Doncaster Property Blog » February 2019

Monthly Archives: February 2019

Doncaster Property News

How Did Brexit Affect the Doncaster Property Market in 2018 – and its Future for 2019?

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A few weeks ago, I suggested property values in Doncaster would be between -0.4% and 0.6% different by the end of the year. It might surprise some people that Brexit hasn’t had the effect on the Doncaster property market that most feared at the start of 2018.

The basis of this point of view can clearly be seen in the number of property transactions (i.e. the number of property sold) that have taken place locally since 2008. The most recent property recession was the Credit Crunch years of 2008/2009/2010.

In property recessions, the headline most people look at is the average value of property. Yet, as most people that sell also go on to buy, for most home movers, if your property has gone down in value, the one you want to buy has also gone down in value so you are no better or worse off. If you are moving up market – which most people do when they move home – in a repressed market, the gap between what yours is worth and what you will buy gets lower … meaning you will be better off.

Yet, most property commentators, including myself, suggest (and I have mentioned this before in some of my other blog articles) a better measure of the health of the property market is the transaction numbers (i.e. the number of people selling and buying). So, I decided to look at the 2018 statistics, and compare them with the Credit Crunch years (2008 to 2010) and the boom years (2014 to 2017). The results can be seen in the table below.

The Average Number of Properties Sold Per Month Over the Last 10 Years in Doncaster
2008 to 2010 2014 to 2017 2018
Jan 195 264 297
Feb 218 289 277
March 248 411 384
April 223 307 358
May 249 346 373
June 266 429 424
July 266 396 327
Aug 224 387 400
Sept 212 361 312
Oct 232 392 385
Nov 220 374 396
Dec 258 442 420

Then, I looked at the average quarterly figures for those chosen date ranges … and created this graph …

In that 2008 to 2010 property Credit Crunch recession, the average number of properties sold in the Doncaster area were 234 per month. Interesting when we compare that to the boom years of 2014 to 2017, when an average of 366 properties changed hands monthly … yet in the ‘supposed’ doom laden year of 2018, an impressive average of 363 properties changed hands monthly … meaning 2018 compared to the boom years of 2014 to 2017 saw a drop of 1.0% – yet still 54.9% higher than the Credit Crunch years of 2008 to 2010.

The simple fact is, the fundamental problems of the Doncaster property market are that there haven’t been enough new homes being built since the 1980’s (and I don’t say that lightly with all the new homes sites dotted around the locality). Also, the cost of buying your first home remaining relatively high compared to wages and to add insult to injury, all those issues are armor-plated by the tougher mortgage rules which were introduced in 2014 and the current mortgage market conditions.

It is these issues which will ultimately determine and form the rather unexciting, yet still vital, long term outlook for the Doncaster (and national) housing market, as I feel the Brexit issue over the last few years has been the ‘current passing diversion’ for us to worry about. Assuming something can be sorted with Brexit, in the long term property values in Doncaster will be constrained by earnings increases with long term house price rises of no more than 2.5% to 4% a year.

Fundamentally, the question I am asked by many Doncaster buy to let landlords and Doncaster homebuyers is … “should I wait to buy or not?”

As a Doncaster homebuyer, one shouldn’t be thinking of what is happening in Westminster, Brussels, Irish Backstop, China or Trump and more of your own personal circumstances. Do you want to move to get your child in ‘that’ school or do you need an extra bedroom for your third child? For lots of people, the response is a resounding yes – and in fact, I feel many people have held back, so once we know what is finally happening with Brexit and the future of it, there could a be a release of that pent-up demand to move home as people humbly just want to get on with their lives.

There is little to be lost in postponing a house purchase until there is better clarity on the situation. If it isn’t Brexit it will something else – so just get on with your lives and start living. We got through the global financial crisis/Credit Crunch in ‘08/’09, Black Wednesday in ’92 where mortgage interest rates went from 8.5% to 15% in one day, we got through the worst stock market crash with Black Monday in ’87, hyperinflation, power shortages, petrol quadrupling in price in less than a year and a 3 day week in the ‘70’s … need I go on?

