6.52 Babies Born for Each New Home Built in the Baldock area

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As more babies are being born to Baldock and North Hertfordshire mothers, I believe this increase will continue to add pressure to the over stretched Baldock property market and materially affect the local property market in the years to come.

On the back of eight years of ever incremental increasing birth rates, a significant 6.52 babies were born for every new home that was built in the North Hertfordshire Council area in 2016.  I believe this has and will continue to exacerbate the Baldock housing shortage, meaning demand for housing, be it to buy or rent, has remained high.  The high birth rate has meant Baldock rents and Baldock property prices have remained resilient, even with the challenges the economy has felt over the last eight years, and they will continue to remain high in the years to come.

This ratio of births to new homes has reach one its highest levels since 1945 (back in the early 1970’s the average was only one and a half births for every household built).  Looking at the local birth rates, the latest figures show we in the North Hertfordshire Council area had an average of 63.8 births per 1,000 women aged 15 to 44.  Interestingly, the national average is 61.7 births per 1,000 women aged 15 to 44 and for the region its 64.7 births per 1,000 women aged 15 to 44.

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The number of births from Baldock and North Hertfordshire women between the ages of 20 to 29 are close to the national average, but those between 35 and 44 were much higher.  However overall, the birth rate is still increasing, and when that fact is combined with the ever-increasing life expectancy in the Baldock area, the high levels of net migration into the area over the last 14 years (which I talked about in the previous articles), and the higher predominance of single person households, this can only mean one thing, a huge increase in the need for housing in Baldock.

Again, in a previous article a while back, I said more and more people are having children as tenants because they feel safe in rented accommodation.  Renting is becoming a choice for Baldock people.

The planners and politicians of our local authority, central Government and people as a whole need to recognise that with individuals living longer, people having more children and whilst divorce rates have dropped recently, they are still at a relatively high level (meaning one household becomes two households) demand for property is simply outstripping supply.

The simple fact is more Baldock properties need to be built, be that for buying or renting.

Only 1.1% of the Country is built on by houses.  Now I am not suggesting we build tower blocks in the middle of Ivel Springs or Weston Hills, but the obsession of not building on any green belt land should be carefully re-considered.

Yes, we need to build on brownfield sites first, but there aren’t hundreds of acres of brownfield sites in Baldock, and what brownfield sites there are, building on them can only work with complementary public investment.  Many such sites are contaminated and aren’t financially viable to develop, so unless the Government put their hand in their pocket, they will never be built on.

I am not saying we should crudely go ‘hell for leather’ building on our Green Belt, but we need a new approach to enable some parts of the countryside to be regarded more positively by local authorities, politicians and communities and allow considered and empathetic development.  Society in the UK needs to look at the green belts outside their leisure and visual appeal, and assess how they can help to shape the way we live in the most even-handed way.  Interesting times!

 

658,208 People use Baldock Train Station a year……

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How does that affect the Baldock Property Market?

 

It might surprise you that it isn’t always the poshest villages around Baldock or the swankiest Baldock streets where properties sell and let the quickest. Quite often, it’s the ones that have the best transport links. I mean, there is a reason why one of the most popular property programmes on television is called Location, Location, Location!

As an agent in Baldock, I am frequently confronted with queries about the Baldock property market and most days, chiefly from newcomers, I am asked “What is the best part of Baldock and its villages to live in these days?”.  Now the answer is different for each person. A lot depends on the demographics of their family, their age, schooling requirements and interests etc. Nonetheless, one of the principal necessities for most tenants and buyers is ease of access to transport links, including public transport of which the railways are very important.

Official figures recently released state that, in total, 902 people jump on a train each and every day from Baldock Train station. Of those, 336 are season ticket holders. That’s a lot of money being spent when a season ticket, standard class, to London is £5,432 a year.

If up to £1.82m is being spent on rail season tickets each year from Baldock, those commuters must have some impressive jobs and incomes to allow them to afford that season ticket in the first place. That means demand for middle to upper market properties remains strong in Baldock and the surrounding area and so, in turn, these are the type of people who are happy to invest in the Baldock buy to let market, providing homes for the tenants of Baldock.

The bottom line is that property values in Baldock would be much lower, by at least 3% to 4%, if it wasn’t for the proximity of the railway station and the people it serves in the town

This isn’t a flash in the pan. Rail is becoming increasingly important as the costs associated with car travel continue to rise and roads are becoming more and more congested. This has resulted in a huge surge in rail travel.

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Overall usage of the station at Baldock has increased over the last 20 years. In 1997, a total of 229,353 people went through the barriers or connected with another train at the station in that 12-month period. However, in 2016, that figure had risen to 658,208 people using the station (that’s 1,803 people a day).

