September 5, 2017
Number 19 on the countdown of my top 20 streets in Cardiff is Rhymney Street in the heart of Cathays. It has an average price £177,442 and has had 280 transactions since 1995.
September 5, 2017
Number 19 on the countdown of my top 20 streets in Cardiff is Rhymney Street in the heart of Cathays. It has an average price £177,442 and has had 280 transactions since 1995.
September 1, 2017
My thoughts to the landlords and homeowners of Cardiff…
The tightrope of being a Cardiff buy-to-let landlord is a balancing act many do well at. Talking to several Cardiff landlords, they are very conscious of their tenants’ capacity and ability to pay the rent and their own need to raise rents on their rental properties (as Government figure shows ‘real pay’ has dropped 1% in the last six months). Evidence does however suggest many landlords feel more assured than they were in the spring about pursuing higher rents on their Cardiff buy-to-let properties.
During the summer months, historic evidence suggests that the rents new tenants have had to pay on move in have increased. June/July/August is a time when renters like to move, demand surges and the normal supply and demand seesaw mean tenants are normally prepared to pay more to secure the property they want to live in, in the place they want to be. This is particularly good news for Cardiff landlords as average Cardiff rents have been on a downward trend recently. So look at the figures here…
Rents in Cardiff on average for new tenants moving in have risen 0.8% for the month, taking overall annual Cardiff rents 1.3% higher for the year
However, several Cardiff landlords have expressed their apprehensions about a slowing of the housing market in Cardiff and I believe, based on this new evidence, they may be exaggerated.
Before we get the Champagne out, the other side of the coin to property investing is capital values (which will also be of interest to all the homeowners in Cardiff as well as the Cardiff buy-to-let landlords). I believe the Cardiff property market has been trying to find some form of balance (one might even say equilibrium) since the New Year. According to the Land Registry…
Property Values in Cardiff are 5.88% higher than they were 12 months ago, rising by 2.68% last month alone!
Yet, I would take those figures with a pinch of salt as they reflect the sales of Cardiff properties that took place in early Spring 2017 and now are only exchanging and completing during the summer months.
The reality is the number of properties that are on the market in Cardiff today has risen by 4.21% since the New Year and that will have a dampening effect on property value increases. As tenants have had less choice, buyers now have more choice … and that will temper Cardiff property prices as we head towards 2018.
Be you a homeowner or landlord, if you are planning to sell your Cardiff property in the short term, it’s important, especially with the rise in the number of properties on the market, that you realistically price your property when you bring it to the market. It is so crucial as the short-term balance of the local property market see-saw slips more towards the buyer with the increase in the number of properties for sale. Everyone has access to every property on the market now through the likes of Rightmove and Zoopla and they will compare your home with other property like yours.
However, even with this uplift in the number of properties for sale in Cardiff, property prices will remain stable and strong in the medium to long term. This is because the number of properties on the market today is still way below the peak of summer of 2008, when there were 6,687 properties for sale compared to the current level of 2,623 (if you recall, prices dropped by nearly 20% in Credit Crunch years of ‘08 and ‘09).
Compared to 2008, today’s lower supply of Cardiff properties for sale will keep prices relatively high…and they will continue to stay at these levels for the medium to long term.
Less people are moving than a few years ago, meaning less property is for sale. Fewer properties for sale mean property prices remain relatively high and this is because of a number of underlying reasons. Firstly, buy-to-let landlords tend not sell their properties as often than owner-occupiers, consequently removing the property out of the housing market selling cycle. Secondly, Stamp Duty is much higher compared to 10 years ago (meaning it costs more to move). Next, there is a dearth of local authority rental housing so demand for private rented housing will remain high. Then we have the UK’s maturing owner occupier population, meaning these older people are less likely to move (compared to when they were younger). Another reason is the lack of new homes being built in the country (we need 240k houses a year to be built in the UK and we are currently only building 145k a year!) and finally, the new mortgage rules introduced in 2014 about how much a person can borrow on a mortgage has curtailed demand.
Some final thought’s before I go – to all the Cardiff homeowners that aren’t planning to sell – this talk of price changes is only on paper profit or loss. To those that are moving … most people that sell, are buyers as well, so as you might not get as much for yours, the one you will want to buy won’t be as much, (swings and roundabouts as Mum used to say!)
To all the Cardiff landlords – keep your eyes peeled – I have a feeling there may be some decent buy-to-let deals to be had in the coming months
August 22, 2017
The most recent set of data from the Land Registry has stated that property values in Cardiff and the surrounding area were 5.8% higher than 12 months ago and 12.27% higher than January 2015.
