Local property market information for the serious investor

Month: September 2016

What will the 0.25% Interest Rate do to the Cardiff Bay Property Market?

cardiff bay property

I had an interesting chat with a Penarth landlord who owns a few properties in the city. He popped his head in to my office as his wife was shopping in the area (and let’s be honest talking about the Cardiff Bay Property Market is a lot more interesting than clothes shopping!). We had never spoken before (because he uses another agent in the city to manage his Cardiff properties) yet after reading my blog on the Cardiff Bay Property Market for awhile, the landlord wanted to know my thoughts on how the recent interest rate cut would affect the Cardiff property market and I would also like to share these thoughts with you……

Well it’s been a few weeks now since interest rates were cut to 0.25% by the Bank of England as the Bank believed Brexit could lead to a materially lower path of growth for the UK, especially for the manufacturing and construction industries. You see for the country as a whole, the manufacturing and construction industries are still performing well below the pre credit crunch levels of 2008/09, so the British economy remains highly susceptible to an economic shock. This is especially important in Cardiff, because even though we have had a number of local success stories in manufacturing and construction, a large number of people are employed in these sectors. In Cardiff, of the 153,401 people who have a job, 8,255 are in the manufacturing industry and 8,933 in Construction meaning

5.4% of Cardiff workers are employed in the Manufacturing

sector and 5.8% of Cardiff workers are in Construction

The other sector of the economy the Bank is worried about, and an equally important one to the Cardiff economy, is the Financial Services industry. Financial Services in Cardiff employ 8,088 people, making up 5.3% of the Cardiff working population.

Together with a cut in interest rates, the Bank also announced an increase in the quantity of money via a new programme of Quantitative Easing to buy £70bn of Government and Private bonds. Now that won’t do much to the Cardiff Bay property market directly, but another measure also included in the recent announcement was £100bn of new funding to banks. This extra £100bn will help the High St banks pass on the base rate cut to people and businesses, meaning the banks will have lots of cheap money to lend for mortgages .. which will have a huge effect on the Cardiff Bay property market (as that £100bn would be enough to buy half a million homes in the UK).

It will take until early in the New Year to find out the real direction of the Cardiff Bay property market and the effects of Brexit on the economy as a whole, the subsequent recent interest rate cuts and the availability of cheap mortgages. However, something bigger than Brexit and interest rates is the inherent undersupply of housing (something I have spoken about many times in my blog and the specific affect on Cardiff Bay). The severe undersupply means that Cardiff Bay property prices are likely to increase further in the medium to long term, even if there is a dip in the short term. This only confirms what every homeowner and landlord has known for decades .. investing in property is a long term project and as an investment vehicle, it will continue to outstrip other forms of investment due to the high demand for a roof over people’s heads and the low supply of new properties being built.

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Ready Made Investment Property in Prospect Place

Hi Everyone! I hope you have all had a good week.

So as I was having a browse on Zoopla last night this two bed in Prospect Place stuck out.

It is being advertised as a tenanted investment opportunity with a yield of 6.5% which sounds very good! It has just come on the market with Knight Knox for a bargain of £132,500! Now there are no internal photos at the moment so I would definitely suggest a viewing to check this is all what it seems but at this price it is worth a look. It has two bedrooms and two bathrooms and similar flats in the development are typically being sold for £145,000 and upwards.

http://www.zoopla.co.uk/for-sale/details/41542460

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Only 10.1% of Cardiff Bay Rented Property have Children living in them.

Doom and Gloom for Cardiff Bay Property Market?

A few weeks ago I was asked a fascinating question by a local Councillor who, after reading the Cardiff Bay Property Blog, emailed me and asked me – “Are Cardiff Bay Landlords meeting the Challenges of tenanted families bringing up their families in Cardiff Bay?”

What an interesting question to be asked.

Irrespective of whether you are tenant or a homeowner, to bring up a family, the most important factors are security and stability in the home. A great bellwether of that security and stability in a rented property is whether tenants are constantly being evicted. Many tenancies last just six months with families at risk of being thrown out after that with just two months’ notice for no reason.

Some “left leaning Politician’s” keep saying we need to deal with the terrible insecurity of Britain’s private rental market by creating longer tenancies of 3 or 5 years instead of the current six months. However, the numbers seem to be telling a different story. The average length of residence in private rental homes has risen in the last 5 years from 3.7 years to 4 years (a growth of 8.1%), which in turn has directly affected the number of renters who have children. In fact, the proportion of private rented property that have dependent children in them, has gone from 29.1% in 2003 to 37.4% today.

Looking specifically at the CF10 area of Cardiff compared to the National figures, of the 3,894 private rental homes in, 393 of these have dependent children in them (or 10.1%), which is interestingly (although expected) below the National average of already stated 37.4%.

Even more fascinating are the other tenure types in CF10 Cardiff …

  • 9% of Social (Council) Housing in Cardiff Bay have dependent children
  • 5% of Cardiff Bay Owner Occupiers (with a Mortgage) have dependent children
  • 6% of Owner Occupiers (without a Mortgage) have dependent children

Although, when we look at the length of time these other tenure types have, whilst the average length of a tenancy for the private rented sector is 4 years, it is 11.4 years in social (council) housing, 24.1 years for home owners without a mortgage and 10.4 years of homeowners with mortgages.

Anecdotally I have always known this, but this just proves landlords do not spend their time seeking opportunities to evict a tenant as the average length of tenancy has steadily increased. This noteworthy 8.1% increase in the average length of time tenants stay in a private rented property over the last 5 years, shows tenants are happy to stay longer and start families.

So, as landlords are already meeting tenants’ wants and needs when it comes to the length of tenancy, I find it strange some politicians are calling for fixed term 3 and 5 year tenancies. Such heavy handed regulation could stop landlords renting their property out in the first place, cutting off the supply of much needed rental property, meaning tenants would suffer as rents went up. Also, if such legislation was brought in, tenants would loose their ‘Get Out of Jail card’, as under current rules, they can leave at anytime with one months notice not the three or six month tenant notice suggested by some commentators.

Finally, there is an extra piece of good news for Cardiff Bay tenants. A recent national survey has noted that those living in private rented housing for a long periods of time generally paid less rent than those who chopped and changed.

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The countdown is on for Rent Smart Wales Enforcement!

Hi Everyone!

As we are only a few months away from enforcement of the Rent Smart Wales legislation I thought it would be a good opportunity to do quick recap video for you.

Make sure you comply with the legislation by 23 rd November!

As always any queries/questions feel free to give me a call on 02920 301141 or email cardiff@northwooduk.com

 

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