The Exeter Property Sales Market

I have spoken to a large number of landlords, investors and first time buyers recently, who have been asking about the Exeter property market.

With all the headlines about property values in the UK, should we be worried about a new price crash or explosion? The economy seems to be looking a lot healthier and there are signs we are seeing a real recovery after several false starts.

I believe that, over the last few years, mortgages have been a little more difficult to obtain than during the 2000’s and this lack of mortgages has produced some pent up demand for property. Now we appear to be on the other side of the financial crisis and the banks are more willing to lend and this is why sales, prices and first-time buyer numbers have improved so rapidly.

Property values in Exeter have risen, on average by around 5.7% in the last 12 months. When I look at Devon as a whole, prices have risen by around 7.2% and nationally by around 8.7%. Comparing this rate of increase with the 30-40% yearly increases in the boom years of 2000 to 2004, I cannot see why some are concerned about an unsustainable price boom.

So, in general now is a good time to buy, however it does depend on how long you plan to own the property (whether as a home or investment), whether it personally suits you and most importantly whether you can afford it. Exeter first time buyers preparing to take the plunge should bear these factors in mind. The biggest issue must be for buyers to ensure they can take the hit of future interest rate rises.

Landlords tend to buy for the long term, so these short term movements do not tend to affect them as much. The lack of supply in Exeter of new properties coming onto the market indicates people wanting to buy have to move quickly, and don’t have the luxury of a few weeks to decide to view the property. However, my findings show that first time buyers and landlords in Exeter aren’t prepared to pay over the odds for a property to secure it. Perhaps the memory of the 2008 price crash has given a dose of realism to the optimistic Exeter property market?

Exeter Stock Saturation

I was emailed during the week by a regular reader of our blog who asked about saturation of rental property in Exeter.

Thankfully there is currently no sign of this so do not get alarmed. If you gave us 10 or even 20 terraced houses in Exeter to let, we would find you tenants, provided they were priced sensibly. We may not be able to find 20 immediately, however they would all go without too much trouble.

Sometimes with new build developments, Cranbrook for example, many of the properties complete on the same day and the landlords who bought those properties put them up for rent at around the same time. That creates a short term problem with supply and demand, but once the initial hurdle is overcome, normal service resumes. We have let many properties at this site off plan, meaning they have not yet completed when we have found a tenant. This is one way of spreading the demand to ensure there is not a surge of similar properties at the same time.

Whether you should buy new build is another question. Some people do this as it looks nice and everything is guaranteed.

If you're a good negotiator you may be able to get the builder to chuck in all the things you need to get it let - appliances, window blinds, flooring. It is an ultra-low risk approach to buy to let. However you will always pay a premium for a new build property and whether it makes financial sense is another question entirely.

The key when buying a new build property is to ensure there are plenty of amenities nearby.  Again taking Cranbrook as an example, there is an excellent school on site and soon there will be a mainline train station, a secondary school and a variety of shops and, as the access to the city centre is so good, there are plenty of jobs nearby.

Unfortunately there is not a lot a landlord can do if lots of similar properties come to the market at the same time.  However, if your property is being correctly managed, your agent will be able to assess the market to ensure it is marketed at the best time possible.

If you would like to discuss property in Exeter, please visit us on South Street, or call me on 01392 254488.

Lovely modern apartment in Exeter

http://www.martinco.com/for-sale/property/190322

Another opportunity has arisen in this block for a nice little investment property. This particular example has come on the market with Martin & Co for £159,950 and is in lovely condition, it also has the added benefit of having a private door to the communal garden, great for an apartment. This will make it stand out from the crowd. 

The rental market is still incredibly strong with demand at an all time high, compared with the supply which is low, a great market for landlords! This type of property at the moment would rent in the region of £795 pcm, which would look to generate you an annual yield of around 6%. This of course doesn't take into account any ground rents or service charges though, so be sure to check those out if you are interested in this one

We recently managed to help one of our Exeter Property blog followers buy a lovely 2 bed house, once this goes through to completion and we let it out for them, they will be looking at a return of just over 5.5% before additional costs!

