Local property market information for the serious investor

Author: Kate Gwinnutt

Cardiff Private Rents hit £19.18 per sq. foot

As I am sure you are aware, one the best things about my job as an agent is helping Cardiff landlords with their strategic portfolio management. Gone are the days of making money by buying any old Cardiff property to rent out or sell on. Nowadays, property investment is both an art and science. The art is your gut reaction to a property, but with the power of the internet and the way the Cardiff property market has gone in the last 11 years, science must also play its part on a property’s future viability for investment.

Many metrics most property professionals (including myself) use when deciding the viability of a rental property is what properties are selling for, the average rent, the yield and an average value per square foot.

However, another metric I like to use is the average rent per square foot. The reason being is that is a great way to judge a property from the point of view of the tenant … what space they get for their money. Now of course, location (location, location in a Phil and Kirstie style) has a huge influencing factor when it comes to rents (and hence rent per square foot). Like people buying a property, tenants also have that balancing act between better/worse location, more vs. less money and size of accommodation (bigger and more rooms equalling more money) and where they live (location) verses making ends meet.

Interestingly, I know there are a lot of you in Cardiff who like to see my statistics on the Cardiff property market, so before I talk about the rental figures per square foot, I wanted to share the £ per square foot on the values. In Cardiff, the current AVERAGE figures are being achieved (and I must stress, these are average figures, so there will an enormous range in these figures), but on average, properties in Cardiff, split down by type are achieving …

  • Cardiff Detached Property – £269 / sq ft
  • Cardiff Semi Detached Property – £243 / sq ft
  • Cardiff Terraced Property – £224 / sq ft
  • Cardiff Apartments – £245 / sq ft

So, the rental figures:

The extent of space you get for your rent is replicated in the space you get for your money when buying a property. The average size of rental property in the Cardiff area is 813.1 sq ft (interesting when compared to the national average of 792.1 sq ft)

This means the average rent per square foot currently being

achieved on a Cardiff rental property is £19.18 per sq ft per annum

So, what we can deduce from this?  Well the devil is always in detail!

Whilst I was able to quote the average overall figure and the fact my research showed it was quite clear from data that there is relationship between the average £ per sq ft figures on property values and average £ per sq ft on rental figures as a property grows in size. However, something quite intriguing happens to those figures, in terms of what the property will sell for and what it will rent for, when we change and increase the size of the property.

My research showed that doubling the size of any Cardiff property doesn’t mean you will double the value of it … in either value or rent. This is because the marginal value increases diminish as the size of the property increases. In layman’s terms … Subject to a few assumptions, double the size of the house doesn’t mean double the value … what really happens is a doubling of the size gives only an approximately 40% to 65% uplift in value, but here comes the even more fascinating part … when it came to the rental figures, double the size of the house meant only 20% to 45% in increase in rent.

 

In a future article, I will be discussing the actual added value an extension can bring … but in the meantime, in an overall and sweeping statement, most of the time it makes sense to extend if you are going to live in the property as long as the extension is proportionate to the property, but if you are going to rent it out … possibly not.

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No 14. Harrison Drive

Harrison Drive in St Mellons is number 14 on my countdown of the top 20 streets in Cardiff based on turnover and popularity.

Watch the video for more info

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Homeownership Amongst Cardiff Bay’s Young Adults Slumps to 45.06%

Doom and Gloom for Cardiff Bay Property Market?

The degree to which young Cardiff Bay people are locked out of the Cardiff Bay housing market has been revealed in new statistics.

A Cardiff Bay landlord was asking me the other week to what effect homeownership rates in Cardiff Bay in the early to middle aged adult age range had affected the demand for rental property in Cardiff Bay since the Millennium. I knew anecdotally that it affected the Cardiff Bay rental market, but I wanted some cold hard numbers to back it up. As you know, I like a challenge when it comes to the stats.. so this is what I found out for the landlord, and I’d like to share them with you as well.

As anyone in Cardiff Bay, and most would say those born more recently, are drastically less likely to own their own home at a given age than those born a decade earlier, let’s roll the clock back to the Millennium and compare the figures from then to today.

In the year 2000, 45.6% of Cardiff Bay 28-year olds (born in 1972) owned their own home, whilst a 28 year old today born in 1990) would have a 24.3% chance of owning their own home. Next, let’s look at someone born ten years before that. So, going back to the Millennium, a 38 year Cardiff Bay person (therefore born in 1962) would have a 67.4% chance of owning his or her own home and a 38 year today in Cardiff Bay (born in 1980) would only have a 52.5% chance of owning their own home.

