Tamworth Property Market – Outlook for 2019

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Tamworth property values are unexpectedly 4.8% higher than at the end of 2017, notwithstanding the uncertainty and threats over the potential impact of Brexit in 2019. This has exceeded all the predictions (aka guesses) of all the City of London economists, in an astonishing sign of strength for the local Tamworth and wider national economy.

Nevertheless, the statistics from the Land Registry come after a lethargic year for the number of properties in Tamworth compared to the actual prices achieved for those properties.  All this against a framework of amplified political ambiguity and ensuing years of rising Tamworth property values that have reduced the affordability of homes in the locality.

The average value of a Tamworth property today

Currently stands at £225,400

Looking in finer detail, it isn’t a surprise that 1,216 property sales in Tamworth over the last 12 months is somewhat lower than the long-term average over the last 20 years of 1,550 property sales per year in Tamworth as the long-term trend of people moving less has meant a decline in the number of property transactions.

I believe locally, Tamworth property value growth will be more reserved in 2019 after two decades of weaker wage rises. One of main drivers in the demand (and thus the price people are prepared to pay for a home) is the growth of peoples wage packets. Interestingly, wage inflation over the last six months has risen from 2.4% in the late summer to its current level of 3.3% (which is higher than the average since the Millennium, which has been a modest 2.1%). One of the reasons why wages are growing in the short term is the unemployment rate in the country currently only stands at 4.1%, continuing to stay close to its lowest level since the 1970’s.

However, even though Tamworth salaries and wages are rising comparatively higher than they were last year, looking over the long term, Tamworth property values are 139.61% higher than they were in January 2002, yet average salaries are only 76.1% higher over the same time frame. This means over the last few years, with average property values so high comparative to salary/wages, many Tamworth potential buyers have been priced out of being able to purchase their first home.

At first glance, these stats are actually rather positive during this reported time of political uncertainty and the height of Brexit commotion … because I genuinely believe that to be the case. The press have always looked for the bad news (well they do say it is that that sells newspapers), and whilst I am not entering into the pros and cons of Brexit itself, the numbers do stack up quite well since the Brexit vote took place nearly 3 years ago.

Moving forward, when taken with the recent reduction in short to medium term number of property transactions (i.e. the number of Tamworth properties sold), it should be noted that a lot of the this buoyant house price increase has a lot more to do with a shortage of properties on the market rather than an uplift in the Tamworth housing market generally.

And we can’t forget that Tamworth isn’t in its own little bubble, as there are noteworthy differences across the UK in property value inflation. House prices in London and the South East have hardly risen or even fallen in some places, whilst in the Midlands, North and other parts of the country they have generally increased. 

Looking forward, I would say to the homeowners and buy to let landlords of the locality that I expect Tamworth house price growth to remain stable between 1.3% and 2.1% by the end of this year (although they could dip slightly during the summer) … as long as nothing unexpected happens in the world economically or politically of course.

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How Would a Hard Brexit Affect Tamworth House Prices?

I have been asked a number of times recently what a hard Brexit would mean to the Tamworth property market. To be frank, I have been holding off giving my thoughts, as I did not want to add fuel to the stories being banded around in the national press. However, it’s obviously a topic that you as Tamworth buy to let landlords and Tamworth homeowners are interested in … so I am going to try and give you what I consider a fair and unbiased piece on what would happen if a hard Brexit takes place in March 2019.

After the weather and football, the British obsession on the UK property market is without comparison to any other country in the world. I swear The Daily Mail has the state of the country’s property market on its standard weekly rotation of front-page stories! Like I have said before on my blog, there are better economic indexes and statistics to judge the economy (and more importantly) the property market. If you recall, I said the number of transactions was just as important, if not more, as a bellwether of the state of the property market.

Worries that the Brexit referendum would lead to a fast crash in Tamworth (and national) property values were unfounded, although the growth of property values in Tamworth has reduced since the referendum in the summer of 2016.

Now, it’s true the Tamworth property market is seeing less people sell and move and the property values are rising at a slower rate in 2018 compared to the heady days of the first half of this decade (2010 to 2015), but before we all start panicking, let’s ask ourselves, what exactly has happened in the last couple of years since the Brexit vote?

