Local property market information for the serious investor

Category: Property market research

Hard Brexit could cause 3,500 properties to be dumped onto the Cardiff Property market

So all cards up in the air! A general election will be on the books, but one thing is for sure … whoever gets the job to deal with Brexit has a hard job on their hands (I’m just glad its not me!) As it currently stands, by not assuring the rights of EU citizens in the UK, Theresa May has squandered an opportunity to give peace of mind to our EU co-workers working and living in Cardiff (and the rest of the UK). No.10 Downing Street’s point of view is that in promising the rights of EU citizens in the UK, it will postpone the same guarantee to the 1.5 million UK citizens living in the other nations of the EU.

Putting aside the politics for one second, the simple fact is now Article 50 has been triggered, we have two years to make a deal with the EU; otherwise it will be a ‘hard Brexit’. Now you might not think a hard Brexit will affect you in your home in Cardiff… but nothing could be further from the truth.

Of the 334,551 people who are resident in the Cardiff City Council area, 290,537 were born in the UK, 7,434 were born in EU countries from West Europe and 4,648 were born in EU countries from the former Soviet States in East Europe (the rest coming from other countries around the world).

The rights of these EU citizens living in the Cardiff area are not guaranteed and will now be part of the negotiation with Europe. It is true a lot of our EU next door neighbours in Cardiff will have acquired rights relating to the right to live, to work, to own a business, to possess a property, the right to access health and education services and the right to remain in a UK after retirement… yet those acquired rights are up for negotiation in the next two years.

So, what would a hard Brexit do to the Cardiff property market?

Well a hard Brexit could mean the nuclear option when it came to the Cardiff Bay housing market. It could mean that every EU citizen would have to leave the UK.

In the Cardiff City area, 3,500 of the 7,434 Western European EU citizens own their own home and (so they would all need to be sold) and 3,652 of the 4,648 Eastern European EU citizens rent a property, so again all those rental properties would all come on the market at the same time.

Hard Brexit and mass EU Migration would mean c. 3,500 properties being dumped onto the housing market in a short period of time, meaning there would be a massive drop in Cardiff property values and rents, causing negative equity for thousands of Cardiff homeowners and many buy-to-let landlords would be out of pocket.

While there is no certainty as to what the future will hold, both UK expats in the EU and EU citizens in the UK rights will no longer be guaranteed and will be subject to bilateral renegotiation.

All I ask is that the politicians are sensible with each other in the negotiations. A lot of the success of the Cardiff (and UK) property market has been built on high levels of homeownership and more recently in the last 10/15 years, a growth of the rental sector with lots of demand from Eastern Europeans coming to Cardiff (and the surrounding area) to get work and provide for their families. Many Cardiff people have invested their life savings into buying a buy to let property.

Much will depend on what is politically realistic. Unilateral knee-jerk reactions and measures caused by a hard Brexit would not only likely cause major disruption or suffering to the 3 million EU citizens living in the UK, but also everyone who owns property in the UK … politics aside – a hard Brexit is in no one’s interests.

 

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12.75 Babies Born for Each New Home Built in the Cardiff City area

As more babies are being born to Cardiff City mothers, I believe this increase will continue to add pressure to the over stretched Cardiff City property market and materially affect the local property market in the years to come.

On the back of eight years of ever incremental increasing birth rates, a significant 12.75 babies were born for every new home that was built in the Cardiff City council area in 2016.  I believe this has and will continue to exacerbate the Cardiff City housing shortage, meaning demand for housing, be it to buy or rent, has remained high.  The high birth rate has meant Cardiff City rents and Cardiff City property prices have remained resilient – even with the challenges the economy has felt over the last eight years, and they will continue to remain high in the years to come.

This ratio of births to new homes has reach one its highest levels since 1945 (back in the early 1970’s the average was only one and a half births for every household built).  Looking at the local birth rates, the latest figures show we in the Cardiff City council area had an average of 54.6 births per 1,000 women aged 15 to 44.  Interestingly, the national average is 61.7 births per 1,000 women aged 15 to 44 and for the region its 60 births per 1,000 women aged 15 to 44.

