Haywards Heath Property Values rise by 0.3% month on month.

I do like to have a coffee at Café Rouge on Broadway in Haywards Heath. Whilst in there, a suited gentleman approached me and asked if I was the person who wrote the blog about the Haywards Heath property market. We ended up having an interesting chat about the local property market, as he was concerned his daughter would never be able to buy her own property, a place in Haywards Heath she herself can call home.

My latest analysis, using the Land Registry and Office of National Statistics, shows that overall, month on month, Haywards Heath property values increased by 0.3%. The year on year figures showed the value of residential property in Haywards Heath has increased by 8.8% in the year to the end February 2016, taking the average value of a property in the council area to £261,300.

It gets even more interesting when we look at the last few months’ figures and see the patterns that seem to be emerging.

·         January 2016  - a rise of 1.2%

·         December 2015 - a rise of 0.8%

·         November 2015 - a rise of 0.3%

We have talked in many recent articles about the lack of properties being built in Haywards Heath over the last 30 years. This lack of new building has been the biggest factor that has contributed to Haywards Heath property values still being 272.14% higher than in 1995. At the risk of repeating myself, until the Government addresses this issue, and allows more properties to be built, things will continue to get worse as the UK population grows at just under 500,000 people a year (which is a combination of around 226,000 people because of higher birth rates/people living longer and 259,000 net migration) whilst the country is only building 152,400 properties a year – no wonder demand is outstripping supply.

Another reason intensifying the current level of property values in Haywards Heath is the fact that people aren’t moving home as much as they used to. This means fewer properties are coming onto the market for sale so in consequence, there is a lack of choice of property to buy, meaning people thinking of moving are discouraged from putting their property on the market, thus perpetuating the problem, as the scarcity of possible properties to buy in order to move also deters people from offering their home for sale. This unevenness between demand from would be purchasers and the number of properties coming on to the market for sale is causing pressures in Haywards Heath (and the rest of the UK).

So what of the future of the Haywards Heath property market and this man’s daughter? I firmly believe the property market in Haywards Heath and the country as a whole is changing its attitude about home ownership. Back in the 1960’s, 70’s, 80’s and 90’s, getting on the property ladder was everything. Since the late 1990’s, we as a country (in particular, the young) have slowly started to change our attitude to home ownership. We are moving to a more European model, where people choose to rent in their 20’s and 30’s (meaning they can move freely and not be tied to a property), then inherit money in their 50’s when their property owning parents pass away, allowing them to buy property themselves just like they do in Germany and other sophisticated and mature European counties, meaning his daughter will end up owning property, just later in life than we did. So, whatever the vote on the 23rd of June, if you think about it, we might be more European than we think!

What would Brexit mean to the 10,100 Haywards Heath Property owners?

I don’t know about you, but I find if you read the Daily Mail, there are only three topics that make the blood boil of ‘Middle England’. Bureaucracy from Brussels, House Prices and the late Princess of Wales. Ignoring the late Princess if I can for this article, but if we as a country were to unshackle ourselves from chains of Brussels (the first topic), could we inadvertently effect the second topic and make UK house values drop?

If you read all the newspapers, the Brexit debate seems to be focused solely on central London. Many commentators have said Brexit would mean central London would have a lower standing in the world, meaning less people would be employed in Central London, with the implication of lower wages, fewer jobs etc. in Central London. But we are in Haywards Heath, not Marylebone, Mayfair or any part of Zone 1 London.

Now on the run up to the vote on the 23rd of June, I predict the ‘in’ camp will start to scare homeowners with forecasts of negative equity, and the ‘out’ camp will appeal the 20 somethings, who have been priced out of the property market with the prospect of a new era of inexpensive housing, should the fears of central London estate agents and developers, who believe the bottom will fall out of the market if we do leave, become real. The only reason the Mayfair’s, Knightsbridge’s, and Kensington’s of central London are attractive to foreign buyers are political and economic steadiness, an open and honest legal system and a lively cultural life. None of that is threatened by Brexit.

But again, we are in Haywards Heath and central London is 39 miles away. We are hometown to St Francis Rangers FC, Richard Osman and Natasha Bedingfield, and whilst the central London property market exploded after 2009, that explosion really and honestly didn’t affect the Haywards Heath property market. So, putting central London aside, what would an ‘in’ or ‘out’ vote really mean for the 10,100 property owners of Haywards Heath?