The juxtaposition of the property and the train station has an important effect on the value and saleability of a Baldock property. It is also significant for tenants – so if you are a Baldock buy to let investor looking for a property – the distance to and from the railway station can be extremely significant.

One of the first things house buyers and tenants do when surfing the web for somewhere to live is find out the proximity of a property to the train station. That is why Rightmove displays the distance to the railway station alongside each and every property on their website.

For more thoughts on the Baldock Property market and for any advice please pop into the office or give us a call on 01462 894565.

What will the General Election do to 5,604 Baldock Homeowners?

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In Baldock, of the 5,604 households, 1,792 homes are owned without a mortgage and 2,034 homes are owned by a mortgage. Many homeowners have made contact me with asking what the General Election will do the Baldock property market?  The best way to tell the future is to look at the past.

I have looked over the last five general elections and analysed in detail what happened to the property market on the lead up to and after each general election. Some very interesting information has come to light.

Of the last five general elections (1997, 2001, 2005, 2010 and 2015), the two elections that weren’t certain were the last two (2010 with the collation and 2015 with unexpected Tory majority). Therefore, I wanted to compare what happened in 1997, 2001 and 2005 when Tony Blair was guaranteed to be elected/re-elected versus the last knife edge uncertain votes of 2010 and 2015,  in terms of the number of houses sold and the prices achieved.

Look at the first graph below comparing the number of properties sold and the dates of the general elections:

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It is clear, looking at the number of monthly transactions (the blue line), there is a certain rhythm or seasonality to the housing market. That rhythm/seasonality has never changed since 1995 (seasonality meaning the periodic fluctuations that occur regularly based on a season – i.e. you can see how the number of properties sold dips around Christmas, rises in Spring and Summer and drops again at the end of the year).

To remove that seasonality, I have introduced the red line. The red line is a 12 month ‘moving average’ trend line which enables us to look at the ‘de-seasonalised’ housing transaction numbers, whilst the yellow arrows denote the times of the general elections. It is clear to see that after the 1997, 2001 and 2005 elections, there was significant uplift in number of households sold, whilst in 2010 and 2015, there was slight drop in house transactions (i.e. number of properties sold).

I then wanted to consider what happened to property prices. In the graph below, I have used that same 12-month average, housing transactions numbers (in red) and yellow arrows for the dates of the general elections but this time compared that to what happened to property values (pink line):

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It is quite clear none of the general elections had any effect on the property values.  Also, the timescales between the calling of the election and the date itself also means that any property buyer’s indecisiveness and indecision before the election will have less of an impact on the market.

Finally, what does this mean for the landlords of the 767 private rented properties in Baldock? Well, as I have discussed in previous articles (and just as relevant for homeowners as well) property value growth in Baldock will be more subdued in the coming few years for reasons other than the general election. The growth of rents has taken a slight hit in the last few months as there has been a slight over supply of rental property in Baldock, making it imperative that Baldock landlords are realistic with their market rents.  However, in the long term, as the younger generation still choose to rent rather than buy the prospects, even with the changes in taxation, mean investing in buy-to-let still looks a good bet.  If you want to find out more about the Baldock property market or for any advice, please either pop into the office, call us on 01462 894565 or e-mail: lettings@satchells.co.uk.

How The Rented Sector Has Transformed The Property Market In Baldock

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The Baldock housing market has gone through a sea change in the past decades with the Buy-to-Let (B-T-L) sector evolving as a key trend, for both Baldock tenants and Baldock landlords.

The government recently released a white paper on housing which I have read and wish to offer my thoughts on the topic.  It was interesting that the private rental sector played a major part in the future plans for housing. This is especially important for our growing Baldock population.

In 1981, the population of North Hertfordshire stood at

108,600 and today it stands at 131,700

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Currently, the private rented (B-T-L) sector accounts for 13.2% of households in the town.  The Government want to assist people living in the houses and help the economy by encouraging the provision of quality homes, in a housing sector that has grown due to worldwide economic forces, pushing home ownership out of the reach of more and more people. Interestingly, when we look at the 1981 figures for home ownership, a different story is told.

53.01% Baldock people owned their own home in 1981

38.08% Baldock people rented from the Council or Housing Association in 1981

 and 8.91% Baldock rented from a Private Landlord       

The significance of a suitable housing policy is vital to ensure suitable economic activity and create a vibrant place people want to live in. With the population of North Hertfordshire set to grow to 161,000 by 2037 it is imperative that North Hertfordshire District Council and central government all work actively together to ensure the residential property market does not hold the area back, by encouraging the building and provision of quality homes for its inhabitants.