The number of births from Cardiff City women between the ages of 20 to 29 are significantly lower than the national average, but those between 35 and 44 were much higher.  However overall, the birth rate is still increasing, and when that fact is combined with the ever-increasing life expectancy in the Cardiff City area, the high levels of net migration into the area over the last 14 years (which I talked about in the previous articles) and the higher predominance of single person households … this can only mean one thing … a huge increase in the need for housing in Cardiff City.

Again, in a previous article a while back, I said more and more people are having children as tenants because they feel safe in rented accommodation.  Renting is becoming a choice for Cardiff City people.

The planners and Politian’s of our local authority, central Government and people as a whole need to recognise that with individuals living longer, people having more children and whilst divorce rates have dropped recently, they are still at a relatively high level (meaning one household becomes two households) … demand for property is simply outstripping supply.

The simple fact is more Cardiff City properties need to be built

… be that for buying or renting.

Only 1.1% of the Country is built on by houses.  Now I am not suggesting we build tower blocks in the middle of the Cotswolds, but the obsession of not building on any green belt land should be carefully re-considered.

Yes, we need to build on brownfield sites first, but there aren’t hundreds of acres of brownfield sites in Cardiff City, and what brownfield sites there are, building on them can only work with complementary public investment.  Many such sites are contaminated and aren’t financially viable to develop, so unless the Government put their hand in their pocket, they will never be built on.

I am not saying we should crudely go ‘hell for leather’ building on our Green Belt, but we need a new approach to enable some parts of the countryside to be regarded more positively by local authorities, politicians and communities and allow considered and empathetic development.  Society in the UK needs to look at the green belts outside their leisure and visual appeal, and assess how they can help to shape the way we live in the most even-handed way.  Interesting times!

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Cardiff Bay Rents To Rise Quicker Than Cardiff Bay Property Prices In Next 5 Years

cardiff bay property

The next five years will see an interesting change in the Cardiff Bay property market. My recent research has concluded that the rent private tenants pay in Cardiff Bay will rise faster than Cardiff Bay property prices over the next five years, creating further issues to Cardiff Bay’s growing multitude of renters. In fact, my examination of statistics forecasts that .. 

By 2022, Cardiff Bay rents will increase by 22%, whereas Cardiff Bay property values will only grow by 17%.

Let me explain why I have come to those conclusions:

Over the last five years, property values in Cardiff Bay have risen by 22.4%, whilst rents have only risen by 7.2%.

Throughout the last few years, and compounded in 2016, tenant demand for rental properties continued to go up whilst the Press predicted some landlords expect to reduce their portfolios in the next couple of years, meaning Cardiff Bay tenants will have fewer properties to choose from, which will push rents higher. In fact, talking to fellow property professionals in Cardiff Bay, there appears to be privation and shortage of new rental properties coming on to the Cardiff Bay lettings market.

Landlords have some intriguing challenges ahead of them in the coming years most notably in that the Tory’s have changed the taxation rules for landlords in the way buy to let properties are to be taxed. On top of that, there is the ban on letting agent fees which is still to come into force (probably in 2018). When that happened in Scotland in 2012, Scottish letting agents passed on those fees to their landlords, who in turn increased the rent they charged to their tenants.

All I would say to Theresa May and Philip Hammond is that they must be wary about indicating both red and green lights at the same time to the private rented sector. They can’t expect the armies of small private landlords to continue to house around a fifth of the population and then tax the hell out of them. They didn’t invest in buy to let as a charity or to satisfy any philanthropic urges. Something has to give – and that will be significant rent rises over the coming few years (and before anyone gives me any derogatory comments about landlords … if it wasn’t for landlords buying all these buy to let properties over the last 15 years, I am not sure where everyone would be living today – because most the Council houses were sold off in the 1980’s!).

With the challenges ahead, with the ‘B’ word (that’s budget if you wondered!), house price inflation will be tempered over the coming five years in Cardiff Bay. As I have discussed in previous articles, the number of properties on the market in Cardiff Bay remains close to historic lows, which is both good as it keeps houses prices relatively stable, yet not so good as it impedes choice for buyers… and hence why I believe property values in Cardiff Bay will only be 17% higher in five years’ time.