Tamworth house prices have risen by 14.77% since the

EU Referendum… 

…and yes, in 2018 we are on track (and again this is projected) to finish on 1,128 property transactions (i.e. the number of people selling their home) … which is less than 2017 … but still higher than the long term 12 year average of 975 transactions in the local council area.

So, it appears the EU vote hasn’t caused many major issues so far, however, if there was a large economic jolt, that could be a different game, yet how likely is that?

The property market is mostly influenced by interest rates and salaries.

A hard Brexit would subdue wage growth to some degree, yet the level of the change will depend on the undetermined type of Brexit deal (or no deal). If trade barriers are imposed on a hard Brexit, imports will become more expensive, inflation will rise and growth will fall, although at least we are not in the Euro, meaning this could be tempered by the exchange rate of the Pound against the Euro. In plain language, a hard Brexit will be worse for house prices than a deal.

So why did the Governor of the Bank of England suggest a disorderly hard Brexit would affect house prices by up to 35%?

I mean it was only nine years ago we went through the global financial crisis with the credit crunch. Nationally, in most locations including Tamworth, property values dropped in value by 16% to 19% over an 18-month period. Look at the graph and if we had a similar percentage drop, it would only take us back to the property value levels we were achieving in 2015.

And let’s not forget that the Bank of England introduced some measures to ensure we didn’t have another bubble in any future property market. One of the biggest factors of the 2009 property crash was the level of irresponsible lending by the banks. The Bank of England Mortgage Market Review of 2014 forced Banks to lend on how much borrowers had left after regular expenditure, rather than on their income. Income multipliers that were 8 or 9 times income pre-credit crunch were significantly curtailed (meaning a Bank could only offer a small number of residential mortgages above 4.5 times income), and that Banks had to assess whether the borrower could afford the mortgage if interest rates at the time of lending rose by three percentage points over the first five years of the loan … meaning all the major possible stumbling blocks have been mostly weeded out of the system.

So, what next?

A lot of Tamworth homeowners might wait until 2019 to move, meaning less choice for buyers, especially in the desirable areas of Tamworth. For Tamworth landlords, Tamworth tenants are also likely to hang off moving until next year, although I suspect (as we had this on the run up to the 2015 General Election when it was thought Labour might get into Government), during the lull, there could be some Tamworth buy to let bargains to be had from people having to move (Brexit or No Brexit) or the usual panic selling at times of uncertainty.

Brexit, No Brexit, Hard Brexit … in the whole scheme of things, it will be another footnote to history in a decade. We have survived the Oil Crisis, 20%+ Hyperinflation in the 1970’s, Mass Unemployment in the 1980s, Interest Rates of 15% in 1990’s, the Global Financial Crash in 2009 … whatever happens, happens. People still need houses and a roof over their head. If property values drop, it is only a paper drop in value … because you lose when you actually sell. Long term, we aren’t building enough homes, and so, as I always say, property is a long game no matter what happens – the property market will always come good.

Growth in UK property values as well as in Tamworth seems fated to slow over the next five to ten years, whatever sort of Brexit takes place.

If you are thinking of getting into the property rental market and don’t know where to start, speak to us for impartial advice and guidance to get the best return on your investment. For more information about other potential investment properties that we could introduce you to, or to ask about our thoughts on your own investment choices, call us now on 01827 425195, you can always email me on Lorraine@hallandthompson.co.uk

Don’t forget to visit the links below to view back dated deals and Tamworth Property News.

Blog  – https://www.Tamworthpropertyblog.co.uk

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Value of Tamworth Property Market falls £82.8m

The combined value of Tamworth’s housing market has fallen by £82,781,160 in the last 6 months, meaning the average value of a Tamworth property has decreased in value by an average of £3,162.

This is great news for Tamworth first time buyers and Tamworth buy to let landlords, as there is a slight hesitation in the market because of the uncertainty over Brexit. As I have always said, investing in Tamworth property, be it for you to live in or as a buy to let investment, is a long-term game. In the grand scheme of things, this minor change over the last 5 or 10 years is nothing.

The RICS’s latest survey of its Chartered Surveyor members showed that nationally the number of properties actually selling has dropped for the 16th month in a row. Locally in Tamworth, certain sectors of the market are matching that trend, yet others aren’t. It really depends which price band and type of property you are looking for, as to whether it’s a buyers or sellers market.

