Mid Sussex’s New 3 Speed Property Market.

“What’s happening to the Mid Sussex Property Market” is a question I am asked repeatedly.  Well, would it be a surprise to hear that my own research suggests that there isn’t just one big Mid Sussex property market – but many small micro-property markets?

According to recent data released by the Office of National Statistics (ONS), I have discovered that at least three of these micro-property markets have emerged over the last 20+ years in the area.

For ease, I have named them the,

• 1.    ‘lower’ Mid Sussex Property Market.
• 2.    ‘lower to middle’ Mid Sussex Property Market.
• 3.    ‘middle’ Mid Sussex Property Market.

The ‘lower’ and ‘lower to middle’ sectors of the Mid Sussex property market have been fuelled over the last few years by two sets of buyers. The first set, making up the clear majority of those buyers, are cash rich landlord investors who are throwing themselves into the Mid Sussex property market to take advantage of alluringly low prices and even lower interest rates. The other set of buyers in the ‘lower’ and ‘lower to middle’ Mid Sussex property market are the first-time buyers (FTB), although the FTB market is in a state of unparalleled deadlock as it’s been trampled into near-immobility and incapacity by the new 2014 stricter mortgage affordability regulations and also fewer mortgages with low deposits. 

Some of you may be interested to know how I have classified the three sectors;

• 1.  ‘lower’ Mid Sussex housing market – the bottom 10% (in terms of value) of properties sold
• 2. ‘lower to middle’ Mid Sussex housing market – lower Quartile (or lowest 25% in terms of value) of properties sold
• 3.   ‘middle’ Mid Sussex housing market - which is the median in terms of value.

Then if one looks at the figures for Mid Sussex District Council area you can see the three different sectors (lower, lower/middle and middle) have performed quite differently.

You can quite clearly see that it is the ‘lower to middle’ market that has performed the best.

You might ask, what do all these different figures mean to homeowners and landlords alike?  Quite a lot – so let me explain. The worst performing sector (with the lowest Percentage uplift) was the ‘middle’ housing market. Therefore, interestingly, if we applied the best percentage uplift figure (i.e. from the ‘lower to middle’ market percentage uplift), to the ‘middle’ 1995 housing market figure, the 2017 figure of £387,876, would have been £401,255 instead – quite a difference you must agree?

Now, I have specifically not mentioned the upper reaches of the Mid Sussex housing market for several reasons.  Firstly, the lower or middle market is where most of the buy to let investment landlords buy their property and where the majority of property transactions take place. Secondly, due to the unique and distinctive nature of Mid Sussex’s up-market property scene (because every property is different and they don’t tend to sell as often as the lower to middle market), it is much more difficult to calculate what changes have occurred to property prices in that part of the Mid Sussex property market - looking at the stats for the up-market Mid Sussex property market from Land Registry, only 19 properties in Burgess Hill for example (and a 1 mile radius around it) have sold for £1,300,000 or more since 1997.

So, what should every homeowner and buy to let landlord take from the information that there are many micro-property markets? Well, when you realise there isn’t just one Mid Sussex Property Market, but many Mid Sussex “micro-property markets”, you can spot trends and bag yourself some potential bargains.

Slowing Mid Sussex Property Market? Yes and No!

The tightrope of being a Mid Sussex buy-to-let landlord is a balancing act many do well at. Talking to several Mid Sussex landlords, they are very conscious of their tenants’ capacity and ability to pay the rent and their own need to raise rents on their rental properties (as Government figure shows ‘real pay’ has dropped 1% in the last six months). Evidence does however suggest many landlords feel more assured than they were in the spring about pursuing higher rents on their Mid Sussex buy-to-let properties.

During the summer months, historic evidence suggests that the rents new tenants have had to pay on move in have increased. June/July/August is a time when renters like to move, demand surges and the normal supply and demand seesaw mean tenants are normally prepared to pay more to secure the property they want to live in, in the place they want to be. This is particularly good news for Mid Sussex landlords as average Mid Sussex rents have been on a downward trend recently. So look at the figures here; rents in Mid Sussex on average for new tenants moving in have risen 0.9% for the month, taking overall annual Mid Sussex rents 0.9% lower for the year

However, several Mid Sussex landlords have expressed their apprehensions about a slowing of the housing market in Mid Sussex and I believe, based on this new evidence, they may be exaggerated.

Before we get the Champagne out, the other side of the coin to property investing is capital values (which will also be of interest to all the homeowners in Mid Sussex as well as the Mid Sussex buy-to-let landlords).  I believe the Mid Sussex property market has been trying to find some form of balance (one might even say equilibrium) since the New Year.  According to the Land Registry property values in Mid Sussex are 6.14% higher than they were 12 months ago, rising by 4.01% last month alone!

    Source; HM Land Registry and Denton House Research.

Yet, I would take those figures with a pinch of salt as they reflect the sales of Mid Sussex properties that took place in early Spring 2017 and now are only exchanging and completing during the summer months.

The reality is the number of properties that are on the market in Mid Sussex today has risen by 9.32% since the New Year and that will have a dampening effect on property value increases. As tenants have had less choice, buyers now have more choice and that will temper Mid Sussex property prices as we head towards 2018.

Be you a homeowner or landlord, if you are planning to sell your Mid Sussex property in the short term, it’s important, especially with the rise in the number of properties on the market, that you realistically price your property when you bring it to the market.  It is so crucial as the short-term balance of the local property market see-saw slips more towards the buyer with the increase in the number of properties for sale. Everyone has access to every property on the market now through the likes of Rightmove and Zoopla and they will compare your home with other property like yours.

However, even with this uplift in the number of properties for sale in Mid Sussex, property prices will remain stable and strong in the medium to long term. This is because the number of properties on the market today is still way below the peak of summer of 2008. In Burgess Hill for example, there were 393 properties for sale compared to the current level of 211 (if you recall, prices dropped by nearly 20% in Credit Crunch years of ‘08 and ‘09).

Compared to 2008, today’s lower supply of Mid Sussex properties for sale will keep prices relatively high and they will continue to stay at these levels for the medium to long term.

Less people are moving than a few years ago, meaning less property is for sale. Fewer properties for sale mean property prices remain relatively high and this is because of a number of underlying reasons. Firstly, buy-to-let landlords tend not sell their properties as often than owner-occupiers, consequently removing the property out of the housing market selling cycle. Secondly, Stamp Duty is much higher compared to 10 years ago (meaning it costs more to move). Next, there is a dearth of local authority rental housing so demand for private rented housing will remain high. Then we have the UK’s maturing owner occupier population, meaning these older people are less likely to move (compared to when they were younger). Another reason is the lack of new homes being built in the country (we need 240k houses a year to be built in the UK and we are currently only building 145k a year!) and finally, the new mortgage rules introduced in 2014 about how much a person can borrow on a mortgage has curtailed demand.

Some final thought’s before I go – to all the Mid Sussex homeowners that aren’t planning to sell – 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, (swings and roundabouts as Mum used to say!)

To all the Mid Sussex landlords – keep your eyes peeled – I have a feeling there may be some decent buy-to-let deals to be had in the coming months.