenants should expect a more regulated rental market, with greater security for tenants, where they can rely on good landlords providing them high standards from their safe and modernised home. As in Europe, where most people rent rather than buy, it doesn’t matter who owns the house – all people want is a clean, decent roof over their head at a reasonable rent.

So only you, the reader, can decide if buy to let is immoral, but first let me ask this question - if the private buy to let landlords had not taken up the slack and provided a roof over these people’s heads over the last decade .. where would these tenants be living now? ….. because the alternative doesn’t even bear thinking about!

If you are a landlord or thinking of becoming one for the first time and you want to read more articles like this about the Southampton Property Market, together with regular postings on what I consider the best buy to let deals in Southampton (out of the many of properties on the market, irrespective of which agent is selling it) then feel free to get in touch.

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/belvoirlettingssouthampton/

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

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

Southampton’s private renting set to hit 35,598 households by 2021 - Is Buy to Let immoral? (Part 1)

Can we blame the 55 to 70-year-old Southampton citizens for the current housing crisis in the city?

Also known as the ‘Baby Boomer Generation’, these Southampton people were born after the end of the Second World War as the country saw a massive rise in births as they slowly recovered from the economic hardships experienced during wartime.

Throughout the 1970’s and 1980’s, they experienced (whilst in their 20’s, 30’s and 40’s) an unparalleled level of economic growth and prosperity throughout their working lifetime on the back of improved education, government subsidies, escalating property prices and technological developments, they have emerged as a successful and prosperous generation.

...Yet some have suggested these Southampton baby boomers have (and are) making too much money to the detriment of their children, creating a ‘generational economic imbalance’, where mature people benefit from house-price growth while their children are forced either to pay massive rents or pay large mortgages.

Between 2001 and today, average earnings rose by 65%,

but average Southampton house prices rose by 109.1%

The issue of housing is particularly acute with the generation called the Millennials, who are young people born between the mid 1980’s and the late 1990’s. These 18 to 30 years, moulded by the computer and internet revolution are finding, as they enter early adult life, it very hard to buy a property, as these ‘greedy’ landlords are buying up all the property to rent out back to them at exorbitant rents ... it’s no wonder these Millennials are lashing out at buy to let landlords, as they are seen as the greedy, immoral, wicked people who are cashing in on a social despair.

Like all things in life, we must look to the past, to appreciate where we are now.

The three biggest influencing factors on the Southampton (and UK) property market in the later half of the 20^th Century were, firstly, the mass building of Council Housing in the 1950’s and 60’s. Secondly, for the Tory’s to sell most of those Council Houses off in the 1980’s and finally 15% interest rates in the early 1990’s which resulted in many houses being repossessed. It was these major factors that underpinned the housing crisis we have today in Southampton.

To start with, in 1995 the USA relaxed its lending rules by rewriting the Community Reinvestment Act. This Act saw a relaxation on the Bank’s lending criteria’s as there was pressure on these banks to lend on mortgages in low wage neighbourhoods, as the viewpoint in the USA was that anyone (even someone on the minimum wage) any working class person should be able to buy a home.  Unsurprisingly, the UK followed suit in the early 2000’s, as Banks and Building Society’s relaxed their lending criteria and brought to the market 100% mortgages, even Northern Rock started lending every man and his dog 125% mortgages.

So when we roll the clock forward to today, and we can observe those very same footloose banks from the early/mid 2000’s (that lent 125% with just a note from your Mum and a couple of breakfast cereal tokens), ironically reciting the Bank of England backed hymn-sheet of responsible-lending. On every first time buyer mortgage application, they are now looking at every line on the 20-something’s banks statements, asking if they are spending too much on socialising and holidays ... no wonder these Millennials are afraid to ask for a mortgage (as more often than not after all that – the answer is negative).

Conversely, you have unregulated Buy To Let mortgages. As long as you have a 25% deposit, have a pulse, pass a few very basic yardsticks and have a reasonable job, the banks will literally throw money at you ... I mean Virgin Money are offering 2.99% fixed for 3 years – so cheap!

So, in Part Two next week, I will continue this emotive article and show you some very interesting findings on why young people aren’t buying property anymore (and it’s not what you think!).

If you are a landlord or thinking of becoming one for the first time and you want to read more articles like this about the Southampton Property Market, together with regular postings on what I consider the best buy to let deals in Southampton (out of the many of properties on the market, irrespective of which agent is selling it) then feel free to get in touch.

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/belvoirlettingssouthampton/

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

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

Southampton Property Market Sees An Unpredicted Autumn Boost of 10%

Well, it doesn’t seem like two minutes ago that it was Christmas – and now it’s all over! One cold December morning, after arranging the office’s Christmas cards I thought I would nip out for a quick festive coffee and over-priced mince pie at my favourite local coffee shop Mettricks.  I met an old client of mine in the coffee shop and we got talking about the Southampton property market. I had just completed my research for my next blog article and I would like to share with you the parts of the conversation relating to the Southampton property market.

He asked me what my thoughts were about the last half of the year in regard to the Southampton property market and if there were any great buy to let deals around. In reply I said that, in my view, shrugging off the uncertainty of the initial post Brexit vote, I have seen an increase in supply and a rise in the number of properties selling at the lower to middle end of the market, meaning both first time buyers and buy to let landlords have been returning in the last few months – proof the market is beginning to bounce back.

