Stamford Property Values 7.7% higher than year ago

It’s been nearly 18 months since Sajid Javid, the Conservative Housing Minister published The White Paper “Fixing the Broken UK Housing Market”, meanwhile Stamford property values continue to rise at 7.7% (year on year for the council area) and the number of new homes being constructed locally remain slow, creating a potential perfect storm for those looking to buy and sell.

 

The White Paper is important as it will ensure we have long-term stability and longevity in property market as a whole. Stamford homeowners and landlords need to be aware of these issues in the report to ensure they don’t lose out and ensure the local housing market is fit for purpose.  The White Paper wanted more homes to be built in the next couple of decades, so it might seem counter-intuitive for existing property owners to encourage more homes to be built and a change in the direction of housing provision – as this may have a negative effect on their own property.

 Yet the country needs a diversified and fluid property market to allow the economy as a whole to grow and flourish, which in turn will be a greater influence on whether prices increase or decrease in the long term.
 

The first of the four points raised was to give local authorities powers to speed up house building and ensure developers complete new homes on time.  Secondly, statutory methods demanded local authorities and builders build at higher densities (i.e. more houses per hectare) where appropriate.  The other two points were incentives for smaller builders to take a larger share of the new homes market and help for people renting.



Looking at data from the Local Government’s Association in South Kesteven, the council is below the regional average, only spending £23.33 per person, compared the regional average of £32.05 per head – which will mean the planning department will be hard pressed to meet those targets. 

 

 

Also, 87% of planning applications are decided within the statutory 8-week initial period, below the regional average of 89% (see the graph below).  I am slightly disappointed with the numbers for our local authority when it comes to the planning and the budget allocated to this vital service.

I would agree with the government’s ambition to make more efficient use of land and avoid building homes at low densities where there is a shortage of land for meeting identified housing needs, ensuring that the density and form of development reflect the character, accessibility and infrastructure.  It’s all very good building lots of houses, but we need the infrastructure to go with it.


Talking to local homeowners their biggest fear of all this building is a lack of infrastructure for those extra houses (the extra roads, doctors’ surgeries, schools etc.). I know most want more houses to be built to house their family and friends, but irrespective of the density it’s the infrastructure that goes with the housing that is just as important.  This is where I think the White Paper failed to go as far as I feel it should have done. 

 

 

Nearly 5 Babies Born for Every New Home Built in the Past Five Years in Rutland

This discovery is an important foundation for my concerns about the future of the Rutland property market - when you consider the battle that today’s 20 and 30-somethings face in order to buy their first home and get on the property ladder. This is particularly ironic as these youngsters are being born in an age when the number of new babies born to new homes was far lower.

This will mean the babies being born now, who will become the next generation’s first-time buyers will come up against even bigger competition from a greater number of their peers unless we move to long term fixes to the housing market, instead of the short term fixes that successive governments have done since the 1980’s.

 

 

 

In 2016, 11.20 babies were born in Rutland for every home that had been built in the 5 years to the end of 2016 (latest data). Interestingly, that ratio nationally was 2.9 babies to every home built in the ‘50s and 2.4 in the ‘70s.  I have seen the unaudited 2017 statistics and the picture isn’t any better! (I will share those when they are released later in the year).

Our children and grandchildren will be placed in an unprecedented and unbelievably difficult position when wanting to buy their first home unless decisive action is taken. It doesn’t help that with life expectancy growing year on year, this too is also placing excessive pressure on the availability of homes to live in, with normal population growth nationally (the number of babies born less the number of people passing away) accumulative by 2 people for every 1 home that was built since the start of this decade.

 
Owning one’s home is a measure many Brits to aspire to. The only long-term measure that will help is the building of more new homes on a scale not seen since the 50’s and 60’s, which means we would need to aim to at least double the number of homes we build annually.

In the meantime, what does this mean for local landlords and homeowners? Well, the demand for rental properties in Stamford and Rutland in the short term will remain high and until the rate of building grows substantially, this means rents will remain strong and correspondingly, property values will remain robust.

