The Burgess Hill House Price Index: 156.41

I had the most interesting conversation the other day with a local Burgess Hill accountant, who asked me about my articles on the Burgess Hill property market. He was particularly interested with the graphs, facts and figures contained within them – so much so he recommended his clients read them, as most of them were either Burgess Hill homeowners, Burgess Hill landlords and a lot of the time - both. However, one question that kept me on my toes was, “With so many House-Price-Indices, how do you know which one to use and how can you calculate what is exactly happening in Burgess Hill?”

To start with, there are indeed a great number of these Indices, including the Land Registry, Office of National Stats, Halifax, Nationwide and LSL to name but a few. The issue occurs when these different house price indices give diverse pictures of the state of the UK housing market. Whilst some indices measure the average value of every property in the UK (sold or unsold), others measure the average ‘price-paid’ of houses that happen to be sold over a fixed time scale; confusing isn’t it!

A lot of the variance between house price indices occurs because of the distinctive ways in which the numerous indices endeavour to beat these issues. You see, the biggest problem in creating a house-price-index when comparing and contrasting with most other indexes (e.g. inflation where the price a ubiquitous tin of Beans can easily be measured over the months and years), is every home is unique and as Burgess Hill people are only moving every 15 years, it appears the only thing that can be measured is the price of property sold in a given month.

By their very nature, all of the indices are only able to paint a picture of the whole of the UK or, at best, the regional housing market. As I have said many times in my articles on the Mid Sussex property market, it is important to look to the medium term when considering house price inflation/deflation. Looking at the month-to-month jumps, many indices look like one of those jumpy lie-detector needles you see in the cold war movies! 

I can guarantee you in the coming few months, on a month-by-month basis, one or more of the indices will say property prices will have dropped. Let me tell you, no property market indices are representative of the housing market in the short term. Many indices have shown a drop around the Christmas and New Year months, even the boom years of 2001 to 2007 and 2013 to 2015.

So, back to the question, how do we work out what is happening in the Burgess Hill Property Market and can there be a Burgess Hill House Price Index?

To calculate what I consider is a fair and proper House Price Index for Burgess Hill I initially needed to decide on a starting place for the index. I have chosen 2008 as far enough away, but still gives us a medium/long term view. Next, I split all the house sales into their types (Detached/Semi/House /Apartment) to give us an indication of what is actually selling by postcode district. So, for example, below is a table for the RH15 postcode district (the sample shows 2008, 2016 and 2017.

Then I look at the actual numbers of properties sold in the RH15 postcode district. Below is the graph with the numbers for the years already mentioned.

Then I look at the actual numbers of properties sold in the RH15 postcode district. Below is the graph with the numbers for the years already mentioned.

Finally, I amalgamated the same data points for the other postcode districts covered by Burgess Hill and the surrounding villages, weighted it accordingly, to produce the Burgess Hill House Price Index, which after all that work, currently stands at for Q4 2017 at 156.41 (Q4 2008 = 100).

Haywards Heath Rents Set to Rise to £1,327 pm in Next 5 Years.

It’s now been a good 12/18 months since annual rental price inflation in Haywards Heath peaked at 4.3%. Since then we have seen increasingly more humble rent increases. In fact if you look at Haywards Heath for example, certain parts of the Haywards Heath rental market over the autumn, the rental market saw some slight falls in rents. So, could this be the earliest indication that the trend of high rent increases seen over the last few years, may now be starting to buck that trend?

Well, possibly in the short term, but in the coming few years, it is my opinion Haywards Heath rents will regain their upward trend and continue to increase as demand for Haywards Heath rental property will outstrip supply, and this is why.

The only counterbalance to that improved rental growth would be to meaningfully increase rental stock (i.e. the number of rental properties in Haywards Heath). However, because of the Government’s new taxes on landlords being introduced between 2017 and 2021, that means buy-to-let has (and will) be less attractive in the short term for certain types of landlords (meaning less new properties will be bought to let out).

Interestingly, countless market experts assumed at the start of 2017, that the number of rental properties would in fact drop throughout the year. The assumption being as the new tax rules for landlords started to kick in, landlords looked to kick their tenants out, sell up and invest their capital elsewhere. (Although ironically that would lower supply of rental properties, decreasing the supply, meaning rents would increase again!).

Anecdotal evidence suggests, confirmed by my discussions with fellow property, accountancy and banking professionals in Mid Sussex, that Mid Sussex landlords are (instead of selling up en masse), actually either (1) re-mortgaging their Haywards Heath buy-to-let properties instead or (2) converting their rental portfolios into limited companies to side step the new taxation rules.

The sentiment of many Mid Sussex landlords is that property has always weathered the many stock market crashes and runs in the last 50 years. There is something inheritably understandable about bricks and mortar – compared to the voodoo magic of the stock market and other exotic investment vehicles like debentures and crypto-currency (e.g. BitCoin). 

Remarkably, there is some good news for tenants, as Tory’s recently published the draft Tenants’ Fee Bill, which is designed to prohibit the charging of tenants lettings fees on set up of the tenancy. However, looking at evidence in Scotland, I expect rents to rise to compensate landlords, thus hammering faithful tenants looking for long-term tenancy agreements the hardest. This growth will be on top of any usual organic rent growth.  It really is swings and roundabouts!

So, what does this all mean for landlords and tenants in Haywards Heath? In my considered opinion, rents in Haywards Heath over the next 5 years will rise by 5.5%, taking the average rent for a Haywards Heath property from £1,258 per month to £1,327 per month.

To put all that into perspective though, rents in Haywards Heath over the last 12 years have risen by 35.8%. In fact, that rise won’t be a straight-line growth either, because I have to take into account the national and local Haywards Heath economy, demand and supply of rental property, interest rates, Brexit and other external factors. Please see the graph for my projections.

In the past, making money from buy-to-let property was as easy as falling off a log. But with these new tax rules, new rental regulations and the overall changing dynamics of the Mid Sussex property market, as a Mid Sussex landlord, you are going to need work smarter and have every piece of information, advice and opinion to hand on the Mid Sussex, Regional and National property markets, to enable you to continue to make money.