One idea the government has proclaimed is a variety of measures aimed at encouraging the Build-to-Rent (B-T-R) sector (instead of the B-T-L sector). These include allowing local authorities to proactively plan for B-T-R schemes, and making it simpler for B-T-R developers to offer inexpensive private rented homes.

To do this, the government will invent a distinct affordable housing class for B-T-R, called ‘Affordable Private Rent’, which will oblige new homes builders to provide at least 1 in 5 of a new home developments at a 20% discount on open-market rents and three year tenancies for tenants. In return, the new home builders will get better planning assurances.

Private landlords will not be expected to offer discounts, nor offer 3-year tenancies but it is something Baldock landlords need to be aware of as there will be greater competition for tenants.

Over the last ten years, home ownership has not been a primary goal for young adults as the world has changed. These youngsters expect ‘on demand’ services from click and collect, Amazon, dating apps and TV with the likes of Netflix. Many Baldock youngsters see that renting more than meets their accommodation needs, as it combines the freedom from a lifetime of property maintenance and financial obligations, making it an attractive lifestyle option.

Private rented housing in Baldock and North Hertfordshire, be it B-T-L or B-T-R, has the prospective to play a very positive role.

 

Baldock’s ‘Generation Trapped’ and the £712.9m legacy

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Last week, I wrote an article on the plight of the Baldock 20 something’s often referred to by the press as ‘Generation Rent’. Attitudes to renting have certainly changed over the last twenty years and as my analysis suggested, this change is likely to be permanent. In the article, whilst a minority of this Generation Rent feel trapped, the majority don’t – making renting a choice not a predicament. The Royal Institution of Chartered Surveyors (RICS) predicted that the private rental sector is likely to grow substantially by 1.8m households across the UK in the next 8 years, with demand for rental property unlikely to slow and newly formed households continuing to choose the rental market as opposed to buying.

However, my real concern for Baldock homeowners and Baldock landlords alike, is our mature members of the population of Baldock.  Currently OAP’s (65+ yrs in age) in Baldock are sitting on £418.7m of residential property.  However, what about the ‘Baby Boomers’, the 50yr to 64yr old Baldock people and what their properties are worth – and more importantly, how the current state of affairs could be holding back those younger generation renters.

In Baldock, there are 465 households whose owners are aged between 50yrs and 64yrs and about to pay their mortgage off.  That property is worth, in today’s prices, £174.3m. There are an additional 320 mortgage free Baldock households, owned by 50yr to 64yr olds, worth £119.9m in today’s prices, meaning…

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Baldock Baby Boomers and Baldock OAP’s are sitting

on £712.9m worth of Baldock property

These Baldock Baby Boomers and OAP’s are sitting on 7,918 Baldock properties and many of them feel trapped in their homes, and hence I have dubbed them ‘Generation Trapped’.

Recently, the English Housing Survey stated 49% of these properties owned by the Generation Trapped, as I have dubbed them, are ‘under-occupied’ (under-occupied classed as having at least two bedrooms more than needed). These houses could be better utilised by younger families, but research carried out by the Prudential suggest in Britain it’s estimated that only one in ten older people downsize while in the USA for example one in five do so.

The growing numbers of older homeowners who want to downsize their home are often put off by the difficulties of moving. The charity United for all Ages, suggested recently many are put off by the lack of housing options, 19% by the hassle and cost of moving, 14% by having to de-clutter their possessions and 14% by family reasons such as staying close to children and grandchildren.

Helping mature Baldock (and the Country) homeowners to downsize at the right time will also enable younger Baldock people to find the homes they need – meaning every generation wins, both young and old. However, to ensure downsizing works, as a Country, we need more choices for these ‘last time buyers’.

Theresa May and Philip Hammond can do their part and consider stamp duty tax breaks for downsizers, our local Council in Baldock and the Planning Dept. should play their part, as should landlords and property investors to ensure Baldock’s ‘Generation Trapped’ can find suitable property locally, close to friends, family and facilities.

‘Generation Rent (Forever)’ – 591 Baldock Tenants have no intention of ever buying a property to call home

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The good old days of the 1970’s and 1980’s eh … with such highlights lowlights as 24% inflation, 17% interest rates, 3 day working week, 13% unemployment, power cuts … those were the days (not)… but at least people could afford to buy their own home. So why aren’t the 20 and 30 something’s buying in the same numbers as they were 30 or 40 years ago?

Many people blame the credit crunch and global recession of 2008, which had an enormous impact on the Baldock (and UK) housing market. Predominantly, the 20 something first-time buyers who, confronting a problematic mortgage market, the perceived need for big deposits, reduced job security and declining disposable income, discovered it challenging to assemble the monetary means to get on to the Baldock property ladder.

