March 2, 2017
I was down in the Bay doing some viewinsg and while I was there thought it would be a good opportunity to record my video.
Hope you enjoy.
March 2, 2017
I was down in the Bay doing some viewinsg and while I was there thought it would be a good opportunity to record my video.
Hope you enjoy.
February 17, 2017
How much is your Cardiff Property really worth? Use our online valuation tool to find out out http://valuation.northwooduk.com/
How much is your Cardiff Property really worth? Use our online valuation tool http://valuation.northwooduk.com/
February 15, 2017
Recent statistics published by the Office of National Statistics show that there are 267,704 private rented households in the Country that are occupied by people aged 65 and older, meaning 4.39% of OAP’s are living in private rented property.
It got me thinking two things. How many of these OAP’s have always rented and how many have sold up and become a tenant? In retirement, selling up could make financial sense to the mature generation in Cardiff Bay, potentially allowing them to liquidate the equity of their main home to enhance their retirement income. I wanted to know why these older people rent and whether there was opportunity for the buy to let landlords of Cardiff Bay?
The Prudential published a survey recently that said nearly six out of ten OAP renters had never owned a home. Two out of ten OAP renters were required to sell up because of debt, just about one in ten OAP renters sold their property to use the money to fund their retirement and the remaining one out ten OAP renters, rented for other reasons.
Funding retirement is important as the life expectancy of someone from Cardiff Bay at age 65 (years) is 17.7 years for males and 20.9 years for females (interesting when compared to the National Average of 18.7 years for males and 21.1 years for females). The burdens of financing a long retirement are being felt by many mature people of Cardiff Bay. The state of play is not helped by rising living costs and ultra-low interest rates reducing returns for savers.
So, what of Cardiff Bay? Of the 647 households in Cardiff Bay, whose head of the household is 65 or over, not surprisingly 273 of households were owned (42.19%) and 301 (46.52%) were in social housing. However, the figure that fascinated me was the 46 (7.11%) households that were in privately rented properties.
Anecdotal evidence, by talking to both my team and other Cardiff Bay property professionals is that this figure is rising. More and more Cardiff Bay OAP’s are selling their large Cardiff Bay homes and renting something more manageable, allowing them to release all of their equity from their old home. This equity can be gifted to grandchildren (allowing them to get on the property ladder), invested in plans that produce a decent income and while living the life they want to live.
These Cardiff Bay OAP renters know they have a fixed monthly expenditure and can budget accordingly with the peace of mind that their property maintenance and the upkeep of the buildings are included in the rent. Many landlords will also include gardening in the rent! Renting is also more adaptable to the trials of being an OAP – the capability to move at short notice can be convenient for those moving into nursing homes, and it doesn’t leave family members panicking to sell the property to fund care-home fees.
Cardiff Bay landlords should seriously consider low maintenance semi-detached bungalows on decent bus routes and close to doctor’s surgeries as a potential investment strategy to broaden their portfolio. Get it right and you will have a wonderful tenant, who if the property offers everything a mature tenant wants and needs, will pay top dollar in rent!
February 7, 2017
It was late May 2016, The Right Hon. Member for Tatton, Mr George Osborne, published an official HM Treasury analysis stating UK house prices would be lower by at least 10% (and up to 18%) by the middle of 2018 compared with what is expected if the UK remained in the European Union. So, eight months on from the Referendum, are we beginning to show signs of that prophecy? The simple answer is yes and no.
Good barometers of the housing market are the share prices of the big UK builders. Much was made of Barratt’s share price dropping by 42.5% in the two weeks after Brexit, along with Taylor Wimpey’s equally eye watering drop in the same two weeks by 37.9%. Looking at the most recent set of data from the Land Registry, property values in Cardiff are 0.89% down month on month (and the month before that, they weren’t a great deal better with a decrease of 0.17%) – so is this the time to panic and run for the hills?
Doom and Gloom then? Well, let me consider the other side of the coin.
Well, as I have spoken about many times in my blog, it is dangerous to look at short term. I have mentioned in several recent articles, the heady days of the Cardiff property prices rising quicker than a thermometer in the desert sun between the years 2011 and late 2016 are long gone – and good riddance. Yet it might surprise you during those impressive years of house price growth, the growth wasn’t smooth and all upward. Cardiff property values dropped by an eye watering 1.78% in April 2012 and 0.52% in February 2015 – and no one batted an eyelid then.
You see, property values in Cardiff are still 4.27% higher than a year ago, meaning the average value of a Cardiff property today is £230,300. Even the shares of those new home builders Barratt have increased by 43.3% since early July and Taylor Wimpey’s have increased by 37.3%. The Office for Budget Responsibility, the Government Spending Watchdog, recently revised down its forecast for house-price growth in the coming years – but only slightly.