Doncaster Landlords? Well, where else are you going to invest your money? Like I said earlier in the article, we aren’t building enough homes to keep up with demand … so as demand outstrips supply, house values will continue to grow. Putting the money in the building society will only get you 1% to 2% if you are lucky. In the short term though, there could be some bargains to be had from shortsighted panicking sellers and in the long term … well, the same reasons I gave to homeowners also apply to you.

Doncaster Property News

Doncaster House Prices up 20.4% in the last 5 Years

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Over the last 5 years, we have seen some interesting subtle changes to the Doncaster property market as buying patterns of landlords have changed ever so slightly.

The background to this story was the recently published set of buy-to-let (BTL) lending statistics. Roll the clock back 12 months and 6,700 BTL mortgages were granted (in the same month) for £900m, meaning the average BTL mortgage was £134,200. Looking at last month’s figures, and as one might expect with the Brexit issue overhanging the property market, the lending figures were down, yet not by the amount I originally thought. Last month, just over 6,100 new buy-to-let mortgages were granted for a total sum of £800m (meaning the average landlord mortgage was a respectable £131,100). Yet, when I looked back to the boom year of the 2014 property market, in the corresponding same month, only £1,030 million was borrowed on 8,300 buy-to-let properties (meaning the average buy-to-let mortgage was £124,100). It seems Brexit is having no effect on landlords buying habits.

Looking closer to home in Doncaster, throughout 2018, I have been regularly chatting to more and more landlords, be they seasoned professional Doncaster BTL landlords or FTL’s (first time landlords) and their attitude is mostly positive. Instead of reading the scare-papers (oops sorry newspapers), those Doncaster landlords that look with their eyes, will see the Doncaster property market is doing reasonably well, with medium term rents and property values rising; as quite obviously from the mortgage figures .. landlords are still buying.

The question I get asked all the time is .. “What type of buy-to-let property should I buy?  You can make money from property through both the rent (expressed as a yield when compared to the value of the property) and how the actual value of the home itself changes.

Since 2014, property values in Doncaster have risen by 20.4%.

We have records of what each type of property (i.e. Detached/Semi/Terraced/Apartments) has achieved per square metre going back 20 years … and looking back over the last 5 years, these are the numbers ..

2014 Doncaster Average Value £/Sq.M Current Doncaster Average Value £/Sq.M
Detached £1,496 £1,781
Semi Detached £1,238 £1,508
Terraced £1,059 £1,288
Apartments £1,468 £1,729

 

They all look to have similar percentage uplifts, however as you can see from the table there is in fact some variation throughout and although only slight this can equate to thousands of pounds in monetary terms.

Price Changes in Doncaster in Last 5 years by Type
Detached 19.0%
Semi Detached 21.8%
Terraced 21.6%
Apartments 17.7%
Overall Average 20.4%

This has proved that semis and terraced houses have performed the best .. although like the £/Sq.M figures, these are just averages. When investing, whilst Doncaster apartments haven’t been the best performers in terms of capital growth, they do tend to generate a slightly better yield than houses, probably because several sharers can afford to pay more than a single family. But houses tend to appreciate in value more rapidly and may well be easier to sell, simply because there are fewer being built.

Now these are of course averages, but it gives you a good place to start from. The bigger picture here though is this – irrespective of what is happening in the world, be it Brexit/no Brexit, China, Trump, whatever, Doncaster people still need a roof over their heads and we as a Country haven’t built enough homes to keep up with the demand since the late 1980’s. This means even if we have a short term wobble in 2019 when it comes to property values ..in the medium term, demand will always outstrip supply and prices and rents will increase – because, I doubt the local authority, let alone Westminster, have the billions of pounds required to build the one hundred thousand Council houses per year nationally for the next decade to fix this issue – meaning as the population increases, the only people who can fulfil the demand for accommodation in the medium term is the private BTL landlord.

