Monthly Archives: May 2019

Doncaster Property News

Unemployment – the Secret Driver of the Doncaster Property Market?

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If you have been reading my articles on the Doncaster property market recently, you will see that in the three years since the referendum of the ‘B’ word (that word is banned in our household), we have proved beyond doubt that it (whose name shall remain nameless) has had no effect on the Doncaster property market (or the UK as a whole).

So one might ask, what does affect the property market locally? Well many things on the demand side include wages, job security, interest rates, availability of mortgages, confidence in the economy, inflation, speculative demand … the list goes on. Yet as my blog readers will note, I like to delve deeper into the numbers and I have found an interesting correlation between unemployment and the number of properties sold (i.e. transactions).

Why transaction levels and not house prices? Well just looking at Doncaster house prices as a bellwether has flaws. Many property market commentators and economists believe transaction numbers (the number of properties sold) give a more accurate and candid indicator of the health of the property market than just house values alone. The reason is twofold. First most people when they sell also buy, so if property values have dropped by 10% or risen by 10% on the one you are selling, it would have done the same on the one you are buying – meaning to judge the health of a property market is very one dimensional. Secondly, the act of moving is very much a human thing. Property habitually conveys a robust emotional connection with homeowners – a connection that few would attribute to their other investments like their savings or stock market investments. Moving home could be described as a human enterprise, moving from one chapter of one’s life to another. When people move home, it shows they are moving forward in their lives and so this gives a great indicator of the health of the property market.

Looking at Doncaster’s figures on the graph, you can see an inverse relationship between unemployment and housing transaction levels.

Property transactions in Doncaster dropped by 58.68%, whilst unemployment in Doncaster rose by 56.0% during the 2007 to 2009 Global Financial Crash

There is clearly a relationship between conditions in the Doncaster job market and the number of people who move home … interesting don’t you think?

Year Unemployment % Rate
in Doncaster
Number of Properties
Sold in Doncaster
2004 4.8 6269
2005 5.9 5260
2006 5.9 6073
2007 6.3 6246
2008 8.2 3258
2009 9.7 2581
2010 10.1 2594
2011 11.9 2741
2012 10.6 2684
2013 9.0 3406
2014 8.3 4140
2015 6.4 4283
2016 6.0 4191
2017 5.6 4678
2018 5.6 4637

Now I am not saying unemployment is the only factor influencing the Doncaster property – but it has to be said there is a link.

As a country (and indeed here in Doncaster) over the last 40 years, we have seen a shift in the outlook over the purpose of housing and the development of the religion of following house prices (and I appreciate the irony of me writing these articles on Doncaster – feeding that habit!) Yet, when did owning a home turn from buying a roof over your head to an out and out investment vehicle? I do wish people would stop fretting about their intrinsic value being associated with their Doncaster home. Now of course, I am not dismissing the current levels of Doncaster house prices – we just have to take into consideration other metrics alongside them when judging the health of the property market locally.

One final thought, looking on a broader scale in the UK, those towns and cities whose property markets bounced back after the Global Financial Crash had high levels of employment and low unemployment whilst places with high unemployment and relatively low employment have, on the other hand, typically underperformed.

So the next time you are considering a house move or buying a buy to let property in Doncaster … don’t make your judgment on house price growth alone.

Doncaster Property News

Doncaster House Prices Fall 0.7% in a Year

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What does that mean for local Landlords and Homeowners?

The balancing act of being a Doncaster Buy To Let landlord is something many do well at. Talking to numerous Doncaster landlords, they are very aware of their tenants’ capability to pay the rent and their own need to raise rents on their rental properties.  Despite the ‘perceived ‘dark clouds of Brexit, evidence suggests many landlords feel more confident than they were in the Summer and Autumn of 2018 about aiming to push rents higher on their Doncaster Buy To Let properties.

Looking at the data for the last 7 years, this shows that throughout the Summer months, the rents new tenants have had to pay on move in have increased at a higher rate than during the colder months of Winter.  This is because the Summer months are normally a time when renters like to move, meaning demand increases for rental properties yet supply remains pretty ridged.

Yet the Winter stats buck that trend and this is great news.

Rents in Doncaster on average for new tenants moving in have risen 1.9% for the month, taking overall annual Doncaster rents 2.1% higher for the year

However, several Doncaster landlords have expressed their apprehension about a slowing of the housing market in Doncaster and I believe, based on this new evidence, they may be overstated.  Before we get the bubbly out though, the other part of investing in property is what is happening to 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 form of balance since the New Year.   According to the Land Registry….