Since the Millennium, overall general homeownership in the 25 to 44 year old age range in Cardiff Bay has reduced from 62.32% to 45.06%

If you look at the graph below, split into the four age ranges of 25 year olds (yo) to 29yo, 30yo to 34yo, 35yo to 39yo and finally 40yo to 44 yo, you will quite clearly see the changes since the Millennium in Cardiff Bay. The fact is the figures in Cardiff Bay show the homeownership rate has proportionally fallen the most for the youngest (25yo to 29yo) age range compared to the other age ranges.

The landlord suggested this deterioration in homeownership in Cardiff Bay across the age groups could be down to the fact that more of those born in the 1980’s and 1990’s (over those born in the 60’s and 70’) are going to University and hence entering the job market at an older age or those young adults are living with their parents longer.I read some national homeownership statistics of different age groups with the same number of years after they left education (rather than at the same age) and that gave an identical dip to the graph above.  Neither are these drops in homeownership related with a significant increase in the number of young adults living with their parents. Again, nationally, that has hardly changed over the last 20 years as the percentage of 30-year-olds living with Mum and Dad only increased from 22% of those born in the early ‘70s to 23% of those born in the early ‘80s.

So, what does this mean for the rental market in Cardiff Bay?

Only one thing .. with the local authority not building Council houses, Housing Associations strapped for cash to build new properties and the younger generation not buying, there is only one way these youngsters can obtain a roof over their head and have a home of their own .. through the private landlord sector. Now with the new tax rules and up and coming licensing rules, Cardiff Bay landlords will have to work smarter to ensure they make the investment returns they have in the past. If you ever want to pick my brains on the future direction of the Cardiff Bay rental market .. drop me line or pop in next time you are passing my office.

 

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Cardiff’s ‘Millennials’ set to inherit £178,159 each in property!

That got your attention … didn’t it!

But before we start, what is Generation X, let alone Generation Z, Millennials, Baby Boomers  … these are phrases banded around about the different life stages (or subcomponents) of our society. But when terminologies like this are used as often and habitually as these phrases (i.e. Gen X this, Millennial that etc.), it appears particularly vital we have some practical idea of what these terms actually mean. The fact is that everyone uses these phrases, but often, like myself, they are not exactly sure where the lines are drawn …until now…

So, for clarity …

Generation Z:              Born after 1996

Millennials:                 Born 1977 to 1995

Generation X:              Born 1965 to 1976

Baby Boomers:            Born 1946 to 1964

Silent Generation:       Born 1945 and before

My research shows there are 34,513 households in Cardiff owned by Cardiff Baby Boomers (born 1946 to 1964) and Cardiff’s Silent Generation (born 1945 and before). It also shows there are 67,635 Generation X’s of Cardiff (Cardiff people born between 1965 to 1976). Looking at demographics, homeownership statistics and current life expectancy, around two-thirds of those Cardiff 67,635 Generation X’s have parents and grandparents who own those 34,513 Cardiff properties.

… and they will profit from one of the biggest inheritance explosions of any post-war generation to the tune of £8.366bn of Cardiff property or £185,452 each but they will have to wait until their early 60’s to get it!

The Millennials are also in line for a big inheritance windfall.

There are 81,364 Millennials in Cardiff and my research shows around two thirds of them are set to inherit the 39,886 Cardiff Generation X’s properties. Those Generation X’s Cardiff homes are worth £9.669bn meaning, on average, each Millennial will inherit £178,159; but not until at least 2040 to 2060!

While the Cardiff Millennials have done far less well in amassing their own savings and assets, they are more likely to take advantage of an inheritance boom in the years to come. This will probably be very welcome news for those Cardiff Millennials, including some from poorer upbringings who in the past would have been unlikely to receive gifts and legacies.

However, inheritance is not the magic weapon that will get the Millennials on to the Cardiff housing ladder or tackle growing wealth cracks in UK society, as the inheritance is unlikely to be made available when they are trying to buy their first home…but before all you Cardiff Millennials start running up debts, over 50% of females and around 35% of men are going to have to pay for nursing home care. Interestingly, I read recently that a quarter of people who have to pay for their care, run out of money.

So, if you are a Cardiff Millennial there potentially will be nothing left for you.