The RICS also said its member’s lettings data showed a lower number of rental properties coming on to the market. Anecdotal evidence suggests that (and this is born out in the recent English Housing Survey figures) Tamworth tenants over the last few years are stopping in their rental properties longer, meaning less are coming onto the market for rent. I have noticed locally, that where the landlord has gone the extra mile in terms of decoration and standard of finish, this has certainly helped push rents up (although those properties where the landlord has been remiss with improvements and standard of finish are in fact seeing rents drop). Tamworth tenants are getting pickier – but will pay top dollar for quality. So much so, I believe there will be a cumulative rise of around fourteen to sixteen per cent over the course of the next five years in private rents for the best properties on the market.

Back to the Tamworth Property Values though …

This drop in Tamworth property values doesn’t particularly concern me. The fact is that over the last 6 months 390 properties have sold for a combined value of £83,199,870. You see, that drop must be seen in perspective in that 6 months ago, the total value of Tamworth property stood at £5,701,349,500 (£5.70bn), and today it stands at £5,618,568,340 (£5.62bn) .. this change is a drop in the ocean.

In the short term, say over the next six months and assuming nothing silly happens in Korea, the Middle East or Brexit negotiations, it will be more of the same until the end of the year. In the meantime, the on-going challenges ensuring we as a Country build more homes (although the Office of National Statistics figures released in July showed nationally the number of new homes started to be built over the second Quarter of 2018 had dropped dramatically) makes me think that Tamworth (and Nationally) property value is likely to recommence an upward trajectory as we go into 2019.

One final thought for all the buy to let landlords in Tamworth (and indirectly this does affect all you Tamworth homeowners too). I do hope the recent tax changes towards buy to let landlords don’t bite as deep as it is possibly starting to with certain landlords I know.  We talked about this in an article a few weeks ago and I know why the Government wanted to change the balance by taxing landlords and providing a lift for first time buyers .. however, this may well come at the expense of higher rents for those Tamworth tenants that don’t become first time buyers, as the appeal of buy to let potentially weakens.

If you are thinking of getting into the property rental market and don’t know where to start, speak to us for impartial advice and guidance to get the best return on your investment. For more information about other potential investment properties that we could introduce you to, or to ask about our thoughts on your own investment choices, call us now on 01827 425195, you can always email me on Lorraine@hallandthompson.co.uk

Don’t forget to visit the links below to view back dated deals and Tamworth Property News.

Blog  – https://www.Tamworthpropertyblog.co.uk

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Hard Brexit could cause 550 properties to be dumped onto the Tamworth Property market

So all cards up in the air! A general election will be on the books, but one thing is for sure … whoever gets the job to deal with Brexit has a hard job on their hands (I’m just glad its not me!) As it currently stands, by not assuring the rights of EU citizens in the UK, Theresa May has squandered an opportunity to give peace of mind to our EU co-workers working and living in Tamworth (and the rest of the UK). No.10 Downing Street’s point of view is that in promising the rights of EU citizens in the UK, it will postpone the same guarantee to the 1.5 million UK citizens living in the other nations of the EU.

Putting aside the politics for one second, the simple fact is now Article 50 has been triggered, we have two years to make a deal with the EU; otherwise it will be a ‘hard Brexit’. Now you might not think a hard Brexit will affect you in your home in Tamworth … but nothing could be further from the truth.

Tamworth property market could see 100's of properties dumped with a hard brexit!!
Tamworth property market could see 100’s of properties dumped with a hard brexit!!

Of the 76,446 people who are resident in the Tamworth Borough Council area, 73,628 were born in the UK, 850 were born in EU countries from West Europe and 794 were born in EU countries from the former Soviet States in East Europe (the rest coming from other countries around the world).

The rights of these EU citizens living in the Tamworth area are not guaranteed and will now be part of the negotiation with Europe. It is true a lot of our EU next door neighbours in Tamworth will have acquired rights relating to the right to live, to work, to own a business, to possess a property, the right to access health and education services and the right to remain in a UK after retirement… yet those acquired rights are up for negotiation in the next two years.

