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Doncaster Housing Crisis? Only 2.7% of Doncaster Homes Are For Sale

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The Doncaster Property Market continues to disregard the end of the world prophecies of a post Brexit fallout with a return to business as usual after the summer break.

 

The challenge every Doncaster property buyer has faced over the last few years is a lack of choice – there simply hasn’t been much to choose from when buying (be it for investment or owner occupation). Levels are still well down on what would be considered healthy levels from earlier in this decade, as there is still a substantial demand/supply imbalance. Until we start to see consistent and steady increases in properties coming on to the market in Doncaster, the market is likely to see upward pressure on property values continue.

 

For example, in the last month or so DN4 has seen an average of 182 new properties coming on to the market, not bad when you consider for the last year the numbers have been as low as the 100 to 110 range. With the average Doncaster property value hitting a record high, reaching almost £150,500 according to my research, this shortage of properties on the market over the last two years has contributed to this ‘fuller’ average property figure.

 

As I write this article, 2.72% of Doncaster properties are up for sale. In terms of actual chimney pots, that equates to 1,015 properties on the market in Doncaster (within 3 miles of the centre of Doncaster) – which, when compared to only a year ago when that figure stood at 1,076, is a slight decrease in the number of properties available to buy. Split down into the type of property, it makes even more fascinating reading…

 

  • Detached Properties in Doncaster – 241 on the market a year ago compared to 251 on the market now – an increase of 4%
  • Semi Detached Properties in Doncaster – 420 on the market a year ago compared to 395 on the market now – a decrease of 6%
  • Terraced Properties in Doncaster – 226 on the market a year ago compared to 252 on the market now – an increase of 12%
  • Flats / Apartments Properties in Doncaster – 102 on the market a year ago compared to 80 on the market now – a decrease of 22%

 

This is evidence of strength in the Doncaster housing market that many didn’t expect. Many believed that the Doncaster property market wasn’t going to be strong enough post Brexit – as what was a sellers’ market before the Brexit vote and Buyers’ market in the early months after it, may now be somewhere in between and the market might just be coming back into balance.

 

However, all this will mean property values won’t continue to grow at the same extent they have been over the last 12 to 18 months, and in some months (especially on the run up to Christmas and early in the New Year), values might dip slightly. This won’t be down to Brexit but a re-balancing of the Doncaster Property Market – which is good news for everyone.

 

For more thoughts on the Doncaster Property Market, please visit the Doncaster Property Blog http://www.doncasterpropertyblog.co.uk/

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What will the 0.25% Interest Rate do to the Doncaster Property Market?

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I had an interesting chat with a Bessacarr landlord who owns a few properties in the town. He popped his head in to my office as his wife was shopping in the area (and let’s be honest talking about the Doncaster Property Market is a lot more interesting than clothes shopping!). We had never spoken before (because he uses another agent in the town to manage his Doncaster properties) yet after reading my blog on the Doncaster Property Market for awhile, the landlord wanted to know my thoughts on how the recent interest rate cut would affect the Doncaster property market and I would also like to share these thoughts with you……

Well it’s been a few weeks now since interest rates were cut to 0.25% by the Bank of England as the Bank believed Brexit could lead to a materially lower path of growth for the UK, especially for the manufacturing and construction industries. You see for the country as a whole, the manufacturing and construction industries are still performing well below the pre credit crunch levels of 2008/09, so the British economy remains highly susceptible to an economic shock. This is especially important in Doncaster, because even though we have had a number of local success stories in manufacturing and construction, a large number of people are employed in these sectors. In Doncaster, of the 49,541 people who have a job, 5,358 are in the manufacturing industry and 4,126 in Construction meaning

10.8% of Doncaster workers are employed in the Manufacturing

sector and 8.3% of Doncaster workers are in Construction

The other sector of the economy the Bank is worried about, and an equally important one to the Doncaster economy, is the Financial Services industry. Financial Services in Doncaster employ 1,322 people, making up 2.7% of the Doncaster working population.

