How Did Brexit Affect the Tamworth Property Market in 2018 – and its Future for 2019?

A few weeks ago, I suggested property values in Tamworth would be between 1.3% and 2.1% different by the end of the year. It might surprise some people that Brexit hasn’t had the effect on the Tamworth property market that most feared at the start of 2018.

The basis of this point of view can clearly be seen in the number of property transactions (i.e. the number of property sold) that have taken place locally since 2008. The most recent property recession was the Credit Crunch years of 2008/2009/2010.

In property recessions, the headline most people look at is the average value of property. Yet, as most people that sell also go on to buy, for most home movers, if your property has gone down in value, the one you want to buy has also gone down in value so you are no better or worse off. If you are moving up market – which most people do when they move home – in a repressed market, the gap between what yours is worth and what you will buy gets lower … meaning you will be better off.

Yet, most property commentators, including myself, suggest (and I have mentioned this before in some of my other blog articles) a better measure of the health of the property market is the transaction numbers (i.e. the number of people selling and buying). So, I decided to look at the 2018 statistics, and compare them with the Credit Crunch years (2008 to 2010) and the boom years (2014 to 2017). The results can be seen in the table below.

Then, I looked at the average quarterly figures for those chosen date ranges … and created this graph …

In that 2008 to 2010 property Credit Crunch recession, the average number of properties sold in the Tamworth area were 59 per month. Interesting when we compare that to the boom years of 2014 to 2017, when an average of 93 properties changed hands monthly … yet in the ‘supposed’ doom laden year of 2018, an impressive average of 91 properties changed hands monthly … meaning 2018 compared to the boom years of 2014 to 2017 saw a drop of 1.6% – yet still 55.1% higher than the Credit Crunch years of 2008 to 2010.

The simple fact is, the fundamental problems of the Tamworth property market are that there haven’t been enough new homes being built since the 1980’s (and I don’t say that lightly with all the new homes sites dotted around the locality). Also, the cost of buying your first home remaining relatively high compared to wages and to add insult to injury, all those issues are armor-plated by the tougher mortgage rules which were introduced in 2014 and the current mortgage market conditions.

It is these issues which will ultimately determine and form the rather unexciting, yet still vital, long term outlook for the Tamworth (and national) housing market, as I feel the Brexit issue over the last few years has been the ‘current passing diversion’ for us to worry about. Assuming something can be sorted with Brexit, in the long term property values in Tamworth will be constrained by earnings increases with long term house price rises of no more than 2.5% to 4% a year.

 Fundamentally, the question I am asked by many Tamworth buy to let landlords and Tamworth homebuyers is … “should I wait to buy or not?”

As a Tamworth homebuyer, one shouldn’t be thinking of what is happening in Westminster, Brussels, Irish Backstop, China or Trump and more of your own personal circumstances. Do you want to move to get your child in ‘that’ school or do you need an extra bedroom for your third child? For lots of people, the response is a resounding yes – and in fact, I feel many people have held back, so once we know what is finally happening with Brexit and the future of it, there could a be a release of that pent-up demand to move home as people humbly just want to get on with their lives.

There is little to be lost in postponing a house purchase until there is better clarity on the situation. If it isn’t Brexit it will something else – so just get on with your lives and start living. We got through the global financial crisis/Credit Crunch in ‘08/’09, Black Wednesday in ’92 where mortgage interest rates went from 8.5% to 15% in one day, we got through the worst stock market crash with Black Monday in ’87, hyperinflation, power shortages, petrol quadrupling in price in less than a year and a 3 day week in the ‘70’s … need I go on?

Tamworth Landlords? Well, where else are you going to invest your money? Like I said earlier in the article, we aren’t building enough homes to keep up with demand … so as demand outstrips supply, house values will continue to grow. Putting the money in the building society will only get you 1% to 2% if you are lucky. In the short term though, there could be some bargains to be had from shortsighted panicking sellers and in the long term … well, the same reasons I gave to homeowners also apply to you.