Of course, most parents want to give their children an inheritance, the consideration that what you have worked genuinely hard for over your working life won’t go to your children to help them through their lives is a really awful one … maybe that is why I am seeing a lot of Cardiff grandparents doing something meaningful, and helping their grandchildren, the Millennials, with the deposit for their first house.

One solution to the housing crisis in Cardiff (and the UK as a whole) is if grandparents, where they are able to, help financially with the deposit for a house. Buying is cheaper than renting – we have proved it many times in these articles … so, it’s not a case of not affording the mortgage, the issue is raising the 5% to 10% mortgage deposit for these Millennials.

Maybe families should be distributing a part of the family wealth now (in the form of helping with house deposits) as opposed to waiting to the end… it will make so much more of a difference to everyone in the long run.

Just a thought?

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With Cardiff Annual Property Values 5.4% Higher, This is My 2018 Forecast

Looking at the newspapers between Christmas and New Year, it seemed that this year’s sport in the column inches was to predict the future of the British housing market. So to go along with that these are my thoughts on the Cardiff property market.

With the average 5-year fixed rate mortgage at 1.98% (down from 3.47% in 2014) and 2-year fixed rate at 1.47% (down from 2.37% in 2014), mortgage interest rates offered by lenders are at an all-time low (even with the slight increase on the Bank of England base rate a few months ago). Added to this, there has been a low unemployment rate of 5.6% in Cardiff, which has contributed to maintain a decent level demand for property in Cardiff in 2017 (interestingly – an impressive 724 Cardiff properties were sold in last 12 months), whilst finally, the number of properties for sale in the city has remained limited, thus providing support for Cardiff house prices, meaning …

Cardiff Property Values are 5.4% higher than a year ago

However, moving into 2018, there will be greater pressures on people’s incomes as inflation starts to eat into real wage packet growth, which will wield a snowballing strain on consumer confidence. Interestingly though, information from the website Rightmove suggested over a third of property it had on its books in October and November had their asking prices reduced, the highest percentage of asking price reductions in the same time frame, over five years. Still, a lot of that could have been house-sellers being overly optimistic with their initial pricing.

In terms of what will happen to Cardiff property values in the next 12 months, a lot will be contingent on the type of Brexit we have and the impact on the whole of the UK economy. A lot of people will talk about the Central London property market in the coming year, and if the banking and finance sectors are negatively affected with a poor Brexit deal, then the London market is likely to see more of an impact.

Nevertheless, the bottom line is Cardiff homeowners and Cardiff landlords should be aware of what happens in the rollercoaster housing market of Central London, but not panic if prices do drop suddenly there in 2018. Over the last 8 years, the Central London property market has been in a world of its own (Central London house prices have grown by 89.6% in those last 8 years, whilst in Cardiff, they have only risen by 32.8%). So we might see a heavy correction in the Capital, whilst more locally, something a little more subdued.

Hindsight is always better than foresight and predicting anything economic is all well and good when you know what is around the corner. At least we have the Brexit divorce settlement sorted and, as the UK economy and the UK housing market are intertwined, it all depends on how we deal as a Country with the Brexit issue. However, we have been through the global financial crisis reasonably intact … I am sure we can get through this together as well?

Oh, and house prices in Cardiff over the next 12 months? I believe they will end up between 0.2% higher and 1.6% higher, although it will probably be a bumpy ride to get to those sorts of figures.

 

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£498.63pm – The Profit made by every Cardiff Bay Property Owner over the last 20 years

As we go headlong into 2018, I believe UK interest rates will stay low, even with the additional 0.25% increase that is expected in May or June. That rise will add just over £20 to the typical £160,000 tracker mortgage, although with 57.1% of all borrowers on fixed rates, it will probably go undetected by most buy-to-let landlords and homeowners. I forecast that we won’t see any more interest rate rises due to the fragile nature of the British economy and the Brexit challenge. Even though mortgages will remain inexpensive, with retail price inflation outstripping salary rises, it will still very much feel like a heavy weight to some Cardiff Bay households.

Now it’s certain the Cardiff Bay housing market in 2017 was a little more subdued than 2016 and that will continue into 2018. Property ownership is a medium to long-term investment so looking at that long-term time frame; the average Cardiff Bay homeowner who bought their property 20 years ago has seen its value rise by more than 209%.

This is important, as house prices are a national obsession and tied into the health of the UK economy as a whole. The majority of that historic gain in Cardiff Bay property values has come from property market growth, although some of that will have been added by homeowners modernising, extending or developing their Cardiff Bay home.