 

3 Best Property Deals on this week's Stamford & Rutland Property Market

PROPERTY 1) 

WHAT? 3 Bedroom Semi-Detached

WHERE? Coleridge Way, Oakham.  On the market with Newton Fallowell.

WHY? Modern, spacious, built over 3 floors, master bedroom en suite, garden and garage.  Strong, sought after rental property.

THE FIGURES:
Price: £180,000 (OIEO)

Rent: £750pcm approx.

Annual Income: c£9,000

Yield: c5%

MORE DETAILS?  Click here...
http://www.rightmove.co.uk/property-for-sale/property-54364401.html

 

PROPERTY 2) 

WHAT? Renovation Project. 2 bedroom town centre terrace.

WHERE? Kings Road, Oakham.  On the market with Murray Estate Agents. 

WHY? Full renovation needed of this spacious Victorian terrace with 2 reception rooms and 1st floor bathroom, sought after location and good sized garden.

THE FIGURES:
Guide Price: £139,950 

Rent:£600pcm (once renovated)

Annual Income: c£7,200

Yield: c5.1%

 

MORE DETAILS?  Click here...
http://www.rightmove.co.uk/property-for-sale/property-73548809.html
 

Property 3)

 



WHAT? 1 bedroom, ground floor apartment

WHERE? Keble Court, Stamford. On the market with Knight Partnership.

WHY? Fully renovated throughout, good location, ground floor with off-road parking. 


THE FIGURES:

Guide Price: £90,000

Rent: £400pcm approx.

Annual Income: c£4,800
Yield: c5.3%

MORE DETAILS?  Click here...
http://www.rightmove.co.uk/property-for-sale/property-65199325.html

If you are considering investing in property and would like to chat through the figures with me, please contact me.  I am happy to help.

David Crooke, Owner and MD

UPP Property, Sales & Lettings 

Stamford 01572 725 825 / Oakham 01780 484 554
david@upp-property.co.uk







 
 
 
 

How Affordable is Stamford Property for Average Working Families?

If the supply of new properties is limited and demand continues to soar, the values of existing properties will continue to remain high and stay unattainable for many.  Looking at some recent government statistics, the ratio of the lower quartile house prices to lower quartile gross annual salaries in South Kesteven District Council (SKDC) has hit 8.73 to 1. 

If we systematically ordered every property in SKDC by their value, the average value of the lower quartile properties (i.e. lowest 25%) would be £148,000. If we then did the same calculation to salaries in the same council area, the average of the lowest quartile (lowest 25%) the average salary of the lowest 25% is £16,958 pa, thus dividing one with the other, we get the ratio of 8.73 to 1.

Assuming there is one wage earner in the house, the chances of a Stamford working family being able to afford to buy their own home (when it’s over 8 times their annual salary), is very slim indeed. The current affordability crisis is the unavoidable outcome of the accumulative effect in the failure to build enough homes to keep up with demand. Nevertheless, improving affordability is not a case of just constructing more homes. The council needs to ensure more properties are not only built, but built in the right locations, of the right type and at the right price to ensure the needs of these lower income working families are met, because at the moment, they presently have few options apart from the private rental sector.

Looking at historical data of the ratio, it can be seen that this has been an issue since the early 90’s to mid 2000’s. However, those on the bottom rung of the ladder (in the lower quartile of wage earners) used to be housed by the local authority. However, the vast majority of council houses were sold off in the 1980’s meaning there are much fewer council houses today to house this generation.

Many of the lower quartile working class families were given a lifeline to buy their own homes in middle 2000’s with 100% mortgages, but the 2009 credit crunch ended that opportunity. It is cheaper to buy than to rent, but securing the 5% deposit is the biggest challenge. Unless the government allows 100% mortgages again, demand for rental properties will continue to outstrip supply.

Long term, I suggest local communities hold their local politicians to account to ensure the affordability of housing and the extent to which they work with private developers and housing associations. In addition, they must be encouraged to use the planning tools at their disposal in safeguarding the local community, thereby effectively realising the required level of new households. SKDC could designate certain parcels of residential building land for private rented development only, eliminating the opportunity of the land being bought to develop large executive homes, which does not solve the current problem.

Short term, demand for rental properties will continue to grow, keeping house prices high and rents high.