Mid Sussex Flats Out Perform Property Market Average by 12%

According to the Land Registry's latest House Price Index for Mid Sussex, the value of apartments/flats are rising at a faster rate than terraced/town houses, semi-detached properties and even detached property.

Values of apartments in Mid Sussex have increased by 8.45% over the past year, which is proportionally 12% more than the Mid Sussex average rise of 7.52%. The last time flats/apartments in Mid Sussex out performed all the other types of property, by such a gulf, was back in the summer of 2003. For comparison, the other property types performed as follows;

• ·         Detached homes rose by 7.37%
• ·         Semi-detached homes rose by 7.24%
• ·         Terraced/Town-Houses rose by 7.04%

This moderately increasing rate of property value growth is opportune – but no one should confuse it with a strong and vigorous healthy Mid Sussex property market. Instead, it is somewhat an indicator of the long-lasting lack of property on the market. In fact, I have spoken about the lack of homes for sale in Mid Sussex on a number of occasions in my Mid Sussex Property Blog and whilst it isn’t as bad as it was 12 months ago – choice is quite limited for buyers.

The average property value in Mid Sussex

now stands at £372,700.

When split down into property types;

• ·         Mid Sussex Apartments at £260,200
• ·         Mid Sussex Detached at £518,300
• ·         Mid Sussex Semi-Detached at £347,700
• ·         Mid Sussex Terraced/Town-House at £282,100.

So why have Mid Sussex apartments performed so well, and is it just a Mid Sussex thing? When I scrutinised the figures for the rest of the UK, it appears that apartments are pacemakers in the clear majority of the country. Of the 379 local authority areas in the UK, the value of apartments is rising faster than detached, semi-detached and terraced houses in 320 of them.

So, should Mid Sussex apartment owners be getting out the Champagne? Well, I would keep it on ice as the Land Registry figures are notorious for short term fluctuations. It’s hard to have faith in the fact that Mid Sussex house values rose rapidly last month given that, in the last six months, the Land Registry has frequently made downward revisions to their first published House Price Index figures.

Thankfully, the bigger picture from the Council of Mortgage Lenders (CML) stated that home buying activity last month was up 2% over the same month in 2016 – not bad as we have had the Autumn, Winter and now Spring since Brexit. The CML stated first time buyer’s levels of affordability was being squeezed and that the average amount borrowed by those first-time buyers dropped slightly last month, but the overall amount borrowed (by all buyers) was an impressive 12% higher than the same month in 2016.

So, what next for the Mid Sussex Property market? I believe the uplift in the values of apartments is a short-term blip. The real issue is with the way wage growth might not keep up with inflation as the effects of 2016 exchange rate sucks in inflation (meaning real wage growth stagnates). This will mean buyer demand growth will be curtailed and with property values already so full, I believe a renewed hastening in house price growth is unlikely.

I believe we are starting to return to the housing market we saw in the mid 1990’s, Steady demand, steady supply – nothing silly when it comes to house price growth. Therefore, I believe, with what is happening around us – this isn’t a bad thing at all.

3.39 Babies Born for Each New Home Built in Mid Sussex.

As more babies are being born to Mid Sussex mothers, I believe this increase will continue to add pressure to the over stretched Mid Sussex property market and materially affect the local property market in the years to come.

On the back of eight years of ever incremental increasing birth rates, a significant 3.39 babies were born for every new home that was built in the Mid Sussex council area in 2016.  I believe this has and will continue to exacerbate the Mid Sussex housing shortage, meaning demand for housing, be it to buy or rent, has remained high.  The high birth rate has meant Mid Sussex rents and Mid Sussex property prices have remained resilient – even with the challenges the economy has felt over the last eight years, and they will continue to remain high in the years to come.

This ratio of births to new homes has reached one its highest levels since 1945 (back in the early 1970’s the average was only one and a half births for every household built).  Looking at the local birth rates, the latest figures show we in the Mid Sussex council area had an average of 62.7 births per 1,000 women aged 15 to 44.  Interestingly, the national average is 61.7 births per 1,000 women aged 15 to 44 and for the region its 61.7 births per 1,000 women aged 15 to 44.

The numbers of births from Mid Sussex women between the ages of 20 to 29 are significantly lower than the national average, but those between 35 and 44 were higher.  However overall, the birth rate is still increasing, and when that fact is combined with the ever-increasing life expectancy in the Mid Sussex area, the high levels of net migration into the area over the last 14 years (which I talked about in the previous articles) and the higher predominance of single person households, this can only mean one thing; a huge increase in the need for housing in Mid Sussex.

