Local W4 market information for homeowners, Landlords & Investors.

Month: May 2016

£7,700 boost to Chiswick First time buyers

There’s a whole legion of wannabe Chiswick first-time buyers keen to get on the property ladder and they now have a 3% price advantage over the previously quicker responding army of Chiswick landlords with cash at the ready. Since the start of April,

buy to let landlords have had to pay an additional 3% stamp duty so whilst demand from some Chiswick buy to let landlords has dropped away, in the interim, it offers Chiswick first time buyers (FTB’s) a chance to fill the vacuum with less competition from cash rich landlords (over two thirds of BTL properties were purchased without a mortgage in the last 7 years) who could bid more and complete quicker.

 

Looking at the average value of an apartment in Hounslow

currently standing at £258,100, that means if our Chiswick FTB went up against a Chiswick landlord, the landlord would have to pay an additional £7,743 in stamp duty. Early antidotal evidence from fellow property professionals in the suburb is suggesting landlords are reducing their offers slightly on Chiswick properties to reflect the extra stamp duty.

 

Whilst on the face of it, it appears landlords are being punished by No.11 Downing Street, I actually believe this increase in stamp duty for landlords is a good thing for the Chiswick property market as a whole.

 

Since 2011/12, the Hounslow property market has performed very well indeed. Over the last 12 months, £187,565,488 has been spent buying 556 Hounslow properties. Figures from the Land Registry have just been released and month on month in our council area, property values are 1.8% higher, yet 14.7% higher year on year. These figures are nowhere near the heady days of 2000 (June to be exact), when Chiswick

property prices rose by 28% in 12 months.

 

So as property values in Chiswick (and the UK as whole) start to stablise and come back to some kind of balance, I am beginning to see savvy landlords view the Chiswick property market in a different light. Even with the Spring rush, gone are the days where you could make limitless money on anything that had a door, a few windows and roof. This stamp duty change has made more and more landlords, after reading the Chiswick Property Market Blog take advice on what or not to buy and what to pay, meaning Chiswick landlords are being more calculated with their Chiswick BTL purchases. I am also seeing a variance between relatively brisk current price momentum and softer expectations in terms of property value growth in Chiswick, this in part reflects amplified uncertainty about the short term economic outlook (eg Brexit, Issues in the Far East etc).

 

 

 

Now I know a lot of Chiswick landlords brought forward their BTL purchases to beat the stamp duty deadline. However, it is probable that hunger from Chiswick investors will return for the right Chiswick property later in the year, especially if it’s at the right price and offers a decent yield. However, in the meantime, Chiswick FTB’s could and should, in the short term, make hay whilst the sun shines plug the gap and grab a bargain!

 

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Brexit and Chiswick Property market – 40% more properties on the market

 

 

April Fools Day was no joke for some landlords, as they rushed their buy to let property purchases throughout late March to beat the extra 3% stamp duty George Osborne imposed on buy to let properties after the 31st March 2016. Because some investors brought forward their 2016 property purchases to save the extra tax, speaking to fellow property professionals in Chiswick, all of us have noticed, since the clocks went forward, demand to buy in April and May from these landlords has eased.

 

Then we have the Brexit issue, which is also having a tempering effect on the Chiswick property market – although if you recall I wrote about this a few weeks ago, and whilst an exit will have an effect – it won’t be the end of the world scenario some commentators are suggesting. In another article I wrote previously, I spoke of the growth rate of Chiswick property values, and whilst the rate of growth is slowing, Chiswick property values are still 13.6% higher year on year, albeit the growth rate month on month has started to moderate when compared to the heady days of month on month rises of 2014 and 2015. Interestingly though, a very recent members survey of the Royal Institution of Chartered Surveyors states that only 17% of members believed property values would increase over the next Quarter compared to 44% at the end of 2015.