The Cardiff housing market has been steadfast partly because, so far at least, the wider economy has performed better than expected since Brexit. There is a robust link between the unemployment rate and property prices, and a flimsier one with wage growth. Unemployment in the City of Cardiff Council area stands at 11,000 people (6%), which is considerably better than a few years ago in 2013 when there were 17,500 people unemployed (9.8%) in the same council area.
However, inflation is the only thing that does worry me. Looking at all the pundits, it will get to at least 3% (if not more) in the latter part of 2017 as the drop in Sterling in late 2016 renders our imports with higher prices. If that transpires then the Bank of England, whose target for inflation is 2%, may raise interest rates from 0.25% to 2%+. However, that won’t be so much of an issue as 81.6% of new mortgages in the UK in the last two years have been fixed-rate and who amongst us can remember 1992 with Interest rates of 15%!
Forget Brexit and yes inflation will be a thorn in the side – but the greatest risk to the Cardiff (and British) property market is that there are simply not enough properties being built thus keeping house prices artificially high. Good news for those on the property ladder, but not for those first-time buyers that aren’t!
February 4, 2017
“How much would it cost to buy all the properties in Cardiff?”
This fascinating question was posed by the 14-year-old son of one of my Cardiff landlords when they both popped into my offices before the Christmas break (doesn’t that seem an age away now!). I thought to myself, that over the Christmas break, I would sit down and calculate what the total value of all the properties in Cardiff are worth … and just for fun, work out how much they have gone up in value since his son was born back in the autumn of 2002.
In the last 14 years, since the autumn of 2002, the total value of Cardiff property has increased by 73% or £12.26 billion to a total of £29.05 billion. Interesting, when you consider the FTSE100 has only risen by 68.9% and inflation (i.e. the UK Retail Price Index) rose by 38.7% during the same 14 years.
When I delved deeper into the numbers, the average price currently being paid by Cardiff households stands at £215,021.… but you know me, I wasn’t going to stop there, so I split the property market down into individual property types in Cardiff; the average numbers come out like this ..
|Cardiff Property Market|
|Average Value of a Detached Property||
Average Value of a Semi-Detached Property
|Average Value of a Terraced/Town House Property||Average Value of an Apartment|
… yet it got even more fascinating when I multiplied the total number of each type of property by the average value. Even though detached houses are so expensive, when you compare them with the much cheaper terraced/town houses and semi-detached houses, you can quite clearly see detached properties are no match in terms to total pound note value of the terraced/town houses and semis.
|Total Value of all the Cardiff Detached Properties||Total Value of all the Cardiff Semi-Detached Properties||Total Value of all the Cardiff Terraced/Town House Properties||Total Value of all the Cardiff Apartments|
So, what does this all mean for Cardiff? Well as we enter the unchartered waters of 2017 and beyond, even though property values are already declining in certain parts of the previously over cooked Central London property market, the outlook in Cardiff remains relatively good as over the last five years, the local property market was a lot more sensible than central London’s.
Cardiff house values will remain resilient for several reasons. Firstly, demand for rental property remains strong with continued immigration and population growth. Secondly, with 0.25 per cent interest rates, borrowing has never been so cheap and finally the simple lack of new house building in Cardiff not keeping up with current demand, let alone eating into years and years of under investment – means only one thing – yes it might be a bumpy ride over the next 12 to 24 months but, in the medium term, property ownership and property investment in Cardiff has always, and will always, ride out the storm.
January 27, 2017
Can we blame the 55 to 70-year-old Cardiff citizens for the current housing crisis in the city?
Also known as the ‘Baby Boomer Generation’, these Cardiff people were born after the end of the Second World War as the country saw a massive rise in births as they slowly recovered from the economic hardships experienced during wartime.
Throughout the 1970’s and 1980’s, they experienced (whilst in their 20’s, 30’s and 40’s) an unparalleled level of economic growth and prosperity throughout their working lifetime on the back of improved education, government subsidies, escalating property prices and technological developments, they have emerged as a successful and prosperous generation.
…Yet some have suggested these Cardiff baby boomers have (and are) making too much money to the detriment of their children, creating a ‘generational economic imbalance’, where mature people benefit from house-price growth while their children are forced either to pay massive rents or pay large mortgages.
Between 2001 and today, average earnings rose by 65%,
but average Cardiff house prices rose by 119.6%
The issue of housing is particularly acute with the generation called the Millennials, who are young people born between the mid 1980’s and the late 1990’s. These 18 to 30 years, moulded by the computer and internet revolution, are finding as they enter early adult life, very hard to buy a property, as these ‘greedy’ landlords are buying up all the property to rent out back to them at exorbitant rents … it’s no wonder these Millennials are lashing out at buy to let landlords, as they are seen as the greedy, immoral, wicked people who are cashing in on a social despair.