Live in B77, B78 or B79? Why Not Get An Instant Valuation Of Your Home In Just 60 Seconds
Homes in B77, B78 & B79  are in high demand, especially family homes!. If you are thinking of moving and need an idea of your property value, give this handy little tool a try. You just put in your details and it gives you an idea of the value in
seconds! Now it’s not as accurate as having us pop over but it’s quick, easy and takes less than 60 seconds. Give it a try….

https://valuation.hallandthompson.co.uk/home/1663-hall–thompson-estate-agents

VALUATION ONLINE TOOL  ValPal

https://www.facebook.com/hallandthompsonestateagents

361 First Timer Buyers in Tamworth Bought Their First Home in 2017

A little bit of good news this week on the Tamworth Property Market as recently released data shows that the number of first time buyers taking out their first mortgage in 2017 increased more than in any other year since the global financial crisis in 2009. The data shows there were 361 first time buyers in Tamworth, the largest number since 2006.

I expect in 2018 that this increase of first time buyers will level out and maybe dip slightly as, nationally, figures demonstrate that first time buyer’s average household income was £40,691 and this represented 17.3% of their take home pay. Although, it might surprise readers that it is actually cheaper to buy than it is to rent at the ‘starter home’ end of the housing market. Many of you can remember mortgage rates at 12% … even 15%. Today, at the time of writing this article, I found on the open market, 189 first time buyer mortgages at 95% (meaning only a 5% deposit was required) with 3 year fixed rates from a reputable High Street bank at 2.49% … they even did a 3 year fixed rate 100% mortgage for 2.89%!

Interestingly, looking at the other end of the market, the buy-to-let investment in Tamworth was subdued, with only 74 buy-to-let properties being purchased with a mortgage. However, I must stress, whilst there is no hard and fast data on the total numbers of landlords buying buy-to-let, as HM Treasury believes only 30% to 40% of buy-to-let property is bought with a mortgage. This means there would have been further cash only buy-to-let purchases in Tamworth – it’s just that the data isn’t available at such a granular level.

In terms of the level of mortgage debt in Tamworth, looking specifically at the B77 to B79 postcodes, there has been a steady rise in borrowing over the last couple of years.

This is pleasing to see, as new mortgage debt is created by first time buyers, buy-to-let landlords and home movers themselves, that is being roughly equalled by the amount being paid off with mature mortgaged homeowners in their 50’s and 60’s finally paying off their mortgage.

So, what does all this mean for the Tamworth Property Market?  Well, the stats paint a picture, but they don’t inform us of the whole story. The upper end of the Tamworth property market has been weighed down by the indecision around the Brexit negotiations and rise in stamp duty in 2014, when made it considerably more expensive to buy a home costing more than £1m. The middle part of the Tamworth property market has been affected by issues of mortgage affordability and lack of good properties to buy, as selling prices have reached the limit of what buyers can afford under existing mortgage regulations. The lower to middle Tamworth property market was hit by tax changes for buy-to-let landlords, although this has been offset by the increase in first time buyers.

If you are in the market and selling now and want to ensure you get your Tamworth property sold, the bottom line is you have to be 100% realistic with your pricing from day one and you might not get as much as you did say a year ago (but the one you want to buy will be less – swings and roundabouts?). I know it’s not comfortable hearing that your Tamworth home isn’t worth as much as you thought, but Tamworth buyers are now unbelievably discerning.

So, if you are thinking of selling your Tamworth property in the coming months, don’t ask the agent out a few days before you want to put the property on the market, get them out now and ask them what you need to do to ensure you get maximum value in the shortest possible time. I, like most Tamworth agents, will freely give that advice to you at no cost or commitment to you.

if you would like to read more articles on my thoughts on the Tamworth property Market – please visit the Tamworth Property Market Blog

If you want to learn about the Tamworth Property Market , one source for information is the Tamworth Property Blog authored by yours truly at https://www.tamworthpropertyblog.co.uk

https://www.facebook.com/Hallandthompsonestateagents/

https://www.youtube.com/channel/UCyF9OUR3g6E8HywCx7tU4DA

https://www.linkedin.com/in/lorrainethompson2/

http://www.hallandthompson.co.uk

https://twitter.com/hallandthompson