How Did Brexit Affect the Mid Sussex Property Market in 2018 – and its Future for 2019?

I have suggested previously that property values in Mid Sussex would be between 0.2% and 0.6% different by the end of 2018. It might surprise some people that Brexit hasn’t had the effect on the Mid Sussex property market that some feared at the start of 2018.

The basis of this point of view can clearly be seen in the number of property transactions (i.e. the number of property sold) that have taken place locally since 2008. The most recent property recession was the Credit Crunch years of 2008/2009/2010.

In property recessions, the headline most people look at is the average value of property. Yet, as most people that sell also go on to buy, for most home movers, if your property has gone down in value, the one you want to buy has also gone down in value so you are no better or worse off. If you are moving up market - which most people do when they move home - in a repressed market, the gap between what yours is worth and what you will buy gets lower; meaning you will be better off.

Yet, most property commentators suggest a better measure of the health of the property market is the transaction numbers (i.e. the number of people selling and buying). So, I decided to look at the 2018 statistics, and compare them with the Credit Crunch years (2008 to 2010) and the boom years (2014 to 2017). The results can be seen in the table below.

 Then, I looked at the average quarterly figures for those chosen date ranges.

In that 2008 to 2010 property Credit Crunch recession, the average number of properties sold in Mid Sussex was 160 per month. Interesting when we compare that to the boom years of 2014 to 2017, when an average of 241 properties changed hands monthly. Yet in the ‘supposed’ doom laden year of 2018, an impressive average of 193 properties changed hands monthly, meaning 2018 compared to the boom years of 2014 to 2017 saw a drop of 19.9% - yet still 20.8% higher than the Credit Crunch years of 2008 to 2010.

The simple fact is, the fundamental problems of the Mid Sussex property market are that there haven’t been enough new homes being built since the 1980’s (and I don’t say that lightly with all the new homes sites dotted around the area). Also, the cost of buying your first home remaining relatively high compared to wages and to add insult to injury, all those issues are armor-plated by the tougher mortgage rules which were introduced in 2014 and the current mortgage market conditions.

It is these issues which will ultimately determine and form the rather unexciting, yet still vital, long term outlook for the Mid Sussex (and national) housing market, as I feel the Brexit issue over the last few years has been the ‘current passing diversion’ for us to worry about. Assuming something can be sorted with Brexit, in the long term property values in Mid Sussex will be constrained by earnings increases with long term house price rises of no more than 2.5% to 4% a year.

Fundamentally, the question I am asked by many Mid Sussex buy to let landlords and home-buyers is “should I wait to buy or not?”

As a Mid Sussex home-buyer, one shouldn’t be thinking of what is happening in Westminster, Brussels, Irish Backstop, China or Trump and more of your own personal circumstances. Do you want to move to get your child in ‘that’ school or do you need an extra bedroom for your third child? For lots of people, the response is a resounding yes - and in fact, I feel many people have held back, so once we know what is finally happening with Brexit and the future of it, there could a be a release of that pent-up demand to move home as people humbly just want to get on with their lives.

There is little to be lost in postponing a house purchase until there is better clarity on the situation. If it isn’t Brexit it will something else - so just get on with your lives and start living. We got through the global financial crisis/Credit Crunch in ‘08/’09, Black Wednesday in ’92 where mortgage interest rates went from 8.5% to 15% in one day, we got through the worst stock market crash with Black Monday in ’87, hyperinflation, power shortages, petrol quadrupling in price in less than a year and a 3 day week in the ‘70’s; need I go on?

Mid Sussex Landlords? Well, where else are you going to invest your money? Like I said earlier in the article, we aren’t building enough homes to keep up with demand; so as demand outstrips supply, house values will continue to grow. Putting the money in the building society will only get you 1% to 2% if you are lucky. In the short term though, there could be some bargains to be had from shortsighted panicking sellers and in the long term; well the same reasons I gave to homeowners also apply to you.

Burgess Hill Homeowners 106% More Likely To Live in a Home with 3+ Bedrooms than those that Privately Rent.

The conventional way of categorising property in Britain is to look at the number of bedrooms rather than its size in square meters (square feet for those of you over 50!). My intuition tells me that homeowners and tenants are happy to pay for more space. It’s quite obvious, the more bedrooms a house or apartment has, the bigger the property is likely to be. And it’s not only the tangible additional bedrooms, but those properties with those additional bedrooms tend to have larger (and more) reception (living) rooms.