 

All this had led to increase in the number of properties for sale. For example in the W4 postcode, which mainly comprises of Chiswick, Gunnersby, Turnham Green, Acton Green, South Acton and Bedford Park, there were 476 properties for sale in the postcode in December (of which 70 came on to the market for the first time). In January, February and March, 583 properties came onto the market in the postcode district (or an average of 194 per month), meaning by end of the first Quarter, there were 671 properties available for homeowners and landlords alike to buy in W4 (i.e. a rise of 40.9 more properties for sale). These figures are mirrored in neighbouring postcodes throughout the Chiswick area.

 

Nevertheless, I believe this easing of the Chiswick property market is a good thing, as investment landlords wont have to pay top dollar to secure a property because of the lower competition. On the face of it, this easing should be bad news for the 12,833 homeowners in the W4 area, but nothing could be further from the truth. The majority of homeowners that move, move up market, (i.e. from a flat to terrace/town house, then a semi and then detached), so whilst last year you would have achieved a top dollar figure for your property, you would would have had to have paid an even higher top dollar to secure the one you wanted to buy. The Swings and Roundabouts of the Chiswick Property Market!

 

However, all the signals suggest that whatever the aftermath of the approaching EU referendum, in the long term, the disparity between demand for Chiswick property and the supply (i.e. the number of actual properties) will still exercise a sturdy and definitive influence on the Chiswick property market. It would surprise me that if by 2021, whichever way we vote in late June, assuming we

don’t have another credit crunch or issues like a major world conflict, property prices will be between 22% to 25% higher than they are today.

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Chiswick Property Market in Crisis : Who is to blame?

‘An Englishman’s Home is his Castle’ is the phrase that was coined in Victorian times as the UK has a reputation for being a country of home owners .. but the truth could be further from the point, because in a league of the top 46 economic nations of the world, where owning your property is permissible, the UK is only ranked no.37.

 

As I mentioned a couple of weeks ago, at the end of the First World War, 77% of people rented their home (the vast majority renting from a private landlord as Council Housing was still very much in its infancy). Homeownership rose very slowly in the 1920’s and started to grow as the economy grew after the Great Depression. However, after the Luftwaffe had flattened huge swathes of housing in the early 40’s, the priority was to get people into clean and decent accommodation .. so Local Authority’s (Councils) took up the baton and they built large council estates in the 1950’s and 1960’s.

 

As the UK economy got back on its feet in the middle part of the 20th Century and wages rose, people decided they wanted to own their own home instead of renting. Throughout the post war decades, it became easier to secure a mortgage. Interestingly, by 1977, 61.6% of 30 to 34 year olds were owner occupiers with a mortgage compared to 8.7% of 30 to 34 year olds being in private rented accommodation (the remaining either being in council housing or living with friends or family). Ten years later, in 1987, we saw some significant growth in homeownership, as 68.2% of 30 to 34 year olds had a mortgage and only 4.6% of people privately rented. A decade later and there wasn’t much change as, in 1997, the homeownership figure was 68.3% but private renting had jumped to 12.1% in the same 30 to 34 year old age group.

 

Move on another ten years to the 2007 figures, and this showed a slight drop in homeownership to 65.8% but renting had continued to increase to 18.7% (in the 30 to 34 year old age group). The latest set of figures is for 2014, and only 47.2% of 30 to 34 year olds had a mortgage and an eye watering 33.4% of 30 to 34 year olds privately rent.

 

When we look at the Chiswick figures of homeownership, looking back to 1991, 59.05% of Chiswick households were owned by the homeowner, whilst 8.39% of Chiswick households were privately rented, whilst the 2011 census showed home ownership in Chiswick had dropped to 49.48% and private rented had increased to 26.62%. Much of the recent rise in the occurrence of private renting in Chiswick since the turn of the Millennium is not because property has become more expensive, but the fact these 30 somethings haven’t got a council house to move into (because they were all sold off) – so they have to rent. The selling of council housing in the 1980’s (a subject I have talked about in a previous article in the Chiswick Property Market Blog) artificially grew homeownership in the 1980’s, but as these people have got older, the younger generation didn’t have the same opportunity to buy their council house in the 1990’s, 2000’s or 2010’s. That is why, unless the council start building council houses by the acre, and hundreds of acres, private renting will continue to grow in Chiswick.

