14.8% Drop in the Mid Sussex Property Market.

The number of residential property transactions in Mid Sussex will be 14.8 per cent lower in 2018, compared to 2017. 

 

According to my research, the seasonally adjusted statistics for our local authority area suggest with the number of properties already sold in 2018, and the number of properties currently under offer or sold subject to contract (allowing for property sales to fall through before exchange of contracts) we, as an area, will end the year 14.82 per cent lower compared to 2017.

So why are transaction numbers so important to Mid Sussex homeowners, Mid Sussex landlords and potential first-time buyers?

Many economists and property market commentators believe transaction numbers give a more precise and truthful indicator of the health of the property market than just house values. In the six years before the Credit Crunch in 2007/8, the average number of completed property transactions in the local area (the local authority covered by Mid Sussex) stood at 3,253 per year; yet in the three years following the Credit Crunch, on average, only 2,045 homes were changing hands per year in the area.

Roll the clock forward to more recent times and last year, in 2017, 2,665 homes changed hands (i.e. transacted and sold) in the area, not far off the local authority’s 23 year overall average of 2,840 homes per year.

In the past, a reduction in the number of properties selling has often been believed to be the first signal of a down turn in the housing market as a whole. Although, the down turn of the credit crunch years (2007/2008) was more a free-fall than a subtle down turn. Look at the graph and the ‘so-called’ halcyon days of the 2000 to 2006 property market were a roller coaster when it came to the number of transactions. House prices were rising in the six/seven years before the credit crunch (2000 to 2006), albeit, the rate of growth of Mid Sussex house prices did slow in late 2005 and 2006 (which does fit in nicely with the graph).

In other articles, I have mentioned the change in the number of houses for sale today compared to last year and further back. Although, the market has seen in recent months (i.e. the short term) an increase in the number of properties for sale, fundamentally, in the medium term, there has been an underlying trend in the reduction of properties coming onto the market for sale in Mid Sussex (and nationally) and this has been one of the main drives behind the lack of properties selling. Mid Sussex people aren’t moving as much as they were 30 years ago meaning fewer houses are selling each year.

However, this short-term increase in properties for sale hasn’t been even across the board. In certain sectors of the Mid Sussex property market, there is a glut of properties on the market at the moment and so prices and values are dropping on those types as sellers compete for the limited amount of buyers; yet there are other sectors of the Mid Sussex property market where there is a dearth, a shortage of property, and buyers are fighting tooth and nail with silly offers to try and secure the sale. This means, there are some bargains for you Mid Sussex buy to let landlords. If you look hard enough, you could spot the same trends I have seen in Mid Sussex and find the individual property micro markets that fall into that first sector (with its glut).

So, if you want the inside track on the Mid Sussex property market, whether you are a landlord of ours or another agent, I am more than happy to guide you in the right direction if you drop me a line or an email.

So, to conclude, I believe we will finish on 2,270 housing transactions by the end of the year in the area; not too far off last year’s figure or the long-term 23-year average. Looking at the short term future, now it’s true some (not all) but some potential purchasers of property in Mid Sussex may be exhibiting more caution because of concerns that the Bank of England will continue to put up interest rates– to which I reply – yes of course they will when they are only ultra-low at 0.75%. Anyway, that is the reason why 90%+ of new mortgages over the last nine months have been on a fixed rate. Also, if they do go up a few percentage points – they are nothing compared to the 12%, 14%, even 15% mortgage rates many of my landlords saw in the early 1990’s.

We can all speculate (and I appreciate the irony of that as I write this article) but all I say to any Mid Sussex landlords, Mid Sussex homeowners or Mid Sussex first time buyers is act according to your own life cycle, budget on a modest increase in interest rates in the coming few years (yet protect yourself by fixing it), consider your own circumstances and finally, what you can afford.

Additional 983 Haywards Heath Rented Homes Required by 2027.

I have been doing some research, looking both at National and Regional reports on the demand and supply of property and people together with future projections on the economy, population and family demographics with some interesting results.  According to the Office of National Statistics, in the last financial year nationally, private renting grew by 74,000 households, whilst the owner occupied dwelling stock increased by 101,000 and social (aka council and housing association) stock increased by 12,000 dwellings.

It was the private rental figures that caught my eye.  With eight or nine years of recovery since the Credit Crunch, economic recovery and continuing low interest rates have done little to setback the mounting need for rented housing.  In fact, with house price inflation pushing upwards much quicker than wage growth, this has meant to make owning one’s home even more out of reach for many Millennials, all at a time when the number of council/social housing has shrunk by just over 2.5% since 2003, making more households move into private renting.

There are 5,022 people living in 2,293 privately rented

properties in Haywards Heath.