Before I go …on average, housing associations and local authorities have built around 26,500 houses each year since 2010. The Labour government had a lower average, building about 19,000 homes per year, yet in the 1960’s, under both administrations, 180,000 councils were built per year!

Doncaster Property News

ANOTHER DONCASTER BUY TO LET DEAL YOU WON’T WANT TO MISS!

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WATCH as Natalie brings us another buy to let deal of the day, this time on Twigg Crescent, Armthorpe

  • 1 bedroom, cluster house.
  • On the market with Martin & Co, Doncaster – Lettings & Sales
  • Perfect for an investor or first time buyers!
  • In a highly popular location for rentals and first time buyers, only a short distance away from motorway links and five minutes drive from Doncaster town centre.

Click here to view this property – https://www.rightmove.co.uk/property…/property-66994459.html

If you would like some specialist advice from Natalie, you can call her on 07818 007152, email her at natalie@mosspm.co.uk or visit our office located at White Rose Way, Doncaster, DN4 5FT

Doncaster Property News

Press Release : Moss Properties a Proud Member of Land & New Homes Network

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Moss Properties estate agents in Doncaster has been selected by a leading national network which will help it to continue to develop its expertise in the booming land and new homes sector.

The Land and New Homes Network (LNHN) spans the UK and brings the most professional, forward thinking and trusted non-competing estate agents together to offer developers, property investors and home buyers an unparalleled service based on knowledge, experience and integrity.

Moss Properties is now in a very strong position to provide land and development consultancy to clients and a specialised new homes sales service.

Sanjay Gandhi, Director of Moss Properties said: “We were very pleased to be selected as the LNHN’s agent for Doncaster.

“It means we can deliver even better results for our clients.”

“Membership of the LNHN gives us access to national land and new homes experts who will be on hand to advise us when needed.”

“The Government has made addressing the housing shortage a priority so with thousands of new homes needed we’ve been proactive to ensure our clients will benefit from the best advice and coverage available.”

“The network’s national coverage means we have relationships with builders, developers, investors and estate agents from across the UK. This is good for anyone selling land or new homes with us, as it increases the amount of potential buyers enormously.”

“And it means more choice and better quality for local people looking to buy a new home.”

Ian Stratford, Land and New Homes Network’s Managing Director, said: “We are really looking forward to working together with Moss Properties.”

“They are exactly the type of agency we want as part of the network. They were selected for their professionalism, experience and their focus on delivering results for clients.”

If you own land or a property that you think might have development potential please call Sanjay Gandhi, Director on 07533 595 595 for a confidential conversation.

Or if you are interested in buying a new home please contact Frances Bowling on 07896 988 366.

Doncaster Property News

Doncaster Tenant’s Deposits held total £4,537,841

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With the Government preparing to control tenant’s deposits at five weeks rent, Doncaster landlords will soon only be protected in the event of a single month of unpaid rental-arrears, at a time when Universal Credit has seen some rent arrears quadrupling and that’s before you consider damage to the property or solicitor costs.

It can’t be disputed that the deposits Doncaster tenants have to save for, certainly raises the cost of renting, putting another nail in the coffin of the dream of home ownership for many Doncaster renters whilst at the same time, those same deposits being unable to provide Doncaster landlords with a decent level of protection against unpaid rent or damage to the property.

In fact, the total of all the tenants’ deposits in

Doncaster, deposited or protected, is £4,537,841

When you consider the value of all the privately rented properties in Doncaster total £1,314,812,068, the need for decent landlord insurance to ensure you are adequately covered as a Doncaster landlord is vital.

However, I want to consider the point of view of the Doncaster tenant.  Several housing charities believe spending more than a third of someone’s salary on rent as exorbitant, yet for the tenants they find themselves in that very position.  I feel especially sorry for the Doncaster youngsters in their 20’s who want to rent a place for themselves, as they face having to pay out the rent and try and save for a deposit for a home.

The average 22 to 29-year-old in Doncaster spends 26% of their typical salary on a one bed rental property

….and 31% of their salary for a 2-bed home in Doncaster.