Despite the uncertainty over Brexit as Cardiff (and most of the UK’s) property values continue their medium and long-term upward trajectory. As economics is about supply and demand, the story behind the Cardiff property market can also be seen from those two sides of the story.
Looking at the supply issues of the Cardiff property market, putting aside the short-term dearth of property on the market, one of the main reasons of this sustained house price growth has been down to of the lack of building new homes.
The draconian planning laws, that over the last 70 years (starting with The Town and Country Planning Act 1947) has meant the amount of land built on in the UK today, only stands at 1.8% (no, that’s not a typo – its one point eight percent) and that is made up of 1.1% with residential property and 0.7% for commercial property. Now I am not advocating building modern ugly carbuncles and high-rise flats in the Cotswolds, nor blot the landscape with the building of massive out of place ugly 1,000 home housing estates around the beautiful countryside of such villages as Lavernock, Sully and Radyr.
The facts are, with the restrictions on building homes for people to live in, because of these 70-year-old restrictive planning regulations, homes that the youngsters of Cardiff badly need, aren’t being built. Adding fuel to that fire, there has been a large dose of nimby-ism and landowners deliberately sitting on land, which has kept land values high and from that keeps house prices high.
Looking at the demand side of the equation, one might have thought property values would drop because of Brexit and buyers uncertainty. However, certain commenters now believe property values might rise because of Brexit. Many people are risk adverse, especially with their hard-earned savings. The stock market is at an all-time high (ready to pop again?) and many people don’t trust the money markets. The thing about property is its tangible, bricks and mortar, you can touch it and you can easily understand it.
The Brits have historically put their faith in bricks and mortar, which they expect to rise in value, in numerical terms, at least. Nationally, the value of property has risen by 635.4% since 1984 whilst the stock market has risen by a very similar 593.1%. However, the stock market has had a roller coaster of a ride to get to those figures. For example, in the dot com bubble of the early 2000’s, the FTSE100 dropped 126.3% in two years and it dropped again by 44.6% in 9 months in 2007… the worst drop Cardiff saw in property values was just 18.09% in the 2008/9 credit crunch.
Despite the slowdown in the rate of annual property value growth in Cardiff to the current 5.8%, from the heady days of 9.89% annual increases seen in mid 2014, it can be argued the headline rate of Cardiff property price inflation is holding up well, especially with the squeeze on real incomes, new taxation rules for landlords and the slight ambiguity around Brexit. With mortgage rates at an all-time low and tumbling unemployment, all these factors are largely continuing to help support property values in Cardiff (and the UK).
August 17, 2017
Over the last 12 months, the UK has decided to leave the EU, have a General Election with a result that didn’t go to plan for Mrs May and to add insult to injury, our American cousins elected Donald Trump as the 45th President of the United States. It could be said this should have caused some unnecessary unpredictability into the UK property market.
The reality is that the housing and mortgage market (for the time being) has shown a noteworthy resilience. Indeed on the back of the Monetary Policy pursued by the Bank of England there has been a notable improvement of macro-economic conditions! In July for example it was announced that we are witness to the lowest levels of unemployment for nearly 50 years. Furthermore, despite the UK construction industry building 21% more properties than same time the previous year, there has still been a disproportionate increase in demand for housing, particularly in the most thriving areas of the Country. Repossessions too are also at an all-time low at 3,985 for the last Quarter (Q1 2017) from a high of 29,145 in Q1 2009. All these things have resulted in…
Property values in Cardiff according to the
Land Registry are 5.8% higher than a year ago
So, what does all this mean for the homeowners and landlords of Cardiff, especially in relation to property prices moving forward?
One vital bellwether of the property market (and property values) is the mortgage market. The UK mortgage market is worth £961,653,701,493 (that’s £961bn) and it representative of 13,314,512 mortgages (interestingly, the UK’s mortgage market is the largest in Europe in terms of amount lent per year and the total value of outstanding loans). Uncertainty causes banks to stop lending – look what happened in the credit crunch and that seriously affects property prices.
Roll the clock back to 2007, and nobody had heard of the term ‘credit crunch’, but now the expression has entered our everyday language. It took a few months throughout the autumn of 2007, before the crunch started to hit the Cardiff property market, but in late 2007, and for the following year and half, Cardiff property values dropped each month like the notorious heavy lead balloon, meaning …
The credit crunch caused Cardiff property values to drop by 18.1%
Under the sustained pressure of the Credit Crunch, the Bank of England realised that the UK economy was stalling in the early autumn of 2008. Loan book lending (sub-prime phenomenon) in the US and across the world was the trigger for this pressure. In a bid to stimulate the British economy there were six successive interest rates drops between October 2008 and March 2009; this resulted in interest rates falling from 5% to 0.5%!