Initially, over the coming months, on the run up to referendum, I believe it will be like the run up to last year’s General Election. With the short-term uncertainty in the country, quite often, big decisions are put on ice and people are less likely to make big money purchases i.e. buy a property. However, in the four months up to last year’s election, property values in Haywards Heath increased by 2.96%, not bad for a country that thought it would get a hung parliament! So that argument doesn’t hold much weight with me.

Post vote, should the UK opt to leave Brussels, there would be a much more noteworthy impact. I believe that a vote to stay in the EU would see the Haywards Heath property market return to a status quo very quickly, but the contrasting result could lead to some changes. The principal menace to the Haywards Heath (and UK) housing market could be variation (in an upwards direction) in interest rates as a result of a Brexit, which could theoretically see the cost of mortgages grow swiftly, pricing many out of the market, but then two thirds of landlords buy without a mortgage so that won’t affect them. Also, according to the Bank of England, 80.33% of all new mortgages taken out in 2015 were fixed rate. Looking at all mortgages as a whole, according to the Bank of England, 44% of all UK mortgagees have a fixed rate mortgage, but 56% don’t, so if you aren’t on a fixed rate; talk to your mortgage broker now, because they can only go in one direction!

So in reality, if I really knew what will happen I wouldn’t be a letting agent in Haywards Heath, but a City Whiz Kid in London earning millions. However, I suspect whatever decision the electorate of Haywards Heath and the country as a whole makes, over the long term it won’t have a major effect on the Haywards Heath property market. We have seen off ‘the end of the world’ credit crunch of 2008/9 and subsequent property crash, the 1988 Nigel Lawson induced post dual-MIRAS property crash, the 1979 Winter of Discontent property crash, the 1974 oil crisis that stimulated another property crash. We can even go back nearly a century with the 1926 post General Strike slump in property prices.

Today, property prices are 272.14% higher than 21 years ago in Haywards Heath and are 8.8% higher than 12 months ago. So, make your own decision on 23^rd of June 2016 safe in knowledge that whatever the result, there might be some short term volatility in the Haywards Heath property market, but in the long term (and property investment is a long term strategy) there aren’t enough houses in Haywards Heath to live in either to buy or rent … and until the Government allow more properties to be built – the Haywards Heath property market will be just fine, even if it has a little blip in the summer, there could be some property bargains on the run up to Christmas to be had!

4,658 Spare ‘Spare’ Bedrooms in Burgess Hill – Is this the cause of the Burgess Hill Housing Crisis?

That isn’t a typo. Of the 12,322 households in Burgess Hill, 4,658 of those properties don’t only have one spare bedroom, but two spare bedrooms, and it is this topic I want to talk about this week, my Burgess Hill Property Market Blog readers – because this could be the cure for Burgess Hill’s housing crisis.  The fundamental problem of the Burgess Hill housing ‘crisis’, is the fact that the supply of homes to live in has not historically met demand, increasing property values (and in turn rents), thus ensuring home ownership becomes an unattainable ambition for the twenty something’s of Burgess Hill.

Call me a realist, but it’s obvious that either demand needs to drop or supply needs to rise to stop this trend getting worse for the generations to come.  Don’t get me wrong, I admire Downing Street’s plans to build 200,000 starter homes which will be offered to first time buyers under 40 with a minimum 20% discount price.  However, the building of starter homes on current building sites, where new homes builders already have to build a certain number of affordable ‘starter’ homes at the moment under a different scheme, does not increase the stock of new ‘starter’ homes; it simply replaces one affordable scheme with another.

One option that could resolve the housing crisis is if the Government literally looked closer to home, concentrating on matching households with the appropriate sized home.

In Burgess Hill, 9,105 households have one spare bedroom and of these, 4,658 have two or more spare bedrooms.

This compares to 310 households in Burgess Hill that are overcrowded (i.e. there are more people than bedrooms in the property).

Looking specifically at the homeowners of Burgess Hill, 3,668 owner occupied Burgess Hill houses have one spare bedroom.  Now having a spare bedroom is not considered a luxury.  However, in addition to those 3,668 households with one spare bedroom, there are on top, a further 4,421 owner occupied Burgess Hill households with two or more spare bedrooms.  

Therefore, I am beginning to see there is the spare capacity in the Burgess Hill housing market.  Principally, I will concentrate on the group that makes up the bulk of this category, the owner occupiers of large properties, in their 60’s and 70’s, where the kids flew the nest back in the 80’s and 90’s.  They call it ‘downsizing’, when you sell a big property, where the extra bedrooms are no longer required, to move into a smaller and, usually, less expensive property.