Whilst on the other side of the coin, with the challenges facing landlords and the significant shortage of new homes being built, Cardiff Bay people still need somewhere to live. If those people aren’t buying houses and the local authority aren’t building council houses in there thousands (because they have no money), with the average rent for a Cardiff Bay rental property currently standing at £1,022 per month …

Over the next five years, I predict the average rent

in Cardiff Bay will rise to £1,247 per month

These are interesting times. There is still money to be made in buy to let in Cardiff Bay – Cardiff Bay landlords will just need to be smarter and more savvy with their investments.

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Only 2,606 Properties For Sale in Cardiff

2017 has started with some positive interest in the Cardiff property market.  Taking a snap shot of the Cardiff property market for the first quarter of 2017, the picture suggests some interesting trends when it comes to the number of properties available to buy, their asking prices and what prices properties are actually selling for.

Let us first consider the number of properties for sale, compared to 12 months ago:

Type of Cardiff Property Number of Properties on the Market 12 months ago Number of Properties on the Market now % change
Detached 602 539 -10%
 
Semi 568 565 -1%
 
Terraced             504 502 -0%
 
Flat 923 881 -5%

 

So when we add in building plots and other types of properties that don’t fit into the four main categories, that means there are 2,606 properties for sale today compared with 2,718 a year ago, a drop of 4%.

Next, Cardiff asking prices, compared

to the same as a year ago, are 3% lower.

With that in mind, I wanted to look at what property was actually selling for in Cardiff. Taking my information from the Land Registry, the last available six months property transactions for CF11 show an interesting picture (note the Land Registry data is always a few months behind due to the nature of the house buying process and so November 2016 is latest set of data). The price shown is the average price paid and the number in brackets is the number of properties actually sold.

 

Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16
Detached £241,500 (1) £299,500 (2) £125,000 (1) £303,000 (1) £280,000 (1) £292,500 (2)
Semi

Detached

£202,375 (4) £195,990 (5) £294,600 (5) £225,750 (4) £185,000 (1) £304,250 (4)
Terraced £278,960 (20) £197,144 (28) £229,348 (27) £190,608 (30) £197,262 (34) £242,675 (22)
Flat £182,130 (23) £179,695 (41) £139,847 (25) £166,833 (21) £142,043 (23) £130,534 (19)
All £225,399 (48) £190,348 (76) £194,596 (58) £186,209 (56) £176,930 (59) £204,702 (47)

 

So what does all this mean for the property owning folk of Cardiff?

Well, with less property on the market than a year ago and asking prices 3% lower, those trying to sell their property need to be mindful that buyers, be they first timers, buy to let landlords or people moving up the Cardiff property ladder, have much more price information about the Cardiff property market at their fingertips than ever before.

These Cardiff people who are looking to sell their property in 2017, need to be aware of the risks of over pricing their property when initially placing it on the market. Over the last 12 months, I have noticed the approach of a few Cardiff estate agents is to suggest an inflated asking price to encourage the homeowner and secure the property to sell on their books. The down side to this is that when offered to the market for the first time, buyers will realise it is overpriced and wont waste their time asking for a brochure. They won’t even view the property, let alone make an offer. So when the price is reduced a few months later, the property has become market stale and continues to be ignored.

Whilst the Cardiff property-market has an unassailable demand for property – there is one saying that always rings true – as long as the property is being marketed at the right price it will sell.

If you want to know if your Cardiff property is being marketed at the right price, send me a web link and I will give you my honest opinion.

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Cardiff’s housing affordability hits a ratio of 7.54 to 1

A Cardiff homeowner emailed me last week, following my article posted in the Cardiff Property Blog about the change in attitude to renting by the youngsters of Cardiff and how they thought it was too expensive for first time buyers to buy in Cardiff.  There can be no doubt that buy to let landlords have played their part in driving up property values in Cardiff (and the UK) and from that made housing a lot less affordable for the 20 and 30 somethings of Cardiff.