So, what would a hard Brexit do to the Tamworth property market?

Well a hard Brexit could mean the nuclear option when it came to the Tamworth housing market. It could mean that every EU citizen would have to leave the UK.

In the Tamworth Borough area, 590 of the 850 Western European EU citizens own their own home and (so they would all need to be sold) and 525 of the 794 Eastern European EU citizens rent a property, so again all those rental properties would all come on the market at the same time.

Hard Brexit and mass EU Migration would mean c. 550 properties being dumped onto the housing market in a short period of time, meaning there would be a massive drop in Tamworth property values and rents, causing negative equity for thousands of Tamworth homeowners and many buy-to-let landlords would be out of pocket.

While there is no certainty as to what the future will hold, both UK expats in the EU and EU citizens in the UK rights will no longer be guaranteed and will be subject to bilateral renegotiation.

All I ask is that the politicians are sensible with each other in the negotiations. A lot of the success of the Tamworth (and UK) property market has been built on high levels of home ownership and more recently in the last 10/15 years, a growth of the rental sector with lots of demand from Eastern Europeans coming to Tamworth (and the surrounding area) to get work and provide for their families. Many Tamworth people have invested their life savings into buying a buy to let property.

Much will depend on what is politically realistic. Unilateral knee-jerk reactions and measures caused by a hard Brexit would not only likely cause major disruption or suffering to the 3 million EU citizens living in the UK, but also everyone who owns property in the UK … politics aside – a hard Brexit is in no one’s interests.

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 Tamworth Property Market, together with regular postings on what I consider the best buy to let deals in Tamworth (out of the many of properties on the market, irrespective of which agent is selling it) then feel free to get in touch!

Email me on Lorraine@hallandthompson.co.uk or call on 07531484956.

Don’t forget to visit the links below to view back dated deals and Tamworth Property News. https://www.tamworthpropertyblog.co.uk

Website http://www.hallandthompson.co.uk

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Snap General Election 8th June – Will This Affect The Tamworth Property Market?

I have already been asked what, if any, impact will Theresa May’s decision to have a snap general election on the 8thJune….

Well based upon the massive uncertainty Brexit brought I think we can safely say, that in the short term, there will be no negative impact on the Tamworth property market. If Brexit didn’t slow down the market there is no way a general election will!

The main reasons that I feel the current, Tamworth, market will continue to flourish are quite simple. Interest rates are still at record lows, lenders are offering fantastic deals meaning affordability is at an all time low.. There are still too few properties coming to market and with the current levels of decent job security, it means that prices will remain constant and even continue to rise, based upon the basic law of supply and demand.

If you are thinking of selling now is a great time to market your property, as I have said there aren’t enough around so you are likely to get a very good price. This could change if there is a surge of new properties coming to market before summer.

If you are thinking of buying, again, now is a great time. Lenders are asking for lower deposits and rates are as low as they have ever been, so your dream property is probably as cheap now as its ever going to be for you.

If you are thinking of selling or buying please , get in touch we would love to hear from you.

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Tamworth Unemployment Drops to 3.1% and its effect on the Tamworth 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 Tamworth are 1.19% down month on month (and the month before that, they had grown with a increase of only 1.3%) – 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 Tamworth 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. Tamworth property values dropped by an eye watering 2.39% in April 2013 and 1.39% in January 2015 – and no one batted an eyelid then.

You see, property values in Tamworth are still 7.57% higher than a year ago, meaning the average value of a Tamworth property today is £201,500. 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 Tamworth 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 Tamworth Borough Council area stands at 1,300 people (3.1%), which is considerably better than a few years ago in 2012 when there were 3,500 people unemployed (9.8%) in the same council area.

unemployment, Tamworth, average house price, inflation, Tamworth housing market

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 Tamworth (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 Tamworth Property Market, I will discuss this matter further!

don’t forget you can keep up to date with all our articles on the Tamworth Property Market here….https://www.tamworthpropertyblog.co.uk

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 Tamworth Property Market, together with regular postings on what I consider the best buy to let deals in Tamworth (out of the many of properties on the market, irrespective of which agent is selling it) then feel free to get in touch!

Email me on Lorraine@hallandthompson.co.uk or call on 07531484956.

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