Thankfully, after a period of stagnation, the Cardiff property market started to recover slowly in 2011 as certainty returned to the economy as a whole and Cardiff property values really took off in 2013 as the economy sped upwards. Thankfully, the ‘fire’ was taken out of the property market in Spring 2015 (otherwise we could have had another boom and bust scenario like we had in the 1960’s, 70’s and 80’s), with new mortgage lending rules. Throughout 2016, we saw a return to more realistic and stable medium term property price growth. Interestingly, property prices recovered in Cardiff from the post Credit Crunch 2009 dip and are now 41.3% higher than they were in 2009.
Now, as we enter the summer of 2017, with the Conservatives having been re-elected on their slender majority, the Cardiff property market has recouped its composure and in fact, there has been some aggressive competition among mortgage lenders, which has driven mortgage rates down to record lows. This is good news for Cardiff homeowners and landlords, over the last few months a mortgage price war has broken out between lenders, with many slashing the rates on their deals to the lowest they have ever offered. For example, last month, HSBC launched a 1.69% five-year fixed mortgage!
Interestingly, according to the Council of Mortgage Lenders, the level of mortgage lending had soared to an all-time high in the UK.
In the Cardiff postcodes of CF3/5/10/11/14/15/23/24, if you added up everyone’s mortgage, it would total £5,548,345,594!
Since 1977, the average Bank of England interest rate has been 6.65%, making the current 323 year all time low rate of 0.25% very low indeed. Thankfully, the proportion of borrowers fixing their mortgage rate has gone from 31.52% in the autumn of 2012 to the current 59.3%. If you haven’t fixed – maybe you should follow the majority?
In my modest opinion, especially if things do get a little rocky and uncertainty seeps back in the coming years (and nobody knows what will happen on that front), one thing I know is for certain, interest rates can only go one way from their 300 year ultra 0.25% low level … and that is why I consider it important to highlight this to all the homeowners and landlords of Cardiff. Maybe, just maybe, you might want to consider taking some advice from a qualified mortgage adviser? There are plenty of them in Cardiff
August 5, 2017
As the dust starts to settle on the various unread General Election party manifestos, with their ‘bran-bucket’ made up numbers, life goes back to normal as political rhetoric on social media is replaced with pictures of cats and people’s lunch. Joking aside though, all the political parties promised so much on the housing front in their manifestos, should they be elected at the General Election. In hindsight, irrespective of which party, they seldom deliver on those promises.
Housing has always been the Cinderella issue at General Elections. Policing, NHS, Education, Tax and Pensions etc., are always headline grabbing stuff and always seem to go ‘the ball’. However, housing, which affects all our lives, always seems to get left behind and forgotten.
Nonetheless, the way the politicians act on housing can have a fundamental effect on the wellbeing of the UK plc and the nation as a whole.
One policy that comes to mind is Margaret Thatcher’s Council House sell off in the 1980’s, when around 1.4m council houses went from public ownership to private ownership. It was a great vote winner at the time (it helped her win three General Elections in a row) but it has meant the current generation of 20 somethings in Cardiff (and elsewhere in the Country) don’t have that option of going into a council house. This has been a huge contributing factor in the rise of the private renting and buy to let in Cardiff over the last 15 years.
Nevertheless, looking back to the start of the Millennium, Labour set the national target for new house building at 200,000 new homes a year (and at one point that increased to 240,000 under Gordon Brown for a couple of years). In terms of what was actually built, the figures did rise in the mid Noughties from 186,000 properties built in 2004 to an impressive 224,000 in 2007 (the highest since the early 1980’s) as the economy grew.
Then the Credit Crunch hit. It is interesting, that the 2010 Cameron/Clegg government did things a little differently. The fallout of the Credit Crunch meant a lot less homes were built, so instead of tackling that head on, the coalition side-stepped the target of the number of new homes to build and offered a £400m fund to help kick start the housing market (a figure that was a drop in the ocean when you consider an average UK property was worth around £230,000 in 2010). The number of new houses being completed dipped from 146,800 in 2011 to 135,500 the subsequent year.
So, one might ask exactly how many new homes do we need to build per year? It is commonly accepted that not enough new properties are being built to meet the rising need for homes to live in. A report by the Government in 2016, showed that on average 210,000 net additional households will be formed each year) up to 2039 (through increased birth rates, immigration, people living longer, lifestyle (i.e. divorce) and people living by themselves more than 30 years ago). In 2016, only 140,600 homes were built … simply not enough!
