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.

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!

This property in Baldock has great investment potential!

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Country Properties in Baldock are asking for £169,950 for this one bedroom maisonette.  This is a great option as it has been re-furbished and offers modern contemporary accommodation for any tenant to just move their furniture in. With a rental yield of around 4.2%, and while interest rates are so low this is a property you need to talk to Country Properties about before it goes.

 

Fantastic luxury apartment in Baldock – great for buy-to-let!

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Country Properties in Baldock have just added this property to the market and it’s a cracking apartment!  Offered for sale at £274,950 and in a prime town centre location with a modern interior this is bound to achieve a rental yield of at least 4%.  Take a look at the advert here

Meet the demand for three bedroom rental properties in Baldock!

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This three bedroom semi-detached house is new to the market with Country Properties in Baldock.  On a sought after modern development within walking distance of the town centre and offered for sale at £309,950 this property is likely to go quickly.  Potential annual rental income of around £13,000.