Taking a look at the different property types in Cardiff Bay and the profit made by each type, it makes interesting reading..

Average Price
Paid in 1998 in Cardiff Bay

Average Price
Paid in 2018 in Cardiff Bay

Average Total Profit
in last 20 years in Cardiff Bay

Average Profit
per Month in Cardiff Bay over the last 20 years

 Detached

£68,456

£300,572

£232,116

£967.15

 Terraced

£46,759

£259,523

£212,764

£886.52

Apartments

£68,437

£157,056

£88,619

£369.25

Overall Cardiff Bay Average

£57,589

£177,259

£119,670

£498.63

However, I want to put aside all that historic growth and profit and looking forward to what will happen in the future. I want to look at the factors that could affect future Cardiff Bay (and the Country’s) house price growth/profit; one important factor has to be the building of new homes both locally and in the country as a whole. This has picked up in 2017 with 217,350 homes coming on to the UK housing ladder in the last year (a 15% increase on the previous year’s figures of 189,690. However, Philip Hammond has set a target of 300,000 a year, so still plenty to go!

Another factor that will affect property prices is my prediction that the balance of power between Cardiff Bay buy-to-let landlords and Cardiff Bay first-time buyers should tip more towards the local first-time buyers in 2018.

The Council of Mortgage Lenders expects the number of buy to let mortgages to drop by 34% from levels seen in 2015. This is because of taxes being increased recently on buy-to-let and harder lending criteria for buy to let mortgages, which means I foresee a gradual move in the balance of power in favour of first-time buyers rather than buy-to-let landlords. First time buyers will also be helped by The Chancellor eradicating Stamp Duty for all properties up to £300,000 bought by first-time buyers in the recent budget. 

This means Cardiff Bay buy-to-let landlords will have to work smarter in the future to continue to make decent returns (profits) from their Cardiff Bay buy-to-let investment. Even with the tempering of house price inflation in Cardiff Bay in 2017, most Cardiff Bay buy to let landlords (and homeowners) are still sitting on a copious amount of growth from previous years.

The question is, how do you, as a Cardiff Bay buy to let landlord ensure that continues?

Since the 1990’s, making money from investing in buy-to-let property was as easy as falling off a log. Looking forward though, with all the changes in the tax regime and balance of power, making those similar levels of return in the future won’t be as easy. Over the last ten years, I have seen the role of the forward thinking letting agents evolve from a ‘rent collector’ and basic property management to a more holistic role, or as I call it, ‘landlord portfolio strategic leadership’. Thankfully, along with myself, there are a handful of letting agents in Cardiff Bay whom I would consider exemplary at this landlord portfolio strategy where they can give you a balanced structured overview of your short, medium and long-term goals, in relation to your required return on investment, yield and capital growth requirements. If you would like such advice, speak with your current agent – or whether you are a landlord of ours or not – without any cost or commitment, feel free to drop me a line.

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Youngsters unable to buy their first home in Cardiff – Are the Baby Boomers and Landlords to Blame?

Talk to many Cardiff 20 something’s, where home ownership has looked but a vague dream, many of them have been vexatious towards the Baby Boomer generation and their pushover ‘easy go lucky’ walk through life; jealous of their free university education with grants, their eye watering property windfalls, their golden final salary pensions and their free bus passes.

If you had bought a property in Cardiff for say £20,000 in first quarter of 1977, today it would be worth £253,628, a windfall increase of 1168.14%.

But to blame the 60 and 70 year olds of Cardiff for that sort of rise seems a little unfair, with the value of the homes rising like rocket, I don’t believe they can be censured or made liable for that. A few weeks ago, I discussed in my blog the number of people in the Cardiff area who have two or more spare bedrooms (meaning they are under-occupying the house). I see many mature members of Cardiff society, rattling around in large 4/5 bed houses where the kids have flown the nest years ago … but should they be blamed?

We are all just human, and the mature members of UK society have just reacted to the inducements of our property and tax system. The mature generations who joined the property market party in the 1970’s and 1980’s were able to take out huge mortgages, protected in the knowledge that inflation would corrode the real value of the mortgage, while wage gains would boost their ability to repay.

Neither do I directly blame the multitude of Cardiff buy to let landlords, buying up their 10th or 11th property to add to their buy to let empire. They too, are humbly reacting to the peculiar historic inducements of the UK property market.

So, who is to blame?

