Doncaster Property Blog » April 2019

Monthly Archives: April 2019

Doncaster Property News

Doncaster Buy To Let Annual Returns Hit 10.34% in Last 10 Years

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Many Doncaster people ponder the best places to invest their hard-earned savings and the best piece of advice I can give you is to do your homework and speak to lots of people. It depends on your attitude to risk versus reward. Normally, the lower the risk, the lower the reward whilst a higher risk is normally associated with the possibility of higher returns, yet nothing is guaranteed. At the same time, higher risk also means higher possible losses on your investment – yet if one looks at the bigger picture, the biggest threat to investing, predominantly when the investment is made in the short term, isn’t risk but actually volatility.

So where should you invest? Building society, the stock market, gold or property are options. This article isn’t designed to give you advice – just show you how different investments have performed over the last decade.

Let me start with the humble semi-detached house in Doncaster … which in 2009 was worth £98,600 … so assuming I bought that property for that figure, then I looked at what if I had invested the same amount of money in a building society, into gold and finally the stock market…

  Savings Account Gold Stock Market Doncaster Semi Detached House
2009 capital £98,600 £98,600 £98,600 £98,600
2019 capital £98,600 £125,100 £128,400 £130,900
2019 capital & interest/rent £122,800 £125,100 £171,600 £202,200

Putting your money into the stock market (FTSE100) would have brought a return of 30.2% on your capital over those 10 years and an average of 3.79% a year in dividends (making an overall increase of 74%).

Gold doesn’t earn interest – yet it has increased in value by 26.9% over the same 10 years whilst putting your money in the building society, the money hasn’t increased in value, but would have earned you interest of 24.46% or the equivalent of 2.21% per year.

Investing in an average semi-detached house in Doncaster over the last 10 years has seen the capital increase by 33% (an equivalent of 2.89% per annum) and the income (i.e. the rent) has provided a return, based on the original purchase price, of 105.07% or the annual equivalent of 7.45% … meaning the overall return, based on the original purchase price of an average semi-detached property in Doncaster, is 10.34% per annum.

Notwithstanding No.11 Downing Street’s grab at the profits of buy to let landlords by hitting the buy to let sector with several fiscal punishments with a 3% stamp duty level, a decrease in high rate tax relief for landlords and an increase in rate of CGT on residential property profits, the facts remain that ‘bricks and mortar’ is still one of the preeminent and most constant investments available.

The bottom line is, the buy to let investment remains the mainstay of the British property market, serving to support aspiring homeowners as they work to conquer the, sometimes difficult, financial obstacles of home ownership. With Central Government over the last 30 years only paying lip service to address the lack of new homes being built or tackling the affordability on a consequential scale, it is highly probable this will continue for the next 5/10/15 years as there will always be a call for a respectable, and above all, honest buy to let landlords delivering decent housing to those that need it.

Doncaster Property News

Which Doncaster Properties are Selling the Best?

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Moving home is said to be the third most stressful life event, following a member of your family dying or getting divorced. So it is always best to keep your stress levels down by investigating and doing your homework on both the particular area of Doncaster (or nearby conurbations) where you live (i.e. where you are selling) and where you want to search for your next Doncaster home. Being mindful of how fast (or slow) the different aspects of the Doncaster property market is moving is key.. because it could save you much heartache and many thousands of pounds.

You see, if you know you are selling a property in a sluggish price range and buying in a faster moving price range in Doncaster then putting your property on the market first is vital, otherwise you will always find the one you want to buy tends to sell before your property sells – there is nothing worse than pondering over a property only to find that someone else has bought it. Being primed with all the knowledge is key. On the other side of the coin, if you are selling in a fast moving market and buying in a sluggish market .. you can probably get a better deal on the one you are buying.

For buy to let landlords in Doncaster, this evidence is particularly critical as purchasing a high-demand property in a well-liked area of Doncaster will safeguard a surfeit of availability of tenants, as well as respectable house price growth.

Being an agent in Doncaster, I like to keep an eye on the Doncaster property market on a daily basis because it enables me to give the best advice and opinion on what (or not) to buy in Doncaster; be that a buy to let property for a landlord or an owner occupier house.  So, I thought, how could I scientifically split the Doncaster housing market into sections, so I could analyse which part of the Doncaster property market was doing the best (or the worst).

I took the decision that the preeminent way was to fragment the Doncaster property market into roughly four uniform size price bands (in terms of properties for sale). Each price band would have roughly around 25% of the property in Doncaster available for sale .. then add up all the sold (stc) properties and see which sector of the Doncaster property market was performing best? … And these were the results ..

  # Properties For Sale # Properties Sold (stc)
up to £90,000 469 307
£90,000 to £140,000 569 426
£140,000 to £230,000 554 487
£230,000 upwards 469 172

The best performing price range in Doncaster is the middle to upper market £140,000 to £230,000 where 46.8% of all property in that price range has a buyer and is sold stc.