Looking at the numbers locally in Cardiff and the surrounding area, it is obvious to me, that we as an area, are not pulling our weight either when it comes to building new homes. In the 12 months up to the end of Q1 2017, only 363 properties were built in the Cardiff City Council area. Go back to 2007, that figure was 1,509, 10 years before that in 1997, 1,152 new homes and further back to 1988, 1,160 new homes were built.
Who knows if Teresa May’s Government will last the five years? She will think she has bigger fish to fry with Brexit to get bogged down with housing issues. But let me leave you with one final thought.
The conceivable rewards in providing a place to live for the public on a massive house building programme can be enormous, as previous Tory PM’s have found out. Winston Churchill in 1951, asked his Minister for Housing (Harold Macmillan) if he could guarantee the construction of 300,000 new properties a year, he was notoriously told: “It is a gamble—it will make or mar your political career, but every humble home will bless your name if you succeed.”
Isn’t it interesting, that the Tories remained in power until 1964! Mrs May will have to work out if she wants to be the heiress to Harold Macmillan or David Cameron?
August 1, 2017
No 20 on the countdown of the to 20 streets in Cardiff based on turnover and popularity.
July 25, 2017
Over the next few weeks I will be counting down the top 20 streets in Cardiff based on the turnover and popularity.
Make sure you stay tuned to see if your street makes it into the top 20 or even bags the number 1 spot!
June 19, 2017
How far do Cardiff Bay people go to move to a new house?” This was an intriguing question asked by one of my clients the other week. Readers of my property blog will know I love a challenge, especially when it comes to talking about the Cardiff Bay Property Market!
For the majority, the response is not very far. It is much more common for homeowners and tenants in Great Britain to move across town than to the next town or county. Until now, it’s been hard to say how many homeowners and tenants moved from (and to) relatively far away to buy or rent their new home. However, I carried out some research and requested some statistics from the Royal Mail. What came back was fascinating!
Using statistics for the 12 months up to the middle of Autumn 2016, 335 households moved out of Cardiff Bay (CF10), moving an average distance of 36.06 miles – the equivalent of moving from Cardiff Bay to Swansea (as the crow flies). The greatest distance travelled was 243 miles – that’s more than 9 marathons (when someone moved to Beamish).
Considering there were 236 property sales in CF10 in the year and countless tenant moves, the numbers seems consistent – once you find a city you like, you tend to want to settle down and if you do move, you might only move to a different neighbour-hood, or for better transport links or, to be closer to the school you want to get your children into, but the likelihood is you won’t travel far.
I then turned my attention to people moving into Cardiff Bay. Using the same statistics for the 12 months up to the middle of Autumn 2016, 339 households moved into Cardiff Bay (CF10), moving an average distance of 77.66 miles – the equivalent of moving from Aberystwyth to Cardiff Bay (again as the crow flies). The greatest distance travelled was 398 miles – that’s more than 15 marathons (when someone moved from Aberdeen to Cardiff Bay).
I have looked at the data of every person moving into Cardiff Bay and these have been plotted on a map of the UK. Looking at the map below, it shows exactly where most people come from, when moving into Cardiff Bay. As you can see, there are a high proportion of people moving from London and the East.
So, what does all this mean for the landlords and homeowners of Cardiff Bay?
When an agent markets a property for rent or let, it is vital to know the tenant or property buyer well, that the properties they are letting/selling fit those tenants/buyers, so they almost sell themselves. These days that means not only knowing how many bedrooms, reception rooms etc., a property offers but the budget buyers and tenants want to spend on a property in that area as well as where they come from.
The estate and lettings industry loves the mantra “location, location, location”. I say it might be helpful to factor in where (and how) far people are moving from, so the property can be sold or let more easily. Many say knowledge is power and whilst I do enjoy writing my blog on the Cardiff Bay property market, I also use the information to help my clients buy, let and sell well. So for example, the information gained for this article, will enable my team and I to be more efficient in where to direct our marketing resources to ensure we maximise our clients’ properties sale-ability or rent-ability.
June 15, 2017
There are 23.36 million properties in England and Wales with 64% being owner occupied and 36% being rented either from a private landlord, local authority or housing association.
Over nine out of ten of those English and Welsh owner-occupied properties are a whole house or bungalow. Now, most people would assume they would be freehold – however, of those renting nearly half of rental properties, 44% to be precise, lived in other leasehold apartments and flats.