40 years ago, British people who rented spent an average of 10% of their salary on rent, and only 14% in London.  Looking in even greater detail, according to the ONS, over the past 60 years the proportion of total spending on all housing (renting and mortgages) has doubled from 9% in the late 1950’s to 18% today.  Whilst on the other hand, the proportion of total expenditure on food has halved (33% to 16%), as has the proportion of total spending on clothing (10% to 5%) … it’s a case of swings and roundabouts!

Yet landlords also face costs that need to be covered from rents including mortgages, landlord insurance (especially the need for the often-inadequate deposits to cover the loss of rent and damage), maintenance and licensing.  In fact, rents in the last 10 years have failed to keep up with UK inflation, so in real terms, landlords are worse off when it comes to their rental returns (although they have gained on the increase in Doncaster property values – but that is only realised when a property sells).

There are a small handful of Doncaster landlords selling some/or all of their rental portfolio as their portfolios become less economically viable with the recent tax changes for buy to let landlords, which will result in fewer properties available to rent.

However, this will reduce the supply and availability of Doncaster rental properties, meaning rents will rise (classic textbook supply and demand), thus landlords return and yields will rise.  Yet, because tenants still can’t afford to save the deposit for a home (as we discussed above) and we are all living longer, the demand for rental properties across Doncaster will continue to grow in the next twenty to thirty years as we turn to more European ways where the norm is to rent rather than buy in the 20’s and 30’s age range. This will mean new buy-to-let landlords will be attracted into the market, buy properties for the rental market in Doncaster and enjoy those higher yields and returns … isn’t it interesting that things mostly always go full circle?

Doncaster Property News

ANOTHER DONCASTER BUY TO LET DEAL YOU WON’T WANT TO MISS!

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WATCH as Natalie brings us another buy to let deal of the day, this time on Blake Avenue, Wheatley, Doncaster.

  • 3 bedroom, semi detached house.
  • On the market with Horton Knights, Doncaster.
  • Perfect for an investor or first time buyers!
  • ️ In a highly popular location for rentals and first time buyers, only a short distance away from motorway links and five minutes drive from Doncaster town centre.
Doncaster Property News

Doncaster Property Market – Outlook for 2019

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Doncaster property values are currently 0.9% lower than at the end of 2017, notwithstanding the uncertainty and threats over the potential impact of Brexit in 2019. This is nowhere near as bad as all the predictions (aka guesses) of all the City of London economists, in an astonishing sign of strength for the local Doncaster and wider national economy.

Nevertheless, the statistics from the Land Registry come after a lethargic year for the number of properties in Doncaster compared to the actual prices achieved for those properties.  All this against a framework of amplified political ambiguity and ensuing years of rising Doncaster property values that have reduced the affordability of homes in the locality.

 

The average value of a Doncaster property today,

currently stands at £156,175

 

Looking in finer detail, it isn’t a surprise that 3,691 property sales in Doncaster over the last 12 months is somewhat lower than the long-term average over the last 20 years of 4,748 property sales per year in Doncaster as the long-term trend of people moving less has meant a decline in the number of property transactions.

I believe locally, Doncaster property value growth will be more reserved in 2019 after two decades of weaker wage rises. One of main drivers in the demand (and thus the price people are prepared to pay for a home) is the growth of peoples wage packets. Interestingly, wage inflation over the last six months has risen from 2.4% in the late summer to its current level of 3.3% (which is higher than the average since the Millennium, which has been a modest 2.1%). One of the reasons why wages are growing in the short term is the unemployment rate in the country currently only stands at 4.1%, continuing to stay close to its lowest level since the 1970’s.

However, even though Doncaster salaries and wages are rising comparatively higher than they were last year, looking over the long term, Doncaster property values are 161.49% higher than they were in January 2002, yet average salaries are only 76.1% higher over the same time frame. This means over the last few years, with average property values so high comparative to salary/wages, many Doncaster potential buyers have been priced out of being able to purchase their first home.