However, I would say there has been something else at play other than the issue of raising a deposit – having sufficient income and rising property prices in Baldock. Whilst these are important factors and barriers to home ownership, I also believe there has been a generational change in attitudes towards home ownership in Baldock (and in fact the rest of the Country).

Back in 2011, the Halifax did a survey of thousands of tenants and 19% of tenants said they had no plans to buy a home for themselves. A recent, almost identical survey of tenants, carried out by The Deposit Protection Service revealed, in late 2016, that figure had risen to 38.4%, with many no-longer equating home ownership to success and believing renting to be better suited to their lifestyle.

You see, I believe renting is a fundamental part of the housing sector, and a meaningful proportion of the younger adult members of the Baldock population choose to be tenants as it better suits their plans and lifestyle. Local Government in Baldock (including the planners – especially the planners), land owners and landlords need an adaptable Baldock residential property sector that allows the diverse choices of these Baldock 20 and 30 year olds to be met.

This means, if we applied the same percentages to the current 1,539 Baldock tenants in their 579 private rental properties, 591 tenants have no plans to ever buy a property – good news for the landlords of those 222 properties. Interestingly, in the same report, just under two thirds (62%) of tenants said they didn’t expect to buy within the next year.

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Does that mean the other third will be buying in Baldock in the next 12 months?

Some will, but most won’t … in fact, the Royal Institution of Chartered Surveyors (RICS) predicts that, by 2025, that the number of people renting will increase, not drop. Yes, many tenants might hope to buy but the reality is different for the reasons set out above.  The RICS predicts the number of tenants looking to rent will increase by 1.8 million households by 2025, as rising house prices continue to make home ownership increasingly unaffordable for younger generations.  So, if we applied this rise to Baldock, we will in fact need an additional 242 private rental properties over the next eight years (or 30 a year) … meaning the number of private rented properties in Baldock is projected to rise to an eye watering 821 households.

‘Flipping heck – Baldock’s property values rise by £41.58 a day!

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Investing in Baldock buy to let property is different from investing in the stock market or depositing your hard earned cash in a  Building Society. When you invest your money in a Building Society, this is considered by many as the safe option but the returns you can achieve are awfully low (the best 2-year bond rate from Nationwide is a whopping 0.75% a year!). Another investment is the Stock Market, which can give good returns, but unless you are on the phone every day to your Stockbroker, most people invest in stock market funds, making the investment quite hands off and one always has the feeling of not being in control.

However, with buy to let, things can be more hands on. One of the things many landlords like is the tactile nature of property – the fact that you can touch the bricks and mortar. It is this factor that attracts many of Baldock’s landlords – they are making their own decisions rather than entrusting them to city whizz kids in Canary Wharf playing roulette with their savings.

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I always say investing in property is a long-term game. When you invest in the property market, you can earn from your investment in two ways. When a property increases in value over time, it is known as ‘capital growth’.

Capital growth, also known as capital appreciation, has been strong in recent times in Baldock, but the value of property does go up as well as down just like shares do but the initial purchase price rarely decreases.

Rental income is what the tenant pays you – hopefully this will also grow over time. If you divide the annual rent into the value (or purchase price) of the property, this is your yield, or annual return. So, over the last 5 years, an average Baldock property has risen by £75,892 (equivalent to £41.58 a day), taking it to a current average value of £367,100. Yields range from 5% a year and can reach double digits’ percentages (although to achieve those sorts of returns, the risks are higher).

However, something I haven’t spoken of before is the more specialist area of flipping property to make money.  Flipping – buying a property, carrying out some minor cosmetics and re selling it quickly.  I have seen several investors recently who have made decent returns from this strategy. For example …

One Baldock Investor paid £300,000 for a 3 bedroom house on Church Street in September 2015.  The property was re-furbished and it was resold a few months ago (November 2016) for £437,500 … 45.83% return before costs (or compound annual return equivalent of 37.34% AER).

Some shots of the property before the work was completed:

A shot  of the  garden after  the work was completed & intended kitchen:

This demonstrates how the Baldock property market has not only provided very strong returns for the average investor over the last five years but how it has permitted a group of motivated buy to let Baldock landlords and investors to become particularly wealthy.

As my article mentioned a few weeks ago, more and more Baldock people may be giving up on owning their own home and are instead accepting long term renting whilst buy to let lending continues to grow from strength to strength. If you want to know what  would, and what would not,  make a decent buy to let property in Baldock, please contact us on 01462 894565 or send us a rightmove link to consider.