In the email, they said they thought the plight of the first-time buyers in Cardiff was like a novice tennis player, playing tennis with Andy Murray. If you played him once you will unquestionably lose and if you were to play him 100 times you would lose 100 times. That is what they thought it was like for all the 20 something’s first time buyers of Cardiff going against all the buy to let landlords.

They went on and asked if the Bank of England (BoE) should be tasked to control house price inflation in the same way as the BoE controls inflation.  The BoE has a target for the annual inflation rate of the Consumer Prices Index of 2%, whilst it is also required to support the Government’s economic policy, including its objectives for growth and employment.  So, should BoE be charged with containing buy to let housing market, by possibly changing the rules on the loan-to-value (LTV) ratio’s?

So, let’s look at how affordable Cardiff is?  The best measure of the affordability of housing is the ratio of Cardiff Property Prices to Cardiff Average Wages, (the higher the ratio, the less affordable properties are).   (i.e. looking the table below, for example in 2014, the average value of a Cardiff property was 7.05 times higher than the average annual wage in Cardiff)

1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 (EST)
3.18 4.05 5.04 6.26 6.81 6.91 6.35 6.60 7.05 7.54

 

This deterioration in affordability of property in Cardiff over the last couple of years has been one of the reasons why the younger generation is deciding more and more to rent instead of buy their own house.

… but it’s not the only reason.

A quick look on Money Supermarket today found 169 lenders prepared to offer 75% LTV Buy to let Mortgages and none at 85% LTV.  Lenders have self-imposed a high level of entry for buy to let landlords (i.e. putting down at least 25% of the purchase price in cash).  The BoE don’t need to meddle there!  Also, the Tories have certainly done lots to level the playing field in favour of first time buyers.  For nearly a year now, Landlords have had to pay an additional 3% in stamp duty on any buy to let purchase and over the coming four years, tax rules on landlord’s claiming mortgage interest relief will affect their pocket.  Neither, it doesn’t help that the local Authority sold off council houses in the Thatcher years and so for many on low incomes or with little capital, owning a home has simply never been an option (today or in the past).

It’s easy to look at the headlines and blame landlords.  First time buyers have been able to access 95% LTV mortgages since 2010, meaning even today, a first-time buyer could purchase a 1 bed apartment in Cardiff for around £120,000 and only need to find £6,000 deposit.  Yes, a lot of money, but first time buyers need to decide what is important to them.  Either save up for a couple of years to save the deposit and go without two annual foreign holidays, the full Satellite or Cable TV package with Sports and Movies costing three figures a month, the latest mobile phone and out socialising … or not as the case maybe?

I think we as a Country have changed … renting is returning to be the norm.  So my opinion is, landlords have it tough.  Let’s not blame them for the ‘perceived’ woes of the nation … because to be frank … we haven’t always been a country of homeowners.  Roll the clock back to 1964, and nationally, 30% of people rented their home from a private landlord – today – its only 15.3% nationally.

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Only 2,606 Properties For Sale in Cardiff

2017 has started with some positive interest in the Cardiff property market.  Taking a snap shot of the Cardiff property market for the first quarter of 2017, the picture suggests some interesting trends when it comes to the number of properties available to buy, their asking prices and what prices properties are actually selling for.

Let us first consider the number of properties for sale, compared to 12 months ago:

 

Type of Cardiff Property Number of Properties on the Market 12 months ago Number of Properties on the Market now % change
Detached 602 539 -10%
       
Semi 568 565 -1%
       
Terraced                   504 502 -0%
       
Flat 923 881 -5%

 

So when we add in building plots and other types of properties that don’t fit into the four main categories, that means there are 2,606 properties for sale today compared with 2,718 a year ago, a drop of 4%.

Next, Cardiff asking prices, compared

to the same as a year ago, are 3% lower.

With that in mind, I wanted to look at what property was actually selling for in Cardiff. Taking my information from the Land Registry, the last available six months property transactions for CF11 show an interesting picture (note the Land Registry data is always a few months behind due to the nature of the house buying process and so November 2016 is latest set of data). The price shown is the average price paid and the number in brackets is the number of properties actually sold.

  Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16
Detached £241,500 (1) £299,500 (2) £125,000 (1) £303,000 (1) £280,000 (1) £292,500 (2)
Semi

Detached

£202,375 (4) £195,990 (5) £294,600 (5) £225,750 (4) £185,000 (1) £304,250 (4)
Terraced £278,960 (20) £197,144 (28) £229,348 (27) £190,608 (30) £197,262 (34) £242,675 (22)
Flat £182,130 (23) £179,695 (41) £139,847 (25) £166,833 (21) £142,043 (23) £130,534 (19)
All £225,399 (48) £190,348 (76) £194,596 (58) £186,209 (56) £176,930 (59) £204,702 (47)

So what does all this mean for the property owning folk of Cardiff?

Well, with less property on the market than a year ago and asking prices 3% lower, those trying to sell their property need to be mindful that buyers, be they first timers, buy to let landlords or people moving up the Cardiff property ladder, have much more price information about the Cardiff property market at their fingertips than ever before.

Those Cardiff people who are looking to sell their property in 2017, need to be aware of the risks of over pricing their property when initially placing it on the market. Over the last 12 months, I have noticed the approach of a few Cardiff estate agents is to suggest an inflated asking price to encourage the homeowner and secure the property to sell on their books. The down side to this is that when offered to the market for the first time, buyers will realise it is overpriced and wont waste their time asking for a brochure. They won’t even view the property, let alone make an offer. So when the price is reduced a few months later, the property has become market stale and continues to be ignored.

Whilst the Cardiff property-market has an unassailable demand for property – there is one saying that always rings true – as long as the property is being marketed at the right price it will sell.

If you want to know if your Cardiff property is being marketed at the right price, send me a web link and I will give you my honest opinion.

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‘Flipping’ Heck – Cardiff Property Values Rise by £23.18 a day

Investing in Cardiff buy to let property is different from investing in the stock market or depositing your hard-earned cash in the Building Society. When you invest your money in the Building Society, this is considered by many as the safe option but the returns you can achieve are awfully low (the best 2-year bond rate from Nationwide is a whopping 0.75% a year!). Another investment is the Stock Market, which can give good returns, but unless you are on the phone every day to your Stockbroker, most people invest in stock market funds, making the investment quite hands off and one always has the feeling of not being in control.

However, with buy to let, things can be more hands on. One of the things many landlords like is the tactile nature of property – the fact that you can touch the bricks and mortar. It is this factor that attracts many of Cardiff’s landlords – they are making their own decisions rather than entrusting them to city whizz kids in Canary Wharf playing roulette with their savings.

I always say investing in property is a long-term game. When you invest in the property market, you can earn from your investment in two ways. When a property increases in value over time, it is known as ‘capital growth’. Capital growth, also known as capital appreciation, has been strong in recent times in Cardiff, but the value of property does go up as well as down just like shares do but the initial purchase price rarely decreases.  Rental income is what the tenant pays you – hopefully this will also grow over time. If you divide the annual rent into the value (or purchase price) of the property, this is your yield, or annual return. So, over the last 5 years, an average Cardiff property has risen by £42,300 (equivalent to £23.18 a day), taking it to a current average value of £228,000. Yields range from 6% a year and can reach double digits’ percentages (although to achieve those sorts of returns, the risks are higher).

However, something I haven’t spoken of before is the more specialist area of flipping property to make money. (flipping – buying a property, carrying out some minor cosmetics and re selling it quickly).  I have seen several investors recently who have made decent returns from this strategy. For example …

  

This demonstrates how the Cardiff property market has not only provided very strong returns for the average investor over the last five years but how it has permitted a group of motivated buy to let Cardiff landlords and investors to become particularly wealthy.

As my article mentioned a few weeks ago, more and more Cardiff people may be giving up on owning their own home and are instead accepting long term renting whilst buy to let lending continues to grow from strength to strength.