However, if you think about it, this isn’t so surprising given that properties with more bedrooms would typically accommodate more people and therefore require larger reception rooms.

In today’s Burgess Hill property market, the Burgess Hill homeowners and Burgess Hill landlords I talk to are always asking me which attributes and features are likely to make their property comparatively more attractive and which ones may detract from the price. Over time buyers’ and tenants’ wants and needs have changed.

In Burgess Hill, location is still the No. 1 factor affecting the value of property, and a property in the best neighbourhoods can achieve a price almost 50% higher than a similar house in an ‘average’ area. Nevertheless, after location, the next characteristic that has a significant influence on the desirability, and thus price, of property is the number of bedrooms and the type (i.e. Detached/Semi/Terraced/Flat).

The number of bedrooms for owner-occupiers very much depends on the size of the family and the budget, whilst Burgess Hill landlords have to consider the investment opportunity. In this article, I have analysed Burgess Hill’s housing stock into bedrooms and tenure. Initially looking at Burgess Hill homeowners:

And now the Private rented sector:

 

It can quite clearly be seen that Burgess Hill owner-occupiers tend to occupy the larger properties with more bedrooms. This would be expected due to the demographic of homeowners and people that privately rent.

However, this shows there could be opportunities for Burgess Hill buy to let landlords to purchase larger properties with more bedrooms to attract tenants requiring properties with more bedrooms. However, before you all go buying larger 4 bed and 5 bed mansions to rent them out, a lot of bigger properties in Burgess Hill don’t make financial sense when it comes to buy to let.

For numerous years Burgess Hill buy to let landlords have been the lone buyers at the smaller one and two bed starter homes of the market, as they have been lured by elevated tenant demand and eye-catching returns. Some Burgess Hill landlords believe their window of opportunity has started to close with the new tax regime for landlords, whilst it already appears to be opening wider for first time buyers. This is great news for first time buyers; but one final note for Burgess Hill landlords, all is not lost,  you can still pick up bargains, you just need to be a lot more savvy and do your homework!

 

Top 25 Most Saleable Streets in Burgess Hill.

Following on from my last article, if you recall I said that Junction Road had the most properties sold in the RH15 Burgess Hill postcode, yet I felt that this information wasn’t telling the whole story, as some roads in Burgess Hill have more properties on them than others. Therefore, I promised that I would compare the average number of properties sold by the actual number of properties on that street, to find out the streets whose owners proportionally moved (or sold) more often than the rest of the locality.

To give some foundation to the article, in 2017 Burgess Hill homeowners had, on average, lived at their existing address for 17 years and 6 months. However, when I looked at the difference between homeowners with and without a mortgage; Burgess Hill homeowners without a mortgage had lived in their Burgess Hill home for an average of 23 years and 9 months compared with 10 years and 1 month for homeowners with a mortgage. Interestingly, Burgess Hill’s Mid Sussex Council house tenants have on average resided at their present home for 11 years and 4 months, whilst finally for those who rent from a private landlord, tenants generally have lived in their property for an average of 3 years and 11 months (up from 3 years 5 months only five years ago).

The RH15 Street in the top 25 saleable streets with the highest number of households on it is Junction Road, which has 304 residential addresses. Yet since 1995, only 367 properties have changed hands (some multiple times!), which means the street’s saleability or churn rate is 120.7%.

However, the road that has the highest saleability or churn rate is Parkside, which is a little cul-de-sac of just 30 purpose built flats on it, yet since 1995 there have been 117 sales, a saleability rate of 390.0%. Here is the full breakdown of the top 25 streets.

So, as you can see, some interesting statistics and a lot more correlation between saleability rate and property values (unlike the article last time where we compared value to ‘out and out’ raw sales figures).

Therefore, what does this all mean to Burgess Hill homeowners and Burgess Hill landlords?  Well these 25 streets are the best performing streets out of the 430 streets in the Burgess Hill (RH15) area so if you live/own a property on those 25 streets you are sitting on a very saleable street. If you want to find out how saleable your street is please drop me a line and we can discuss this further.