In the next nine years, looking at the future population growth statistics for the Haywards Heath area and making careful and moderate calculations of what proportion of those extra people due to live in Haywards Heath will rent as opposed to buy, in the next ten years, 2,152 people (adults and children combined) will require a private rented property to live in.

Therefore, the number of Private Rented homes in Haywards Heath will need to rise by 983 households over the next nine years,

That’s 109 additional Haywards Heath properties per year that will need to be bought by Haywards Heath landlords, for the next nine years to meet that demand; and remember, I am being conservative (with a small ‘c’) with those calculations, as demand for privately rented homes in Haywards Heath could still rise more abruptly than I have predicted as I would ask if Theresa May’s policies of building 400,000 affordable homes (which would syphon in this 5-year Parliamentary term) is rather optimistic, if not fanciful?

So, one has to ask wonder if it was wise to introduce a buy to let stamp duty surcharge of 3% and the constraint on mortgage tax relief could curtail and hold back the ability of private landlords to expand their portfolios?

Well a lot of landlords are taking on these new hurdles to buy to let and working smarter.  Buying the property at the right price and using an agent to negotiate on your behalf (we do this all the time) and the 3% stamp duty level isn’t an issue.  Incorporating your property portfolio into a Limited Company is also a way to circumnavigate the issues of mortgage tax relief (although there are other hurdles that need to be navigated on that tack), but just look at the growth of proportion of Buy to Let properties in the Country since the summer of 2016. Something tells me smart landlords are seeing these challenges as just that; challenges which can be overcome by working smarter.

I have a steady stream of Mid Sussex landlords every week asking me my opinion on the future of the Mid Sussex property market and their individual future strategy and, whether you are a landlord of mine or not, if you ever want to send me an email or pop into my office to chat on how you could navigate these new Buy to Let waters it will be good to speak to you (because you wouldn’t want other landlords to have an advantage over you – would you?)

Mid Sussex Property Market: Is Sell to Rent the new Buy to Let?

It doesn’t seem two minutes ago that it was 90 degrees Fahrenheit in the shade (32 degrees Celsius for my younger readers), hosepipe bans looked likely and it was simply too hot to sleep at night, yet early indications were, that as the temperatures soared, the Mid Sussex property market appeared to be doing the reverse and was already starting to cool down.

25.49% less people moved home in the Mid Sussex area in the first part of 2018, when compared to the average number of people moving home (in the same time frame) between 2014 and 2017

The average number of households who sold and moved locally between 2014 and 2017 in the winter and spring months was 219 homes a month, yet in the same time frame in 2018, only 163 (on average) sold and moved.

So, what is the issue? Many have cited Brexit as the issue – but I think it’s deeper than that.

Brexit seems to be the “go to excuse” for everything at the moment! Anyway a few weeks ago, I was out for a family get together in another part of the UK when one of my extended family said that they were planning on buying their first home this autumn most of those present said they were stupid to do so because of Brexit. Nonetheless, half an hour later, another distant cousin said to the same family crowd that they were planning to sell their home; to which most said they were also daft to do so because of Brexit.

Both sides of the argument can’t be right! So, what exactly is happening?

Well if you have been reading my blog on the Mid Sussex property market over the last few months, I have been discussing the threats and opportunities of the current state of fluidity in the Mid Sussex property market, including the issue of OAPs staying in homes that are too big for them as their children have flown the nest, interest rates, inflation, lack of new homes being built and the long term attitude to homeownership, yet I have noticed a new trend in the last few months; the emergence of the ‘sell to renter’.

Sell to Renter?

I have seen a subtle, yet noticeable number of Mid Sussex homeowners that have been selling their Mid Sussex homes, renting and wagering that, in the next few years, the Mid Sussex property market will tumble by more than what they spend on their short-term rental home, before they buy another Mid Sussex home in a couple of years i.e. a ‘sell to renter’. This type of ‘sell to renter’ is mostly predominant at the middle to upper end of the Mid Sussex property market – so I’m not too sure if it will catch on in the main ‘core’ market?

So, what does this all mean for Mid Sussex homeowners and Mid Sussex Buy to Let landlords?

Well, in the short term, demand for middle to upper market Mid Sussex rental properties could increase as these ‘sell to renters’ demand such properties. I would however give a note of caution to Mid Sussex landlords buying in this sector of the Mid Sussex property market as yields in this sector can be quite low. However, for homeowners of middle to upper market Mid Sussex properties, you might have less people wanting to buy your type of property, as some buyers are turning to renting.

Like I have always said, Mid Sussex properties are selling if they are realistically priced (realistic for the market – not a rose-tinted version where someone will pay 10% over the odds because everyone has access to the market stats with the likes of Rightmove and Zoopla!).

P.S Notice the spike in the graph, where the number of property sales jumped to 365 in the month of March 2016? That was all the Mid Sussex buy to let landlords snapping up buy to let properties before the stamp duty rules changed!