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How The Rented Sector Has Transformed The Property Market In Cardiff

The Cardiff housing market has gone through a sea change in the past decades with the Buy-to-Let (B-T-L) sector evolving as a key trend, for both Cardiff tenants and Cardiff landlords.

A few weeks ago, the Government released a White Paper on housing. I have had a chance now to digest the report and wish to offer my thoughts on the topic. It was interesting that the private rental sector played a major part in the future plans for housing. This is especially important for our growing Cardiff population.

In 1981, the population of Cardiff stood at 286,900

and today it stands at 357,200.

Currently, the private rented (B-T-L) sector accounts for 9.9% of households in the city.  The Government want to assist people living in the houses and help the economy by encouraging the provision of quality homes, in a housing sector that has grown due to worldwide economic forces, pushing home ownership out of the reach of more and more people. Interestingly, when we look at the 1981 figures for homeownership, a different story is told.

61.25% Cardiff people owned their own home in 1981

27.28% Cardiff people rented from the Council or Housing Association in 1981

 and 11.47% Cardiff rented from a Private Landlord

The significance of a suitable housing policy is vital to ensure suitable economic activity and create a vibrant place people want to live in. With the population of Cardiff set to grow to 437,000 by 2037 – it is imperative that City of Cardiff Council and Central Government all work actively together to ensure the residential property market doesn’t hold the area back, by encouraging the building and provision of quality homes for its inhabitants.

One idea the Government has proclaimed is a variety of measures aimed at encouraging the Build-to-Rent (B-T-R) sector (instead of the B-T-L sector). These include allowing local authorities to proactively plan for B-T-R schemes, and making it simpler for B-T-R developers to offer inexpensive private rented homes.

To do this, the government will invent a distinct affordable housing class for B-T-R, called ‘Affordable Private Rent’, which will oblige new homes builders to provide at least 1 in 5 of a new home developments at a 20% discount on open-market rents and three year tenancies for tenants. In return, the new homebuilders will get better planning assurances.

Private landlords will not be expected to offer discounts, nor offer 3-year tenancies – but it is something Cardiff landlords need to be aware of as there will be greater competition for tenants.

Over the last ten years, home ownership has not been a primary goal for young adults as the world has changed. These youngsters expect ‘on demand’ services from click and collect, Amazon, Dating Apps and TV with the likes of Netflix. Many Cardiff youngsters see that renting more than meets their accommodation needs, as it combines the freedom from a lifetime of property maintenance and financial obligations, making it an attractive lifestyle option.

Private rented housing in Cardiff, be it B-T-L or B-T-R, has the prospective to play a very positive role.

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Cardiff’s ‘Generation Trapped’ and the £15.99bn legacy

Last week, I wrote an article on the plight of the Cardiff 20 something’s often referred to by the press as ‘Generation Rent’. Attitudes to renting have certainly changed over the last twenty years and as my analysis suggested, this change is likely to be permanent. In the article, whilst a minority of this Generation Rent feel trapped, the majority don’t – making renting a choice not a predicament. The Royal Institution of Chartered Surveyors (RICS) predicted that the private rental sector is likely to grow substantially by 1.8m households across the UK in the next 8 years, with demand for rental property unlikely to slow and newly formed households continuing to choose the rental market as opposed to buying.

However, my real concern for Cardiff homeowners and Cardiff landlords alike, as I discussed a couple of months ago, is our mature members of the population of Cardiff. In that previous article, I stated that the current OAP’s (65+ yrs in age) in Cardiff were sitting on £6.89bn of residential property … however, I didn’t talk in depth about the ‘Baby Boomers’, the 50yr to 64yr old Cardiff people and what their properties are worth – and more importantly, how the current state of affairs could be holding back those younger Generation Renters.

In Cardiff, there are 20,798 households whose owners are aged between 50yrs and 64yrs and about to pay their mortgage off. That property is worth, in today’s prices, £4.74bn. There are an additional 19,088 mortgage free Cardiff households, owned by 50yr to 64yr olds, worth £4.35bn in today’s prices, meaning…

Cardiff Baby Boomers and Cardiff OAP’s are sitting

on £15.99bn worth of Cardiff Property

These Cardiff Baby Boomers and OAP’s are sitting on 70,095 Cardiff properties and many of them feel trapped in their homes, and hence I have dubbed them ‘Generation Trapped’.