It’s not unexpected that the upper end of the property market (the top 25%) in Doncaster is finding things a little tougher compared to the others. Remarkably for Doncaster landlords, the lower market is doing reasonably well, but it’s not the best, so maybe there could be some property deals out there for buy to let investment? Even though the number of first time buyers in 2018 did increase over the 2017 levels, it was from a low starting point and the large majority of 20 to 30yo’s don’t want to or can’t buy their first home and the local authority has no money to build Council houses meaning an increase in demand as private landlords take up the slack – because everyone needs a roof over their head!

If you would like to pick my brains on the Doncaster Property Market – pop in for a coffee or drop me a line on social media or email.

Doncaster Property News

What Has Happened to the Doncaster Property Market Since the Last Property Market Crash?

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A handful of Doncaster landlords and homeowners have been asking me what would happen if we had another property crash like we did in 2008/9?

The UK property crash in 2008/9 caused property prices in the UK to drop by an average of 18.37% in a period of 16 months.

On the run up to the Parliamentary vote on Brexit scheduled for March, a number of people asked what a no-deal Brexit would do to the property market and if there would be a crash as a result. I have discussed in a previous article on the chances of that (slim but always a possibility) … but assuming it happens, it is my opinion the outcome of a no-deal Brexit would be no worse than the country’s 2008/9 credit crunch property crash, the late 1988 property crash, the 1974 property crash, 1951 property crash … I could go on. The British economy would bounce back from the shock of a no-deal Brexit with lower property values and a continued low interest rate environment (together with an additional round of Quantitative Easing) and that would mean we would see a similar bounce back as savvy buyers saw it as a fantastic buying opportunity.

So, let me explain the reasons I believe this…

Many said after the Brexit vote in June 2016, we were due a property crash – but we all know what happened afterwards.

Initially, let’s see what would happen if we did have a crash, how quickly it would bounce back and then finally discuss how the chances of a crash are actually quite minimal.

Therefore, to start, I have initially split down the types of property in Doncaster (Det/Semi etc.) and in the red column put the average value of that Doncaster property type in 2009. Next in the orange column what those average values are today in 2019.

Doncaster Property Market

The likely effects of a Property Crash and Recovery

  Average Value in 2009 Average Value in 2019 Assumed Average Value by Q2 2020  (if Property Crash) Assumed Value in 2024/5
Detached £178,200 £255,200 £208,300 £253,300
Semi Detached £98,600 £130,900 £106,900 £124,400
Terraced £75,000 £99,800 £81,500 £95,000
Apartment £88,300 £114,900 £93,800 £107,900

Now, assuming we had a property crash like we did in 2008, when average property values dropped nationally by 18.37%, I applied a similar drop to the current 2019 Doncaster figures (i.e. the green column) to see what would happen to property values by the middle 2020 (because the last crash only took 13/14 months).

…and finally, what would subsequently happen to those same property prices if we had a repeat of the 2009 to 2014 property market bounce back.

Of course, these are all assumptions and we can’t factor in such things as China going pop on all its debt … yet either way, the chance of such a crash coming from internal UK factors are much slimmer than in another of the four property crashes we have experienced in the last 80 years. Why, you might ask?

The seven reasons I believe are these …

  1. The new Bank of England mortgage rules on lending 2014 to stop reckless lending that fuelled that last crash.
  2. Low inflation.
  3. Low mortgage rates (the average Brit’s fixed rate mortgage is currently 2.26% and the variable rate mortgage of 3.07%).
  4. Wage rises are forecast to continue to outgrow inflation.
  5. Unemployment figures dropping to 4% (down from 8.4% in 2011).
  6. The high percentage (67.7%) of all British mortgages being on a fixed rate.
  7. And notwithstanding the distractions of Brexit over the last few years, it cannot be denied that the British economy has slowly and steadily been heading in the right direction for a number of years, built on some decent foundations of a steady housing market (unlike the 1988 and 2008 crashes when the housing market got overheated very quickly on the run up to the crashes).

So as the circumstances are much different to the last two crashes, the chances of a crash are much slimmer. Yet if we do have a crash, for the very same 7 reasons above why the chances of a crash are unlikely, those 7 reasons would definitely contribute to making the ensuing recession neither too long nor substantial in scale.

One final thought for the homeowners of Doncaster. Most people when they move home, move up market, meaning in a decreasing market you will actually be the winner, as a 10% drop on yours would be much smaller in £notes than a 10% drop on a bigger property … think about it.

One final thought for the new and existing buy to let landlords of Doncaster. Well, the questions I seem to be asked on an almost daily basis by landlords are: –

  • “Should I sell my property in Doncaster?”
  • “Is the time right to buy another buy to let property in Doncaster and if not Doncaster, where?”
  • “Are there any property bargains out there in Doncaster to be had?”

Many other Doncaster landlords, who are with us and many who are with other Doncaster letting agents, all like to pop in for a coffee, pick up the phone or email us to discuss the Doncaster property market, how Doncaster compares with its closest rivals (Rotherham, Scunthorpe and Pontefract), and hopefully answer the three questions above. I don’t bite, I don’t do hard sell, I will just give you my honest and straight-talking opinion. I look forward to hearing from you.