So let’s look at the numbers ..

In November 2016, according to the three main property portals (Rightmove, Zoopla and OnTheMarket) there were a total of 1,351 properties for sale in Southampton (within 4 miles of the centre of Southampton to be exact). In November 2015, there were only 1,229 properties for sale, a rise of 10%.

When I split it down into bedrooms (note things like building plots and part commercial/part residential etc won’t be in these figures so the numbers below wont exactly match up to those in the above paragraph).

	# Properties on the market in Nov 2015	# Properties on the market in Nov 2016	Per cent Change
5+ Bedrooms	91	78	-14%
4 Bedrooms	133	138	+4%
3 Bedrooms	338	458	+36%
2 Bedrooms	400	443	+11%
1 Bedroom	251	216	-14%

.. and when I looked at type of properties  .. it got even more interesting

Type of Property	# Properties on the market in Nov 2015	# Properties on the market in Nov 2016	Per cent Change
Detached	278	303	+9%
Semi	204	256	+25%
Terraced	74	124	+68%
Flat	581	584	+1%

As the number of Southampton properties put up for sale has risen by 10%, homeowners have become more realistic about how much their homes are worth. This increase in homeowners wanting to sell suggests there is renewed confidence in the Southampton property market and there are also signs that people are being more realistic about pricing their property.

As you can see, there has been a significant uplift in terraced and semi-detached properties, which means there is greater choice for first time buyers and landlords. So with a combination of realistic pricing and more properties on the market – both first time buyers and landlords alike might be able to pick up a few bargains!  One place for great Southampton Buy to let deals is my blog where, irrespective of which agent is selling the property, I publish what I consider is the very best buy to let deal in Southampton.

If you are a landlord or thinking of becoming one for the first time and you want to read more articles like this about the Southampton Property Market, together with regular postings on what I consider the best buy to let deals in Southampton (out of the many of properties on the market, irrespective of which agent is selling it) then feel free to get in touch.

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/belvoirlettingssouthampton/

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

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

Southampton property price rises set to be more restrained in 2017 due to Brexit

While Brexit has not yet had a sizeable impact on the Southampton housing market, my analysis is pointing to the fact that the economic viewpoint still remains uncertain and Southampton property price growth is likely to be more subdued in 2017 - although that isn’t a bad thing so let me explain.

Since the summer, apart from a little wobble of uncertainty a few weeks after the Referendum vote, property values (and the economy), on the whole has outperformed what most people were anticipating. In fact, when I looked at the property prices for our Southampton City Council area, these were the results...

October 2016              - rise of 0.76%

September 2016         - drop of 0.86%

August 2016                - rise of 0.13%

July 2016                     - rise of 1.29%

June 2016                    - rise of 1.84%

The UK property market continues to perform robustly (because we can’t just look at Southampton as if in its own little bubble) with annual price growth set to end this year at 6.91% and most South East region property market at 9.1%.

Talking to fellow agents in London, the significant tidal wave of growth seen from 2013 through to 2015 in the capital has subdued over the last six months. However, as that central London house price wave has started to ripple out, agents are starting to see stronger property growth values in East Anglia and the South East regions outside of London, than what is being seen within the M25. So, fellow Southampton landlords and homeowners, is this the time to get your surfboards ready for the London wave?

Well, we in Southampton haven’t really been affected by what is happening in the central London property mega bubble (i.e. Kensington, Chelsea, Marylebone, Mayfair etc.). The property market locally is more driven by sentiment, especially the ‘C’ word ... confidence. The main forces for a weaker Southampton Property market relate to economic uncertainty surrounding the Brexit process, which I believe will impact unhelpfully on consumer confidence in the run up to and just after the serving of the Section 50 Notice by the end of Q1 2017.

In addition, the influence of reforms to the taxation of landlords is expected to result in a reduced demand from buy to let landlords, which will limit upward pressure on property values. However, on the other side of the coin, demand from tenants has been strong, but this has been counterbalanced by a strong supply of rental properties. In my opinion, there is a slight risk of rents not growing as much in 2017 as they have in 2016, but by 2018 they will rise again to counteract Philip Hammond’s changes to tenant fees.

The broader Southampton rental market looks relatively positive with modest rental growth expected and rents might rise further if landlords begin to sell properties in an effort to offset to the impact of tax rises.

So what do I predict will happen to the Southampton housing market in 2017? In Southampton, I believe price values are expected to fall by 2.3% in 2017 compared to a rise of 9% this year, then pick up to growth of 1.9% in 2018, 3.1% in 2019, then 4.2% in 2020 and 6.5% in 2021.

But these predictions do not take into account any effect of a possible snap General Election or further referendum on ratifying any Brexit deal (if that comes to pass in the future).

If you are a landlord or thinking of becoming one for the first time and you want to read more articles like this about the Southampton Property Market, together with regular postings on what I consider the best buy to let deals in Southampton (out of the many of properties on the market, irrespective of which agent is selling it) then feel free to get in touch.

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/belvoirlettingssouthampton/

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

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