Well, hyperinflation in the 1970’s meant the real value of people’s mortgages was whipped out (as mentioned above). Margaret Thatcher and Nigel Lawson are also good people to blame with Maggie selling off millions of council houses and Nigel Lawson’s delayed ending of the MIRAS tax relief in 1987; meaning he too can get his share of indignation. The Blair/Brown combo doubled stamp duty in 1997 and again in 2000, which, as a tax on property transactions, precludes a more efficient distribution of the current housing stock. The Government has had plenty of opportunity to change the draconian stamp duty rules to incentivise those mature Cardiff house movers to downsize.

However, I have started to see over the last few years a change in Government policy towards housing. The new breed of Cardiff buy to let landlords that have come about since the Millennium, have had their wings clipped over the last couple of years, with the introduction of new tax rules (meaning it is slightly more difficult to make money out of property unless you have all the national information and Cardiff property trends to hand).

It’s easy to think the only reason that hundreds of first time buyers have been priced out of the Cardiff housing market is because of these landlords. Yet, I believe landlords have been undervalued with the Cardiff homes they provide for Cardiff people. With first time buyers struggling to save for a deposit, if it weren’t for those landlords buying up those homes over the last 10/15 years, we would have a bigger housing crisis than we have today. Since the global financial crisis of 2008/9, local councils have had to cut services, so certainly didn’t have enough money to build new homes … homes that were provided to Cardiff by these buy to let landlords.

One side of the argument is that 1,871 homes are being bought up by buy to let landlords each year in the Cardiff City Council area when otherwise they might have become available to other buyers, the other side of the argument is the current national average deposit is £51,800, which is, by far, the greatest barrier to those wanting to buy their first home. Those homes bought by local buy to let landlords are not left idle, as they equate to 13,096 of new homes for local people, most of whom who see renting as a better option because of the choice, the simplicity and the flexibility which renting brings.

In the 60’s/70’/80’s, the traditional thoughts that you were a failure unless you owned your own home have now all but disappeared, because if you ask many young people, they would probably say renting was the perfect option for them at certain times of their life.

 

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My thoughts on the future of the Cardiff Buy-To-Let Market

I was recently reading a report by the Home website which suggested that hordes of landlords are selling their buy-to-let investments due to increasing burdens on them in the buy-to-let market. Their findings suggest the number of new properties that came onto the market nationally (for sale) jumped by 11% across the UK as a result.

Those increasing burdens include new tax rules coming in over the next 3 to 4 years and the announcement that all self-managing landlords (i.e. landlords that don’t use a letting agent to look after their buy-to-let property) will soon need to register with a compulsory redress scheme to resolve tenant arguments and disputes; as Westminster wants to heighten standards in the Private Rented Sector.

Interestingly I was chatting with a self-managed landlord from Cyncoed, when I was out socially over the festive period, who didn’t realise the other recent legislations that have hit the Private Rented sector, including the ‘Right to Rent’ regulations which came in to operation last year. Landlords have to certify their tenants have the legal right to live in the UK. This includes checking and taking copies of their tenant’s passport or visa before the tenancy is signed. Of course, if you use a letting agent to manage your property, they will usually sort this for you (as they will with the redress scheme when that is implemented).

If you are a self-managed landlord though, the consequences are severe because if you let a property to a tenant who is living in the UK illegally, you will be fined up to £3,000. That same Cyncoed landlord popped into my offices in the New Year, and I checked all his paperwork and ensured he was on the right side of the law going forward – and I offer the same to any landlord in the Cardiff area if you want me to cast my eye over your buy to let matters (and at no cost – ok just bring in some chocolates for the girls in the office!)

But what of all these extra properties being dumped onto the market in Cardiff? When I looked at the records the number of properties on the market in Cardiff now, as opposed to a year ago, the numbers tell an interesting story …

 

  1st Jan 2017 1st Jan 2018  
Detached 543 547 1%
Semi 591 478 -19%
Terraced 509 419 -18%
Flat 788 882 12%
Plots +
Other
94 88 -6%
Total 2525 2414 -4%

Overall, Cardiff doesn’t match the national trend, with the number of properties on the market actually dropping by 4% in the last year.  It was particularly interesting to see the number of flats increase by 12%, yet the number of semis on the market drop by 19%.