Together with a cut in interest rates, the Bank also announced an increase in the quantity of money via a new programme of Quantitative Easing to buy £70bn of Government and Private bonds. Now that won’t do much to the Doncaster property market directly, but another measure also included in the recent announcement was £100bn of new funding to banks. This extra £100bn will help the High St banks pass on the base rate cut to people and businesses, meaning the banks will have lots of cheap money to lend for mortgages .. which will have a huge effect on the Doncaster property market (as that £100bn would be enough to buy half a million homes in the UK).

It will take until early in the New Year to find out the real direction of the Doncaster property market and the effects of Brexit on the economy as a whole, the subsequent recent interest rate cuts and the availability of cheap mortgages. However, something bigger than Brexit and interest rates is the inherent undersupply of housing (something I have spoken about many times in my blog and the specific affect on Doncaster). The severe undersupply means that Doncaster property prices are likely to increase further in the medium to long term, even if there is a dip in the short term. This only confirms what every homeowner and landlord has known for decades .. investing in property is a long term project and as an investment vehicle, it will continue to outstrip other forms of investment due to the high demand for a roof over people’s heads and the low supply of new properties being built.

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7.7% of Doncaster People live in Shared Households

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I had an interesting chat the other day with a Doncaster landlord. He said he had been chatting with an architect friend of his who said back in the mid 2000’s, the developments he was asked to draw were a balance of one and two bed properties, compared to today where the majority of the buildings he is designing are more towards two and sometimes three bedrooms. Now of course, this was all anecdotal but it made me think if similar things were happening in the Doncaster property market?

 

This is a really important point as I explained to this landlord, as knowing when and where the demand of tenants is going to come from in the coming decade is just as important as knowing the supply side of the buy to let equation, in relation to the number of properties built in Doncaster, Doncaster property prices, Doncaster yields and Doncaster rents.

 

In 2001, there were 118,700 households with a population of 286,900 in the Doncaster Metropolitan Borough Council area. By 2011, that had grown to 126,500 households and a population of 302,400.

 

.. meaning, between 2001 and 2011, whilst the number of households in the Doncaster Metropolitan Borough Council area grew by 6.56%, the population grew by 5.42%

 

Nothing surprising there then. But, as my readers will know, there is always a but! My analysis of the 2011 Census results, using the most recent in-depth data on household formation (eg ‘one person households’, ‘couples/ family households’ or ‘couple + other adults households and multi -adult households’), has displayed a sudden and unexpected break with the trends of the whole of the 20th Century. There has been a seismic change in household formation in Doncaster between 2001 and 2011.

Between 2001 and 2011, the population of Doncaster grew, as did the number of Doncaster properties (because of new home building). However, the growth rate of new properties built in Doncaster was much lower than expected though, but still the population has grown by what was expected, meaning the average household size was larger than anticipated in Doncaster. In fact, average household size (ie the number of people in each property) in 2011 was almost exactly the same as in 2001, the first time for at least 100 years it had not fallen between censuses. (Since 1911, household size has decreased by around 20% every decade).

Looking at figures specifically for Doncaster itself,

  • One person households – 30.2%
  • Couples/family households – 62.1%
  • Couple + other adults/multi-adult households – 7.7%

This decline was reflected in large scale shifts in the mix of household types. In particular, there were far more “couple + other adults households and multi -adult households” than expected (7.7% is quite a lot of households). It can be put down to two things; increased international migration and changes to household formation. A particularly important reason for the difference can probably be attributed to the evidence that migrants initially form fewer households (ie two couples share one property) than those who have lived in the UK all their lives. Also, changes to household formation patterns amongst the rest of the population, including adult children living longer with their parents and more young adults living in shared accommodation (as can be seen in the growth of HMO properties (Homes of Multiple Occupation).

 

So, what does all this mean for Doncaster Homeowners and Landlords? Quite a lot in fact. There has been a subtle shift to slightly larger households in the last decade, meaning smart landlords might be tempted to buy slightly larger properties to rent out – again good news for homeowners who will get top dollar for their home as they sell on. But now with Brexit, household formation might swing the other way in the next decade? Who knows? Watch this space!

 

If you want to find out more about the Doncaster Property Market, visit the Doncaster Property Blog http://www.doncasterpropertyblog.co.uk/ or drop me an email to info@mosspm.co.uk

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