Like all things in life, we must look to the past, to appreciate where we are now.
The three biggest influencing factors on the Cardiff (and UK) property market in the later half of the 20th Century were, firstly, the mass building of Council Housing in the 1950’s and 60’s. Secondly, for the Tory’s to sell most of those Council Houses off in the 1980’s and finally 15% interest rates in the early 1990’s which resulted in many houses being repossessed. It was these major factors that underpinned the housing crisis we have today in Cardiff.
To start with, in 1995 the USA relaxed its lending rules by rewriting the Community Reinvestment Act. This Act saw a relaxation on the Bank’s lending criteria’s as there was pressure on these banks to lend on mortgages in low wage neighbourhoods, as the viewpoint in the USA was that anyone (even someone on the minimum wage) any working class person should be able to buy a home. Unsurprisingly, the UK followed suit in the early 2000’s, as Banks and Building Society’s relaxed their lending criteria and brought to the market 100% mortgages, even Northern Rock started lending every man and his dog 125% mortgages.
So when we roll the clock forward to today, and we can observe those very same footloose banks from the early/mid 2000’s (that lent 125% with a just note from your Mum and a couple of breakfast cereal tokens), ironically reciting the Bank of England backed hymn-sheet of responsible-lending. On every first time buyer mortgage application, they are now looking at every line on the 20-something’s banks statements, asking if they are spending too much on socialising and holidays … no wonder these Millennials are afraid to ask for a mortgage (as more often than not after all that – the answer is negative).
Conversely, you have unregulated Buy To Let mortgages. As long as you have a 25% deposit, have a pulse, pass a few very basic yardsticks and have a reasonable job, the banks will literally throw money at you … I mean Virgin Money are offering 2.99% fixed for 3 years – so cheap!
So, in Part Two next week, I will continue this emotive article and show you some very interesting findings on why young people aren’t buying property anymore (and it’s not what you think!).
January 25, 2017
I hope your week is going well.
I popped down to one of the new building developments earlier this week to take a look and thought it would be a good opportunity to record my next video. Take a look
January 15, 2017
Apart from some minor exemptions, Stamp Duty is paid by anyone buying a property over £125,000 in the UK. It presently raises £10.68bn a year for the HM Treasury.
In the latest set of data from HMRC, in the MP constituencies that cover Cardiff, property buyers paid £24m stamp duty in one year alone – a lot of money in anyone’s eyes (although not as much as the £703m in income tax that all of us in the same area paid last year).
However, as you may know, George Osborne introduced an additional tax for landlords and from 1st April 2016 they had to pay an additional 3% stamp duty surcharge on top of the normal stamp duty rate when purchasing a buy to let property. There were tales of woe and Armageddon with a report by Deutsche Bank suggesting that the new surcharge could see house prices fall by as much as 20%.
HMRC data released in the Summer for Quarter 2 (Q2) of 2016 did seem to back up those fears as they published some worrying figures; only one in seven properties purchased was a second home or buy-to-let (in real numbers, only 30,300 of the 207,900 properties in Q2 were bought by landlords).
In previous articles, I spoke about the slump of property transactions after the 1st of April (as landlords rushed through their property purchases in March to beat the April deadline). In Q2 of 2016, £1.976bn was raised in Stamp Duty from Residential Property. Of that £1.976bn, £652m was paid by buy to let landlords (£424m in normal stamp duty and £228m in the additional 3% surcharge).
However, looking at Q3, the numbers have improved significantly. Of the 235,000 property sales, nearly one in four of them (56,100 to be precise) were bought by buy to let landlords and of the £2.208bn in stamp duty, £864m was paid in ‘normal’ stamp duty by BTL landlords and an impressive £442m paid by those same landlords in the additional stamp duty surcharge.
The statistics suggest buy to let investors have thankfully not been deterred by the stamp duty surcharge introduced in April this year. The figures also show that 65.4% of “buy to let” purchases cost less than £250,000, 23.7% of properties were in the £250k to £500k range and 10.9% (or 6,100 additional properties) of buy to let properties bought cost over £500k – interestingly nearly one in four (22.2%) of £500k properties purchased in Q3 were buy to let properties.
It just goes to back up what I stated a few weeks ago when I suggested that many investors had rushed to make purchases before 31st March, making figures in the following months (Q2) artificially low when the 3% supplement was introduced, but in Q3 the number of buy to let properties purchased increased by 85%.