However, speaking with my team and other property professionals in the city, the majority of that movement in the number of properties and the types of properties on the market isn’t down to landlords dumping their properties on the market. The whole property market has changed in the last 12 months, with the majority of the change in the number and type of properties for sale due to the owner-occupier market, not landlords (a subject I will write about soon in my Cardiff Property Market blog later this Spring?). You see, for the last ten years, each month there has always been a small number of Cardiff landlords who have been releasing their monies from their Cardiff buy to let properties – as is the nature of all investments!

Nationally, the number of rental properties coming on to the market to rent fell by 16% in Q4 2017 compared to Q4 2016 .. but that isn’t because there are 16% less rental properties to rent – it’s because tenants are staying in their rental properties longer meaning less are coming on the market to be RE-LET.

Nevertheless, some Cardiff landlords will want to release the equity held in their Cardiff buy to let properties in 2018. All I suggest is that you speak with your letting agent first, as putting a rental property on the open market often spooks the tenants to hand in their notice days after you put it on the market (because they don’t like the uncertainty and also believe they will become homeless!). This means you have an empty property, costing you money with no rent coming in.  However, some letting agents who specialise in portfolio management have select lists of landlords that will buy with sitting tenants in. If you have a portfolio in the Cardiff area and are considering selling some or all of them – drop me a line as I might have a portfolio landlord for you (with the peace of mind that you won’t have any rental voids).

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Increase in Interest Rates to cost Cardiff Bay Home Owners £489.39 a year

Cardiff Bay homeowners will be among those affected by the latest rise in the Bank of England interest rates. The first increase in 10 years; they have just been raised from 0.25 percent to 0.5 per cent. This uplift comes as inflation hits a 51-month high of 2.9 per cent whilst the national unemployment rate is at an all-time low of 4.3 per cent.

Interestingly, the Governor of the Bank of England has indicated that the interest rate is likely to increase again over the next couple of years, but Mr Carney said mortgages and savings would not be affected in the short term. However, look at all the big banks and just about all of them have increased their standard variable mortgage rate..

 

The average Cardiff Bay mortgage is £195,757

I have to ask by how much Cardiff Bay homeowners (on variable rate or tracker mortgages) will see their repayments increase?

In the CF10 postcode there are 1,347 homeowners with a mortgage, of which 579 have a variable rate mortgage (the remaining have fixed rate mortgages). The total amount owed by those CF10 homeowners with those variable rate mortgages is £113,278,990, meaning the average monthly mortgage payment for those home owners on variable rate mortgages before the interest rate rise was £1,526.36 per month and now its £1,567.14 per month … meaning

The interest rate rise will cost Cardiff Bay

homeowners on average an extra £489.39 per year

 

Whilst this is the first raise in interest rates in over 10 years, it must be noted it is at a significantly low level compared to figures in the 1970s and early 1990s. Many of my readers talk of interest rates at 17 per cent when Sir Geoffrey Howe increased them to try and combat the hyperinflation (from the fallout of the financial crisis that hit Britain in the 1970’s) and Norman Lamont in September 1992 with the infamous Black Wednesday crisis, when interest rates were raised from 10% to 15% in just one day.

So, what will this interest rate actually do to the Cardiff Bay housing market?

Well, if I’m being frank – not a great deal. The proportion of Cardiff Bay homeowners with variable rate mortgages (and thus directly affected by a Bank of England rate rise) will be smaller than in the past, in part because the vast majority of new mortgages in recent years were taken on fixed interest rates. The proportion of outstanding mortgages on variable rates has fallen to a record low of 42.3 per cent, down from a peak of 72.9 per cent in the autumn of 2011.

If more Cardiff Bay people are protected from interest rate rises, because they are on a fixed rate mortgage, then there is less chance of those Cardiff Bay people having to sell their Cardiff Bay properties because they can’t afford the monthly repayments or even worse case scenario, have them repossessed.

However, and this will be of interest to both Cardiff Bay homeowners and Cardiff Bay buy to let landlords …

.. for every 1% increase in the Bank of England interest rate, it will cost the average Cardiff Bay homeowner on a variable rate mortgage £163.13 per month

So, what next? Because UK inflation levels are at 2.9 per cent (the country’s highest rate since April 2012) and the Bank of England is tasked by HM Government to keep inflation at 2 per cent using various monetary tools (one of which is interest rates) – you can see why interest rate rises might be on the cards in the future as increasing interest rates tends to dampen inflation.