 

So if you want blame anyone .. blame the Grocer’s daughter from Grantham – Mrs T …. but before you do – do remember in the 1970s, the UK was called the “sick man of Europe” by critics of the UK government, because of industrial strife and poor economic performance compared to other European countries culminating with the Winter of Discontent of 1978/9 and if it hadn’t been for her we wouldn’t be where we are today.

 

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3 bed detached Bungalow Grove Park Chiswick W4 – fantastic development opportunity

Fantastic development opportunity to acquire a 3 bedroom detached bungalow in need of complete refurbishment or with the opportunity to redevelop the site subject to the usual planning permission.

The property is located in the heart of Grove Park on a good size

plot of land.

This property has fantastic potential and will not be on the market for long

http://www.zoopla.co.uk/for-sale/details/photos/40318634

 

 

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Rents in Chiswick rise by 3.8% in the last year

I was reading the Sunday Papers, as is my want and, when reading the financial pages, it was announced UK inflation had increased to its highest level in a year. Inflation, as calculated by the Government’s Consumer Prices Index, rose by 0.3% over the last 12 months. The report said it had risen to the those ‘heady’ levels by smaller falls in supermarket and petrol prices than a year ago. If you recall, in early 2015, we had deflation where prices were dropping!

So what does this mean for the Chiswick property market … especially the tenants?

Back in November, the Office of National Statistics stated average wages only rose by 1.8% year on year, so when adjusted for inflation, Chiswick people are 1.5% better off in ‘real’ terms. Great news for homeowners, as their mortgage rates are at their lowest ever levels and their spending power is increasing, but the news is not so good for tenants.

The average rent that Chiswick tenants have to pay for their Private Rental Properties in Chiswick (i.e. not housing association or council tenants) rose by 3.8% throughout 2015, eating into most of the growth. 2015 wasn’t a one off either. In 2014, rents in Chiswick rose by 3.0% (where salaries only rose by only 0.2%) However, it’s not all bad news for Chiswick tenants, because in 2013 rents rose by 2.5%, (but salaries rose by 2.2%).

… and it must be noted that the private rents Chiswick tenants have had to pay for Chiswick property since 2005 are only 27.6% higher, not even keeping up with inflation, which over the same time frame, rose at 27.8% (although salaries were only 22.3% higher over the same time period)

More and more, talking to 20 and 30 somethings who rent – it’s a choice. Gone are the days where owning your own property was a guaranteed path to wealth, affluence and prosperity. I know keep mentioning Europe, but some of the highest levels of home ownership are in Romania at 96.1%, Hungary at 88.2% and Latvia at 80.9% (none of them European economic dynamos) and even West European countries like Spain at 78.8% and Greece at 74% (and we know both of those countries are on their knees, riddled with national debt and massive youth unemployment).

At the other end of the scale, whilst we in the UK stand at 64.8% homeownership, in Europe’s powerhouses, only 52.5% of Germans own a home and only 44% of Swiss people are homeowners. Looks like eating chocolate, sauerkraut, renting and good economic performance go hand in hand. Yet, joking aside, home ownership has not always been the rule in the UK. In 1918, only 23% of people were homeowners, with no council housing, meaning in fact, 77% were tenants.

Tenants have choice, flexibility to move, they don’t have massive bills when the boiler blows up, it’s a choice. Chiswick rents are growing, but not as much as incomes. To buy or not to buy is an enormously difficult decision. For while buying a Chiswick home is a dream for the majority of the 20 and 30 something’s of Chiswick have, it might not leave them better off in the long run and it isn’t necessarily the best option for everyone. That is why, demand for renting is only going in one direction – upwards.

 

Data:

ONS (Office of National Stats) give the UK inflation figures
Rental figures – again ONS for the region (no one does town rental figures)
Salaries are ONS again
Homeownership from European Union
Homeownership for WW1 is again from ONS

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