Doncaster Property Blog » September 2017

Monthly Archives: September 2017

Doncaster Property News

Decreasing Numbers of Younger Homeowners in Doncaster

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Ethan Cooper, 37-year-old father of two from Doncaster, was out house hunting. It was a pleasant August Saturday afternoon, and our man cycles along on his bike. He cycles up a street of suburban semis, where he spots a few retired mature neighbours, chatting to each other over the garden fence. He leans his bicycle against a lamppost and launches softly into his property search.

Anyone on the road contemplating moving?” Ethan asks, “I am not a landlord or developer, I’m just a Doncaster bloke trying to get out of renting, buy a house, do it up and live in it with my wife and two children

The only way I will leave here is in a box”, answers an 80-something lady, wearing her fading Paisley patterned housecoat from the 1970’s.

I‘ve lived here since before you were born, its lovely up here .. we aren’t moving, are we Doris?” (as her neighbour sagely shook his head at his wife).

Ethan, like many Doncaster people born in the late 1970’s to the early 1990’s, is keen to get a slice of prime Doncaster real estate. Yet people like Ethan in Generation Y (or the Millennials as some people call them i.e. born between 1977 and 1994 and needing family housing now) are discovering, as each year passes by, they are becoming more neglected and ignored when it comes to moving up the property ladder.

Looking at the graph for the UK as whole …

Over 75 percent of Brits aged 65 and above (the baby boomers) are owner-occupiers, the biggest share since records began and a proportional rise of over 48.3% since the early 1980’s. Looking at those Baby Boomers (the current 65+year olds)  .. and roll the clock back 36 years (to when they were in their 30’s and 40’s and two thirds (65.6%) of them owned their own home.

Whilst today, just under a half of 25 to 49 year olds (47.3%) own their own home.

However, the biggest drop has been in the 18 to 24-year old’s, where homeownership has dropped from a third (32%) in the 1980’s to less than one in ten (8.9%) today. Looking at the Doncaster statistics, the numbers make even more interesting reading.

Government policy contributes to the generational stalemate. Stamp Duty rules prevent older Brits from moving as the price of land and planning rules make it harder to build affordable bungalows that are attractive to members of the older generation who want to move.

The average value of an acre of prime building land in the UK is between £750,000 and £800,000 per acre. Bungalows are the favoured option for the older generation, but the problem is bungalows take up too much land to make them profitable for new homes builders. The housing market is gridlocked with youngsters wanting to get on (then move up) the property ladder whilst the older generation, who want to move from their larger houses to smaller, more modern bungalows, can’t. The problem is – there simply aren’t enough bungalows being built and the high price of land, means they are prohibitive to build.

So, what is my point? Well, all I would say to the homeowners of Doncaster is that one solution could be to start to talk to your local councillors, so they can mould the planners’ thoughts and the local authority thinking in setting land aside for bungalows instead of two up two down starter homes? That would free the impasse at the top of the property ladder (i.e. mature people living in big houses but unable to move anywhere), releasing the middle aged gridlocked people in the ladder to move up, thus releasing more existing starter homes for the younger generation.

… and to you Ethan … the wandering new home searcher – if things are going to change, it will be years before they do .. so keep going out and spreading the word of your search for a new home for your family.

Doncaster

Slowing Doncaster Property Market? Yes and No!

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My thoughts to the landlords and homeowners of Doncaster…

The tightrope of being a Doncaster buy-to-let landlord is a balancing act many do well at. Talking to several Doncaster 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 suggest many landlords feel more assured than they were in the spring about pursuing higher rents on their 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 Doncaster landlords as average Doncaster rents have been on a downward trend recently. So look at the figures here…

Rents in Doncaster on average for new tenants moving in have risen 1.6% for the month, taking overall annual Doncaster rents 1.1% higher for the year

However, several Doncaster landlords have expressed their apprehensions about a slowing of the housing market in Doncaster. I think this negativity may be exaggerated.

The other side of the coin to property investing is capital values (which will also be of interest to all the homeowners in Doncaster as well as the Doncaster buy-to-let landlords).  I believe the Doncaster property market has been trying to find some level of equilibrium since the New Year.  According to the Land Registry…

Property Values in Doncaster are 2.21% higher than they were 12 months ago, rising by 2.5% last month alone!