Recently, the English Housing Survey stated 49% of these properties owned by the Generation Trapped, as I have dubbed them, are ‘under-occupied’ (under-occupied classed as having at least two bedrooms more than needed). These houses could be better utilised by younger families, but research carried out by the Prudential suggest in Britain it’s estimated that only one in ten older people downsize while in the USA for example one in five do so.

The growing numbers of older homeowners who want to downsize their home are often put off by the difficulties of moving. The charity United for all Ages, suggested recently many are put off by the lack of housing options, 19% by the hassle and cost of moving, 14% by having to declutter their possessions and 14% by family reasons such as staying close to children and grandchildren.

Helping mature Cardiff (and the Country) homeowners to downsize at the right time will also enable younger Cardiff people to find the homes they need – meaning every generation wins, both young and old. However, to ensure downsizing works, as a Country, we need more choices for these ‘last time buyers’.

Theresa May and Philip Hammond can do their part and consider stamp duty tax breaks for downsizers, our local Council in Cardiff and the Planning Dept. should play their part, as should landlords and property investors to ensure Cardiff’s ‘Generation Trapped’ can find suitable property locally, close to friends, family and facilities.

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‘Generation Rent (Forever)’ – 27,898 Cardiff Tenants have no intention of ever buying a property to call home

The good old days of the 1970’s and 1980’s eh … with such lowlights as 24% inflation, 17% interest rates, 3 day working week, 13% unemployment, power cuts … those were the days (not)… but at least people could afford to buy their own home. So why aren’t the 20 and 30 something’s buying in the same numbers as they were 30 or 40 years ago?

Many people blame the credit crunch and global recession of 2008, which had an enormous impact on the Cardiff (and UK) housing market. Predominantly, the 20 something first-time buyers who, confronting a problematic mortgage market, the perceived need for big deposits, reduced job security and declining disposable income, discovered it challenging to assemble the monetary means to get on to the Cardiff property ladder.

However, I would say there has been something else at play other than the issue of raising a deposit – having sufficient income and rising property prices in Cardiff. Whilst these are important factors and barriers to homeownership, I also believe there has been a generational change in attitudes towards home ownership in Cardiff (and in fact the rest of the Country).

Back in 2011, the Halifax did a survey of thousands of tenants and 19% of tenants said they had no plans to buy a home for themselves. A recent, almost identical survey of tenants, carried out by The Deposit Protection Service revealed, in late 2016, that figure had risen to 38.4%, with many no-longer equating home ownership to success and believing renting to be better suited to their lifestyle.

You see, I believe renting is a fundamental part of the housing sector, and a meaningful proportion of the younger adult members of the Cardiff population choose to be tenants as it better suits their plans and lifestyle. Local Government in Cardiff (including the planners – especially the planners), land owners and landlords need an adaptable Cardiff residential property sector that allows the diverse choices of these Cardiff 20 and 30 year olds to be met.

This means, if we applied the same percentages to the current 72,650 Cardiff tenants in their 30,042 private rental properties, 27,898 tenants have no plans to ever buy a property – good news for the landlords of those 11,536 properties. Interestingly, in the same report, just under two thirds (62%) of tenants said they didn’t expect to buy within the next year.

.. but does that mean the other third will be buying in Cardiff in the next 12 months?

Some will, but most won’t … in fact, the Royal Institution of Chartered Surveyors (RICS) predicts that, by 2025, that the number of people renting will increase, not drop. Yes, many tenants might hope to buy but the reality is different for the reasons set out above.  The RICS predicts the number of tenants looking to rent will increase by 1.8 million households by 2025, as rising house prices continue to make home ownership increasingly unaffordable for younger generations.  So, if we applied this rise to Cardiff, we will in fact need an additional 12,875 private rental properties over the next eight years (or 1,609 a year) … meaning the number of private rented properties in Cardiff is projected to rise to an eye watering 42,917 households.

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