If you would like us to help you find your next investment property, drop me a line at exetersales@martinco.com

NLA reveals figures on landlord investment - By Landlord Today

The combined cost of buy-to-let (BTL) mortgage repayments in the past 12 months is £21.9bn according to the National Landlords Association (NLA).

 

Research from the NLA reveals that approximately one million (1.05m) landlords in the UK have some form of BTL borrowing, with the average cost of their mortgage repayments in the past year £20,950.

 

The staggering figure, which excludes upfront deposits of typically 25% of property value, emerges shortly after the Bank of England announced a high of £8bn of BTL lending in quarter three of 2014.

 

The NLA’s findings show that landlords with smaller portfolios (1-4 properties) spent an average of £10,335 on repayments last year, compared to £55,285 spent by those with larger portfolios (11 or more properties).

 

On average it takes six weeks for a landlord to secure a BTL mortgage, with one in five (19%) landlords waiting over two months to complete their BTL application.

 

Carolyn Uphill, NLA chairman, said:

“These figures really hammer home just how much money private landlords put into providing much needed homes for the UK’s estimated nine million renters, especially  if we consider that such a large proportion are single-property or smaller portfolio landlords.  

 

“The majority of private individual investors are keeping a supply of well-maintained homes on the market when previous governments have failed to incentivise or stimulate more housing and social housing has been in long term decline.

 

“There’s no sign of either of these issues letting up anytime soon so is it any wonder that BTL lending is at an all-time high? It’s hard to imagine exactly where all this investment would come from if landlords weren’t financing housing to such an extent.”

 

The NLA is also reminding landlords to prepare for future rises to interest rates and has produced new guidance about dealing with the issue in order to minimise the effect it has on their lettings business.

http://www.martinco.com/news/2015/01/08/nla-reveals-figures-on-landlord-investment/#.VLzm-EesVu1

Why are Exeter tenants, tenants?

I find frequently when talking about the rental market we concern ourselves about property and landlords but seem to forget the other party in the equation, the tenant. Without tenants there is no demand for the rental property.

The profile of the Exeter tenant has changed and continues to change. Although this is in part due to the credit crunch, job mobility and the raising of deposits, an increased number of people in their twenties are choosing to rent rather than buy and have done so, even when they were in a position where they could have bought a property.

I have previously looked at how affordable properties are in Exeter and those frequent readers amongst you will know my thoughts on this so I will skip over this part for now.

I read an interesting article a recently which looked at the age demographic of people who are now renting; interestingly the south west had a higher than average proportion of middle aged renters compared with the rest of the country.  Is this because we are all getting divorced and have to sell our homes, for example, or is it perhaps because people are warming to the idea of renting and living in a property that someone else has to pay to maintain?

In my opinion, home ownership is not for everyone. Similarly being a landlord is not for everyone, however anyone can be a landlord and make money from it with the right knowledge and advice.

Having to think about when you can afford to upgrade your kitchen, redecorate or have a new roof etc can put the fear into the best of us, which coupled with other life stresses can lead to a pretty miserable time. Therefore knowing that all these points and more will be looked after by the landlord is certainly reassuring. It is similar to buying a new car – some people prefer to lease, where they can give it back after a fixed term, whereas others prefer to own it and deal with all the wonderful bills that come with it.

Generally, of course, a landlord’s mortgage, if any, is lower (usually considerably) than the rent they receive, otherwise they would be making a loss, so a tenant could potentially save money by purchasing if they have the required deposit.  However, if you take into account all the costs involved with home ownership and compare the cost of home ownership with the cost of renting, the extra money paid in rent may mean that over the course of a few years the actual amount paid may work out about the same.

It seems to me that renting is becoming more and more a lifestyle choice rather than a requirement. Figures from the EU’s official statistics bureau, Eurostat, show that home ownership in Britain in 2013 was 64.6%, down from 70% in 2005. Only France (64.3%), Denmark (63%), Austria (57.3%), Germany (52.6%) and Switzerland (44%) were lower.