January 12, 2017
Figures just released by the Bank of England, show that for the first half of 2016, £128.73bn was lent by UK banks to buy UK property – impressive when you consider only £106.7bn was lent in the first half of 2015. Even more interesting, was that most of the difference was in Q2, as £68.12bn was lent by UK banks in new mortgages for house purchase, which is the highest it has been for two years. Looking locally, in Cardiff last quarter, £1.14bn was loaned on CF14 properties alone!
Even though the Bank won’t be releasing the Q3 figures until December 2016, as I discussed a few weeks ago, HMRC have published their own preliminary data to suggest Q3 will be even better, with a massive growth of buy-to-let landlords to the housing market in that time frame. Fascinating, as it seems to fly in the face of the popular narrative – that the uncertainty surrounding Brexit would negatively impact buyer sentiment.
And it’s not just buy-to-let landlords that seem to be flourishing. I am finding that first-time buyers are also a lot more confident too. Low, and now negative, inflation has had a tangible impact on household finances and first-time buyers feel more secure in their jobs. Couple with a low interest rate environment and you have all the ingredients for a strengthening property market. To back that up with numbers, of the £68.12bn of mortgages lent in the Quarter (Q2), £14.9bn was lent to first-time buyers (the highest proportion of that overall lending for over two years at 21.99%).
When I looked at the data for Cardiff City Council area, the average price paid by first-time buyers (FTB’S) was £166,866, which is a rise of 1.29% from last month and a rise of 6.67% to twelve months ago. The Land Registry then categorise the remaining buyers into cash buyers or those buying with a mortgage. The average price paid by cash buyers was £180,834, a rise of 1.15% from last month and a rise of 6.39% to twelve months ago, whilst buyers with mortgages (but not FTB’s), the average price paid by them was £193,176, a rise of 1.25% from last month and a rise of 6.6% to twelve months ago.
What surprised me with these figures was how close the property prices, values and percentages were to each other. It just goes to show the combination of low mortgage rates and a stable job market will continue to have a positive effect on the Cardiff and UK market. And that is why, while there is undoubtedly more cautiousness in the market at present than a year or so ago (among borrowers and mortgage companies alike) – mortgage rates are so competitive that they are inducing people to commit to a home purchase.
It seems the great Brexit uncertainty was over hyped, and house price growth as well as mortgage approvals, could pick up pace into 2017.
January 5, 2017
Back in the Spring, there was a surge in Cardiff Bay landlords buying buy to let property in Cardiff Bay as they tried to beat George Osborne’s new stamp duty changes which kicked in on the 1st April 2016. To give you an idea of the sort of numbers we are talking about, below are the property statistics for sales either side of the deadline in CF10.
Jan 2016 – 30 properties sold
Feb 2016 – 29 properties sold
March 2016 – 81 properties sold
April 2016 – 8 properties sold
May 2016 – 12 properties sold
Normally, the number of sales in the Spring months is very similar, irrespective of the month. However, as one can see, this year was a completely different picture as landlords moved their purchases forward to beat the stamp duty increase. You would think that even with a basic knowledge of supply and demand economics, rents would be affected in a downwards direction?
However, there appears to be no apparent effect on the levels of rent being asked in Cardiff Bay – and more importantly achieved – and this direction of rents is not likely to inverse any time soon, particularly as legislation planned for 2017 might reduce rental stock and push property values ever upward. The decline of buy to let mortgage interest tax relief will make some properties lossmaking, forcing landlords to pass on costs to tenants in the form of higher rents just to stay afloat. Even those who can still operate may be deterred from making further investments, reducing rental stock at a time of severe property shortage.
.. but it’s not all bad news for tenants. Whilst average rents in Cardiff Bay since 2005 have increased by 13.1%, inflation has been 38.5% over the same time frame, meaning Cardiff Bay tenants are 25.4% better off in real terms when it comes to their rent (which is a sizeable chunk of most people’s monthly household budgets)
|Year||Average Rent in Cardiff Bay per month|
I found it particularly interesting looking at the rent rises over the last five years in Cardiff Bay, as it was five years ago we started to see the very early green shoots of growth of the Cardiff Bay economy. As a whole, following the Credit crunch (2011), rents in Cardiff Bay have risen by an average of 0.7% a year – fascinating don’t you think?
The view I am trying to portray is that while renting is often portrayed as the unfavorable alternative to home ownership, many young Cardiff Bay professionals like renting as it gives them adaptability with their life. Rents will continue to rise which is good news for landlords as buy to let is an investment but, as can be seen from the statistics, tenants have also had a good deal with below inflation increases in rents in the past. It’s a win-win situation for everyone although on a very personal note, it’s imperative in the future that tenants are not thwarted from saving for a deposit by excessive rental hikes – there has to be a balance.