Baldock property of the week…..

Take a look at our latest property of the week video – Country Properties are selling a two bedroom apartment with Juliet balcony in prime high street development for £199,950.  With a potential rental yield of around 5% this is one we feel landlords should look at.   Click here for Country Properties advert and call them quick – this won’t hang around long!

58 Properties For Sale in Baldock … is this a good time to sell?

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2017 has started with some positive interest in the Baldock property market.  Taking a snap shot of the Baldock property market for the first quarter of 2017, the picture suggests some interesting trends when it comes to the number of properties available to buy, their asking prices and what prices properties are actually selling for.

Let us first consider the number of properties for sale, compared to 12 months ago:

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So when we add in building plots and other types of properties that don’t fit into the four main categories, that means there are 58 properties for sale today compared with 45 a year ago, a rise of 29%.

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Baldock asking prices, compared to a year ago, are 7% higher.

With that in mind, I wanted to look at what property was actually selling for in Baldock. Taking my information from the Land Registry, the last available six months property transactions for SG7 show an interesting picture (note the Land Registry data is always a few months behind due to the nature of the house buying process and so November 2016 is latest set of data). The price shown is the average price paid and the number in brackets is the number of properties actually sold.

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So what does all this mean for the property owning folk of Baldock?

Well, with more property on the market than a year ago and asking prices 7% higher, those trying to sell their property need to be mindful that buyers, be they first timers, buy to let landlords or people moving up the Baldock property ladder, have much more price information about the Baldock property market at their fingertips than ever before.

Those Baldock people who are looking to sell their property in 2017, need to be aware of the risks of over pricing their property when initially placing it on the market. Over the last 12 months, I have noticed the approach of a few Baldock estate agents is to suggest an inflated asking price to encourage the homeowner and secure the property to sell on their books. The down side to this is that when offered to the market for the first time, buyers will realise it is overpriced and wont waste their time asking for a brochure. They won’t even view the property, let alone make an offer. So when the price is reduced a few months later, the property has become market stale and continues to be ignored.

Whilst the Baldock property-market has an unassailable demand for property – there is one saying that always rings true – as long as the property is being marketed at the right price it will sell.

If you want to know if your Baldock property is being marketed at the right price, send me a web link and I will give you my honest opinion.

With 1,539 people in Private Rented Properties in Baldock – Should you still be investing in Baldock Buy To Let?

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If I were a buy to let landlord in Baldock today, I might feel a little bruised by the assault made on my wallet after being (and continuing to be) ransacked over the last 12 months by HM Treasury’s tax changes on buy to let. To add insult to injury, Brexit has caused a tempering of the Baldock property market with property prices not increasing by the levels we have seen in the last few years. I think we might even see a very slight drop in property prices this year and, if Baldock property prices do drop, the downside to that is that first time buyers could be attracted back into the Baldock property market; meaning less demand for renting (meaning rents will go down). Yet, before we all run for the hills, all these things could be serendipitous to every Baldock landlord, almost a blessing in disguise.

Baldock has a population of 13,085, so when I looked at the number of people who lived in private rented accommodation, the numbers astounded me …

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Yields will rise if Baldock property prices fall, which will also make it easier to obtain a buy to let mortgage, as the income would cover more of the interest cost. If property values were to level off or come down that could help Baldock landlords add to their portfolio. Rental demand in Baldock is expected to stay solid and may even see an improvement if uncertainty is protracted. However, there is something even more important that Baldock landlords should be aware of: the change in the anthropological nature of these 20 something potential first time buyers.

At a recent family get together, I got chatting with my nephew and his partner.  Both are in their mid/late twenties, both have decent jobs in Baldock and they rent. Yet, here was the bombshell, they were planning to rent for the foreseeable future with no plans to even save for a deposit, let alone buy a property. I enquired why they weren’t planning to buy? The answers surprised me as a 40 something, and it will you. Firstly, they don’t want to put cash into property, they would rather spend it on living and socialising by going on nice holidays and buying the latest tech and gadgets. They want the flexibility to live where they choose and finally, they don’t like the idea of paying for repairs. All their friends feel the same. I was quite taken aback that buying a house is just not top of the list for these youngsters.

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So, as 11.8% of Baldock people are in rented accommodation and as that figure is set to grow over the next decade, now might just be a good time to buy property in Baldock – because what else are you going to invest in?  Give your money to the stock market run by sharp suited city whizz kids – because at least with property – it’s something you can touch – there is nothing like bricks and mortar!

For more views and opinions on the Baldock property market – visit the Baldock property market blog:  www.baldockpropertyblog.co.uk.