It might be wise to quickly explain the difference between freehold and leasehold. When someone owns the freehold of a property they own it outright, including the land it is built on, whilst with a leasehold property the leaseholder owns the property for the length of their lease agreement. Leaseholders must pay the person who owns land (the freeholder) ground rent and other fees. When the leasehold ends, ownership returns to the freeholder although the leaseholder can extend the lease or they can buy the freeholder out, but there are rules and regulations with regards doing that.
Therefore, it would be safe to assume that houses are freehold and flats are leasehold .. wouldn’t it? Not necessarily! Most houses are freehold but some might be leasehold – usually through shared-ownership schemes – but more and more new homes builders are selling houses on a leasehold as well. The protection of the law afforded to leaseholders who own a flat is massive, but sadly lacking to leasehold houses sold privately.
Looking specifically at the figures for Cardiff Bay, at the last count in CF10 there were 9,573 properties. Since 1995, 8,696 properties in CF10 have changed hands and have been sold. Looking further at those 8,696 transactions in CF10 since 1995, using data from Land Registry and solicitors practice My-Home-Move, 78.99% have been leasehold (higher than the national average of 15%).
However, I am concerned about a few new homes builders selling new houses (not flats – houses) as leasehold. There has been a growing (yet small) trend for new-build houses to be sold as leasehold in recent years. While not all house builders use this model, those that do maintain it helps make developments financially viable.
The issue comes when builders sell the freehold separately to an investment company without informing the lease holder – which they are legally allowed to do without telling the leaseholder. In England and Wales, the “right of first refusal” to buy the freehold is written in law to leaseholders of flats i.e. the freeholder must offer it to the leaseholders of all the flats of the building first), but not leaseholders of houses.
.. and this is the point I am trying to get across. If you are buying a new home and it’s a house (i.e. not a flat) – please check very carefully indeed whether its freehold or leasehold. If it is a leasehold, whilst you do have rights, they are not as strong as for those people buying a leasehold flat. I appreciate I am only talking about a very small percentage of the property market, but potentially this could end up costing thousands of pounds to those affected.
June 2, 2017
In Cardiff Bay (or CF10 to be precise), of the 7,261 households, 682 homes are owned without a mortgage and 1,347 homes are owned by a mortgage. Many homeowners have made contact me with asking what the General Election will do the Cardiff Bay property market? The best way to tell the future is to look at the past.
I have looked over the last five general elections and analysed in detail what happened to the property market on the lead up to and after each general election. Some very interesting information has come to light.
Of the last five general elections (1997, 2001, 2005, 2010 and 2015), the two elections that weren’t certain were the last two (2010 with the collation and 2015 with unexpected Tory majority). Therefore, I wanted to compare what happened in 1997, 2001 and 2005 when Tony Blair was guaranteed to be elected/re-elected versus the last knife edge uncertain votes of 2010 and 2015 … in terms of the number of houses sold and the prices achieved.
Look at the first graph below comparing the number of properties sold and the dates of the general elections
It is clear, looking at the number of monthly transactions (the blue line), there is a certain rhythm or seasonality to the housing market. That rhythm/seasonality has never changed since 1995 (seasonality meaning the periodic fluctuations that occur regularly based on a season – i.e. you can see how the number of properties sold dips around Christmas, rises in Spring and Summer and drops again at the end of the year).
To remove that seasonality, I have introduced the red line. The red line is a 12 month ‘moving average’ trend line which enables us to look at the ‘de-seasonalised’ housing transaction numbers, whilst the yellow arrows denote the times of the general elections. It is clear to see that after the 1997, 2001 and 2005 elections, there was significant uplift in number of households sold, whilst in 2010 and 2015, there was slight drop in house transactions (i.e. number of properties sold).
Next, I wanted to consider what happened to property prices. In the graph below, I have used that same 12-month average, housing transactions numbers (in red) and yellow arrows for the dates of the general elections but this time compared that to what happened to property values (pink line).
It is quite clear none of the general elections had any effect on the property values. Also, the timescales between the calling of the election and the date itself also means that any property buyer’s indecisiveness and indecision before the election will have less of an impact on the market.
So finally, what does this mean for the landlords of the 3,741 private rented properties in Cardiff Bay? Well, as I have discussed in previous articles (and just as relevant for homeowners as well) property value growth in Cardiff Bay will be more subdued in the coming few years for reasons other than the general election. The growth of rents has taken a slight hit in the last few months as there has been a slight over supply of rental property in Cardiff Bay, making it imperative that Cardiff Bay landlords are realistic with their market rents. But, in the long term, as the younger generation still choose to rent rather than buy … the prospects, even with the changes in taxation, mean investing in buy-to-let still looks a good bet.