At first glance, these stats are actually rather positive during this reported time of political uncertainty and the height of Brexit commotion … because I genuinely believe that to be the case. The press have always looked for the bad news (well they do say it is that that sells newspapers), and whilst I am not entering into the pros and cons of Brexit itself, the numbers do stack up quite well since the Brexit vote took place nearly 3 years ago.

Moving forward, when taken with the recent reduction in short to medium term number of property transactions (i.e. the number of Doncaster properties sold), it should be noted that a lot of the this buoyant house price increase has a lot more to do with a shortage of properties on the market rather than an uplift in the Doncaster housing market generally.

And we can’t forget that Doncaster isn’t in its own little bubble, as there are noteworthy differences across the UK in property value inflation. House prices in London and the South East have hardly risen or even fallen in some places, whilst in the Midlands, North and other parts of the country they have generally increased.

Looking forward, I would say to the homeowners and buy to let landlords of the locality that I expect Doncaster house price growth to remain stable between -0.4% and +0.6% by the end of this year (although they could dip slightly during the summer) … as long as nothing unexpected happens in the world economically or politically of course.

Doncaster Property News

Doncaster Homeowners 74% More Likely To Live in a Home with 3+ Bedrooms than those that Privately Rent

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The conventional way of categorising property in Britain is to look at the number of bedrooms rather than its size in square metres (square feet for those of you over 50!). My intuition tells me that homeowners and tenants are happy to pay for more space. It’s quite obvious, the more bedrooms a house or apartment has, the bigger the property is likely to be. And it’s not only the tangible additional bedrooms, but those properties with those additional bedrooms tend to have larger (and more) reception (living) rooms. However, if you think about it, this isn’t so surprising given that properties with more bedrooms would typically accommodate more people and therefore require larger reception rooms.

In todays Doncaster property market, the Doncaster homeowners and Doncaster landlords I talk to are always asking me which attributes and features are likely to make their property comparatively more attractive and which ones may detract from the price. Over time buyers’ and tenants’ wants and needs have changed.

In Doncaster, location is still the No. 1 factor affecting the value of property, and a property in the best neighbourhoods can achieve a price almost 50% higher than a similar house in an ‘average’ area. Nevertheless, after location, the next characteristic that has a significant influence on the desirability, and thus price, of property is the number of bedrooms and the type (i.e. Detached/Semi/Terraced/Flat).

The number of bedrooms for owner-occupiers very much depends on the size of the family and the budget, whilst Doncaster landlords have to consider the investment opportunity. In this article, I have analysed Doncaster’s housing stock into bedrooms and tenure. Initially looking at Doncaster homeowners..

And now the Private rented sector …

Owner-Occupier Households in Doncaster Private Rented Households in Doncaster
1 Bed 0.98% 13.57%
2 Bed 18.51% 40.13%
3 Bed 60.31% 39.31%
4+ Bed 20.20% 6.99%

It can quite clearly be seen that Doncaster owner-occupiers tend to occupy the larger properties with more bedrooms. This would be expected due to the demographic of homeowners and people that privately rent.

However, this shows there could be opportunities for Doncaster buy to let landlords to purchase larger properties with more bedrooms to attract tenants requiring properties with more bedrooms. However, before you all go buying larger 4 bed and 5 bed mansions to rent them out, a lot of bigger properties in Doncaster don’t make financial sense when it comes to buy to let.

For numerous years Doncaster buy to let landlords have been the lone buyers at the smaller one and two bed starter homes of the market, as they have been lured by elevated tenant demand and eye-catching returns. Some Doncaster landlords believe their window of opportunity has started to close with the new tax regime for landlords, whilst it already appears to be opening wider for first time buyers. This is great news for first time buyers .. but one final note for Doncaster landlords .. all is not lost .. you can still pick up bargains, you just need to be a lot more savvy and do your homework ..one source of such information with articles like this is the Doncaster Property Market Blog http://www.doncasterpropertyblog.co.uk/