Again, in a previous article a while back, I said more and more people are having children as tenants because they feel safe in rented accommodation.  Renting is becoming a choice for Mid Sussex people.

The planners and Politician of our local authority, central Government and people as a whole need to recognise that with individuals living longer, people having more children and whilst divorce rates have dropped recently, they are still at a relatively high level (meaning one household becomes two households). Quite simply demand for property is simply outstripping supply.

The simple fact is more Mid Sussex properties need to be built;

be that for buying or renting.

Only 1.1% of the Country is built on by houses.  Now I am not suggesting we build tower blocks in the middle of the South Downs National Park, but the obsession of not building on any green belt land should be carefully re-considered.

Yes, we need to build on brownfield sites first, but there aren’t hundreds of acres of brownfield sites in Mid Sussex, and what brownfield sites there are, building on them can only work with complementary public investment.  Many such sites are contaminated and aren’t financially viable to develop, so unless the Government put their hand in their pocket, they will never be built on.

I am not saying we should crudely go ‘hell for leather’ building on our Green Belt, but we need a new approach to enable some parts of the countryside to be regarded more positively by local authorities, politicians and communities and allow considered and empathetic development.  Society in the UK needs to look at the green belts outside their leisure and visual appeal, and assess how they can help to shape the way we live in the most even-handed way.  Interesting times!

Hard Brexit could cause 1,400 properties to be dumped onto the local Property market.

So, all cards up in the air! The general election wasn’t exactly the landslide that was predicted when it was first called, which could make the Brexit negotiations due to start next week even more difficult.  As it currently stands, by not assuring the rights of EU citizens in the UK, Theresa May has squandered an opportunity to give peace of mind to our EU co-workers working and living in Mid Sussex (and the rest of the UK). No.10 Downing Street’s point of view is that in promising the rights of EU citizens in the UK, it will postpone the same guarantee to the 1.5 million UK citizens living in the other nations of the EU.

Putting aside the politics for one second, the simple fact is now Article 50 has been triggered, we have two years to make a deal with the EU; otherwise it will be a ‘hard Brexit’. Now you might not think a hard Brexit will affect you in your home in Mid Sussex, but nothing could be further from the truth.

Of the 137,291 people who are resident in the Mid Sussex District Council area, 124,388 were born in the UK, 3,253 were born in EU countries from West Europe and 996 were born in EU countries from the former Soviet States in East Europe (the rest coming from other countries around the world).

The rights of these EU citizens living in the Mid Sussex area are not guaranteed and will now be part of the negotiation with Europe. It is true a lot of our EU next door neighbours in Mid Sussex will have acquired rights relating to the right to live, to work, to own a business, to possess a property, the right to access health and education services and the right to remain in a UK after retirement, yet those acquired rights are up for negotiation in the next two years.

So, what would a hard Brexit do to the Mid Sussex property market?

Well a hard Brexit could mean the nuclear option when it came to the Mid Sussex housing market. It could mean that every EU citizen would have to leave the UK.

In the Mid Sussex District area, 2,372 of the 3,253 Western European EU citizens own their own home and (so they would all need to be sold) and 622 of the 996 Eastern European EU citizens rent a property, so again all those rental properties would all come on the market at the same time.

Hard Brexit and mass EU Migration would mean c. 1,400 properties being dumped onto the housing market in a short period of time, meaning there would be a massive drop in Mid Sussex property values and rents, causing negative equity for thousands of Mid Sussex homeowners and many buy-to-let landlords would be out of pocket.

While there is no certainty as to what the future will hold, both UK expats in the EU and EU citizens in the UK rights will no longer be guaranteed and will be subject to bilateral renegotiation.

All I ask is that the politicians are sensible with each other in the negotiations. A lot of the success of the Mid Sussex (and UK) property market has been built on high levels of homeownership and more recently in the last 10/15 years, a growth of the rental sector with lots of demand from Eastern Europeans coming to Mid Sussex (and the surrounding area) to get work and provide for their families. Many Mid Sussex people have invested their life savings into buying a buy to let property.

Much will depend on what is politically realistic. Unilateral knee-jerk reactions and measures caused by a hard Brexit would not only likely cause major disruption or suffering to the 3 million EU citizens living in the UK, but also everyone who owns property in the UK. Politics aside - a hard Brexit is in no one’s interests.