However, there are many explanations why these individuals do not downsize.   These people have lived in the same house for 30, 40 even 50 years, and as one matures in life, many people do not want to depart from what they see as the family home.  Much time has been invested in making friends in the area and it’s nice to have all those rooms in case every grandchild decided to visit, at the same time, and they brought their friends!  But on a more serious note, more and more people are beginning to downsize earlier, but in my opinion, not at a fast enough rate.  As the years go on we will have a situation where younger families will be living in smaller and smaller houses, whilst all the large houses with a couple of 70 something empty-nesters rattling around them!  I believe the Government should put more weight behind downsizing, because with the right incentives, many could be encouraged to think again and make the spare rooms available.

It would have to be incentives, as using the stick (instead of the carrot) would be political suicide for any party, especially the Tory’s.  One option is to allow retired downsizers not to pay stamp duty on the new property, saving them thousands of pounds and another for the planners to work with builders to build not only starter homes for under 40’s, but also have housing built just for retired downsizers, or is this one step too far in ‘social engineering’?

The fact is not enough properties are being built in Burgess Hill, and with population rising at a faster rate, something needs to be done.  However, I believe the Burgess Hill population (and in fact the whole of the UK) is slowly turning into a more European model of house ownership.  In Europe, most people rent in their 20’s and 30’s, only buying in their 40’s and 50’s, when they inherit money from the sale of their late parent’s property.   That works particularly well in Germany and I can’t see why it can’t work here.  In the meantime, there is an opportunity in the coming 20 years for people to supplement their pension by buying smaller properties to rent out, as that is where the demand will be in the next few decades in Burgess Hill. 

Has owning a home become an unattainable dream for the 365 Haywards Heath 28 year olds?

My parents bought their first house in the 1960’s; they were in their early 20’s. Interestingly, looking at some research by the Post Office from a few years ago, in the 1960’s the average age people bought their first house was 23. By the early 1970s, it had reached 27, rising to 28 in the early 1980’s.

This year alone, 365 people in Haywards Heath will turn 28 and 358 in 2017 and dare I say 268 in 2018. Year in year out the conveyor belt carries on, so where are the Haywards Heath youngsters going to live?

Ask a Haywards Heath ‘twenty something’ and they will say they do not expect to buy until they are in their mid-thirties - seven years later than the 1980’s. Some people even say they will never be able to buy a property and the newspapers have labelled them ‘Generation Rent’ as they are people born in the 1980’s who have no hope of getting on the property ladder. One of the major problems facing young Haywards Heath people is the large deposit needed to get a mortgage, or is it?

The average price paid for an apartment in Haywards Heath over the last 12 months has been £207,415 meaning our first time buyer would need to save £10,870 as a deposit (as 95% mortgages have been available to first time buyers since 2010) plus a couple of thousand for solicitors and survey costs. A lot of money, but people don’t think anything today of spending a couple of thousand pounds to go on holiday; the latest iPhone upgrade or the latest 4K HD television. That amount could soon be saved if these ‘luxuries’ were withheld over a couple of years but attitudes have changed.

Official figures, from the Office for National Statistics, show the average male in Mid Sussex with a full-time job earns £673.40 per week whilst the average female salary is £510.50 a week, meaning they would still comfortably be able to get a mortgage for an apartment.

I was reading a report/survey commissioned by Paragon Mortgages from the autumn of last year. The thing that struck me was that when tenants were asked about their long term housing plans, some 35% of participating tenants intend to remain within the rental sector and 24% intended to buy a house in the future, with the proportion of respondents citing the “unaffordability” of housing as the reason for renting privately increasing from 69% to 74%.

However, time and time again, in the starter home category of property (i.e. apartments), nine times out of ten the mortgage payments to buy a Haywards Heath property are cheaper than having to rent in Haywards Heath. It is the tenant’s perception that they believe they can’t buy, so choose not to. Renting is now a choice. Tenants can upgrade to bigger and better properties and move up the property ladder quicker than their parents or grandparents (albeit they don’t own the property). Over the last decade, culturally in the UK, there has been a change in the attitude to renting so, unless that attitude changes, I expect that the private rental sector in Haywards Heath (and the UK as a whole) is likely to remain a popular choice for the next twenty plus years. With demand for Haywards Heath rental property unlikely to slow and newly formed households continuing to choose the rental market instead of purchasing a property. I also forecast that renting will continue to offer good value for money for tenants and recommend landlords pursue professional advice and adopt a realistic approach to rental increases to ensure that they are in line with inflation and any void periods are curtailed.