The reality is the number of properties that are on the market in Doncaster today has dropped, albeit only by 1.1% since New Year, but even that can have an interesting effect on short-term property values. As tenants have had less choice, buyers also have less choice.

Be you a homeowner or landlord, if you are planning to sell your Doncaster property in the short-term, it is crucial, that whilst you allow room for negotiation, you must still realistically price your property when you bring it to the market. Given that everyone now has access to property details, including historic stats for how much property has sold for, buyers will be more astute during the offer and negotiation stages of a purchase.

Even with this short-term decrease in the number of properties for sale in Doncaster, 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 1,657 properties for sale compared to the current level of 892.

Compared to 2008, today’s lower supply of Doncaster 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 Doncaster 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 Doncaster 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. One place for such deals, irrespective of which agent is selling it, is my Doncaster Property Blog.

Doncaster

Doncaster’s New 3 Speed Property Market

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“What’s happening to the Doncaster Property Market” is a question I am asked repeatedly.  Well, would it be a surprise to hear that my own research suggests that there isn’t just one big Doncaster property market – but many small micro-property markets?

According to recent data released by the Office of National Statistics (ONS), I have discovered that at least three of these micro-property markets have emerged over the last 20+ years in the town.

For ease, I have named them the …

  1. lower’ Doncaster Property Market.
  2. lower to middle’ Doncaster Property Market.
  3. ‘middle’ Doncaster Property Market.

The ‘lower’ and ‘lower to middle’ sectors of the Doncaster property market have been fuelled over the last few years by two sets of buyers. The first set, making up the clear majority of those buyers, are cash rich landlord investors who are throwing themselves into the Doncaster property market to take advantage of alluringly low prices and even lower interest rates. The other set of buyers in the ‘lower’ and ‘lower to middle’ Doncaster property market are the first-time buyers (FTB), although the FTB market is in a state of unparalleled deadlock as it’s been trampled into near-immobility and incapacity by the new 2014 stricter mortgage affordability regulations and also fewer mortgages with low deposits.

Some of you may be interested to know how I have classified the three sectors ..

  1. lower’ Doncaster housing market – the bottom 10% (in terms of value) of properties sold
  2. lower to middle’ Doncaster housing market – lower Quartile (or lowest 25% in terms of value) of properties sold
  3. middle’ Doncaster housing market – which is the median in terms of value

…. and if one looks at the figures for Doncaster Metropolitan Borough Council area you can see the three different sectors (lower, lower/middle and middle) have performed quite differently.



You can see that it is the ‘lower’ market that has performed the best.

You might ask, what do all these different figures mean to homeowners and landlords alike?  Quite a lot – so let me explain. The worst performing sector (with the lowest Percentage uplift) was the ‘middle’ housing market. Therefore, interestingly, if we applied the best percentage uplift figure (i.e. from the ‘lower’ market percentage uplift), to the ‘middle’ 1995 housing market figure, the 2017 figure of £138,850, would have been £142,536 instead – a bit of a difference you must agree?

Now, I have specifically not mentioned the upper reaches of the Doncaster housing market for several reasons.  Firstly, the lower or middle market is where most of the buy to let investment landlords buy their property and where the majority of property transactions take place. Secondly, due to the unique and distinctive nature of Doncaster’s up-market property scene (because every property is different and they don’t tend to sell as often as the lower to middle market), it is much more difficult to calculate what changes have occurred to property prices in that part of the Doncaster property market – looking at the stats for the up-market Doncaster property market from Land Registry, only 11 properties in Doncaster (and a 5 mile radius around it) have sold for £1,000,000 or more since 1997.

So, what should every homeowner and buy to let landlord take from the information that there are many micro-property markets? Well, when you realise there isn’t just one Doncaster Property Market, but many Doncaster “micro-property markets”, you can spot trends and bag yourself some potential bargains. Even in this market, I have spotted a number of bargains over the last few months that I have shared in my Property Blog and to my landlord database, especially in the ‘lower’ and ‘lower/middle’ market. If you want to be kept informed of those buy to let bargains, have a look at my Blog .. it’s free to do so and I’m sure you wouldn’t want to miss out – would you?

I would love to know if you have spotted any micro-property markets in Doncaster.