Property Values in Doncaster are 0.7% lower than they were 12 months ago

Yet, these figures reflect the sales of Doncaster properties that took place in the late Summer of 2018 and only exchanged and completed during the Autumn / early Winter months of last year.

The reality is the number of properties that are on the market in Doncaster today has risen by 14% since the Summer

and that will have a dampening effect on the property market.  As tenants have had less choice, buyers now have more choice .. and that will temper Doncaster property prices as we head into the middle of 2019.

Be you a Doncaster landlord or Doncaster homeowner, if you are preparing to sell your Doncaster property in 2019, it’s important, especially with the rise in the number of properties on the market, that you are pricing your property realistically when you bring it to the market.  With the likes of Rightmove, Zoopla and OnTheMarket on everybody’s mobile phones and laptops, buyers have access to every property on the market and they will compare and contrast your home with other properties like yours – and will more than likely dismiss your property rather than view it.

To all the Doncaster homeowners that aren’t planning to sell though – 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.  Look at the deal as a whole, the difference between what you sell yours for and what you buy at.  Finally, all the Doncaster landlords – keep your eye’s peeled – I have a feeling there may be some decent Doncaster buy to let deals to be had in the coming months.

Doncaster Property News

New Home Building in Doncaster 2018 rises to 54.4% above the post Millennium average

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Nationally, the number of new homes created in 2018 was 222,194, the highest since 1989. Yet since 2002, the average number of properties built in the UK has only been 146,700 per year. You would think, seeing all the new homes sites around, you could ask are we building too many houses, especially off the back of those impressive 2018 build figures? However, to keep up with the ever-growing population, lifestyles and people living longer, official reports state the Country actually needs 240,000 new homes built every year to just stand still.

It is estimated, by the Chartered Institute of Housing, that the current national backlog of new homes required is in the order of 4.7 million (i.e. because of the bottled-up household formation by younger adults living with parents, shared housing and unaffordability). As a Country, we cannot meet all these needs immediately and it will take time to build up an effectual plan to address these issues.

Looking closer to home, you will also see from the graph below the long-term trend of new homes building (the yellow dotted line) has been going in a slight upward direction. In fact, the 2018 new homes build stats for Doncaster are 54.4% above the post Millennium average. (You will see some years are negative, this is because more houses were demolished than built).

But, we still need more homes… yet who is going to build (and pay) for them. Some Doncaster people will say why can’t the local authority build most of them?

In 2018, 1,208 new dwellings were created in the Doncaster Council area and of those 1,208; interestingly 196 were Council and Housing Association homes

So, if our local authority had a more ambitious annual target of say an additional 500 homes on top of those figures, where could they be built and how would they be paid for? Of course, there are the normal apprehensions about infrastructure issues such as roads, schools, hospital capacity and doctors’ surgeries but our local authority has a Local Plan and that has the locations of where they envisage the new housing will be built (and the infrastructure that goes with it).

The Tories lifted the cap on what local authorities could borrow to build Council houses in late 2018 meaning Councils could borrow more money to build more Council houses. Let’s say we built those 500 homes a year for the next 5 years in Doncaster, that would cost the local authority £375 million to build, which would produce in total £17.4 million in rent. At current interest rates, the interest would be £9.5m per year leaving a surplus of £7.9m for property maintenance and management – meaning the Council houses pay for themselves!

Therefore, what does all this mean for Doncaster homeowners and Doncaster buy-to-let landlords?

Well, the chances of our local authority getting the full funding for an extra 500 homes a year is slim as there is only so much money to borrow. If every UK local authority got funding for 500 additional homes a year for the next 5 years, an impressive 867,500 homes would be built in those 5 years but that would require the councils to borrow £130.1bn – and Central Government doesn’t have that kind of money for Councils to borrow (more like £10bn to £15bn).

The 4.7million long term housing shortage means house prices will remain strong in the long term (despite blips like Brexit etc). Demand for private rental properties will continue to grow and if you read my recent article on Doncaster rents, this can only be good news for Doncaster landlords. This attention on the housing crisis by the Government is good news for all Doncaster homeowners and Doncaster buy to let landlords, as it will encourage more fluidity in the market in the longer term, sharing the wealth and benefits of homeownership for all. However, in the short term, demand still outstrips supply for homes and that will mean continued upward pressures on rents for tenants and stability on house prices.