Now of course there is a certain amount of uncertainty with regard to Brexit and the negotiations thereof, but fundamentally the British economy is in decent shape. People will always need housing and as we aren’t building enough houses (as I have mentioned many times in the Cardiff Bay Property Blog), we might see a slight dip in prices in the short term, but in the medium to long term, the Cardiff Bay property market will always remain strong for both Cardiff Bay homeowners and Cardiff Bay landlords alike.

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Cardiff Bay Apartments are 17.1% more affordable than 10 years ago

My research shows that certain types of Cardiff Bay property are more affordable today than before the 2007 credit crunch.

Roll the clock back to 2007 just before the credit crunch hit which saw Cardiff Bay property values plummet like a lead balloon and the Cardiff Bay property market had reached a peak with the prices for Cardiff Bay property hitting the highest level they had ever reached.  Between 2008 and 2010, Cardiff Bay property values lay in the doldrums and only started to rise in 2011, albeit quite slowly to begin with.

Nevertheless, even though property values have now passed those 2007 peaks, my research indicates that Cardiff Bay property, especially flats/apartments, are now more affordable than they were before the 2008 credit crunch.

Back in 2007, the average value of a Cardiff Bay flat/apartment stood at £164,276 and today, it stands at £178,796, a rise of £14,520 or 8.8%.

However, between 2007 and today, we have experienced inflation (as measured by the Government’s Consumer Price Index) of 25.97% meaning that in real spending power terms Cardiff Bay apartments are 17.1% more affordable than in 2007. Looking at it another way, if the average Cardiff Bay apartment (valued at £164,276 in 2007) had risen by 25.97% inflation over those 10 years, today it would be worth £206,938 (instead of the current £178,796).

The point I’m trying to get across is that Cardiff Bay property is more affordable than many people think.  Cardiff Bay first time buyers can get on the ladder as 95% mortgages have been readily available to first-time buyers since 2010.

It really comes down to a choice and if Cardiff Bay first-time buyers can get over the hurdle of saving the 5% deposit for the mortgage on the property – they will be on to a winner, especially with these ultralow mortgage interest rates, a mortgage can be between 10% and 30% cheaper per month than the rental payments on the same house.

So why aren’t Cardiff Bay 20 somethings buying their own home?

Back in the 1960’s and 1970’s, renting was considered the poor man’s choice in Cardiff Bay (and the rest of the Country) a huge stigma was attached to renting. However, over the last 10 years as a country, we have done a complete U-turn in our attitude towards renting – meaning that many people find renting a better option and a lifestyle choice.

Saving the 5% deposit means going without many luxuries in life (such as holidays, every satellite movie and sports channel, socialising or the latest mobile phone – even if only in the short term) therefore instead of saving every last pound to put towards a mortgage deposit Cardiff Bay 20 somethings choose to rent.

There is no denying the simple fact that over the next 10 to 15 years, the people who choose to rent instead of buy in Cardiff Bay will continue to rise.

Therefore, everyone in Cardiff Bay has a responsibility to ensure that an adequate number of quality Cardiff Bay rental properties are safeguarded to meet those future demands. Interestingly, what I have noticed though over the last few years are the expectations of Cardiff Bay tenants on the finish and specification of their Cardiff Bay rental property.

I have perceived that in the past, what a tenant wanted from their Cardiff Bay rental property was moderately unassuming because renting a property was only a short-term choice to fill the gap before jumping on the property ladder. Before the millennium, wood chip wall paper and twenty-year-old kitchen and bathroom suites were considered the norm.

However, Cardiff Bay tenants’ expectations are becoming more discerning as each year goes by.  I have also noticed the length of time a tenant remains in their Cardiff Bay property is becoming longer (and this was backed up recently by stats from a Government Report), although I have noticed a tendency for many Cardiff Bay landlords not to keep the rental payments at the going market rates  – maybe a topic for a future article for my blog?

The bottom line is this … Cardiff Bay landlords will need to be more conscious of tenants needs and wants and consider their financial planning for future enhancements to their Cardiff Bay rental properties over the next five, ten and twenty years –  e.g. decorating, kitchen and bathroom suites etc etc ..

The present-day and future situation of the Cardiff Bay private rental property market is important, and I frequently liaise with Cardiff Bay buy-to-let investors looking to spread their Cardiff Bay rental-portfolios. I also enjoy meeting and working alongside Cardiff Bay first time landlords, to ensure they can navigate through the minefield of rental voids, the important balance of capital growth and yield and ensuring the property is returned back to you in the future in the best possible condition.

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