This week I started posting daily property facts out onto Twitter, looking at various aspects of sales and average prices from across the borough in 2018 from the last 20 years. It got me thinking; property ownership is a medium-long term investment, so if a Landlord or homeowner bought a property in the borough 20 years ago, how much has the value risen by?
Throughout 2018 I have a belief that the UK interest rates are going to remain low, even if an additional increase of 0.25% does occur in May or June.
The increase would add just over £20 to a standard £160,000 tracker mortgage, although considering 57.1% of all borrowers on fixed rates, most buy-to-let landlords or homeowners will struggle to notice the difference.
The current economy is fragile, particularly with a range of cuts and the consistent challenge imposed by Brexit. With price inflation already surpassing salary rises, the weight is going to be very much felt by some Tameside households.
Now it’s certain the Tameside housing market in 2017 was a little more subdued than 2016 and that will continue into 2018. By taking a look at the long-term timeframe, it’s visible that the average Tameside homeowner who bought their property 20 years ago has seen its value rise by more than 275%.
This is important, as house prices are a national obsession and tied into the health of the UK economy as a whole. The majority of that historic gain in Tameside property values has come from property market growth, although some of that will have been added by homeowners modernising, extending or developing their Tameside home.
Looking at the different property types across the nine areas in the borough and the profit that’s been made by each type makes interesting reading:
| Average Price Paid in 1998 in Tameside | Average Price Paid in 2018 in Tameside | Average total profit in last 20 years in Tameside | Average monthly profit in last 20 years in Tameside | |
|---|---|---|---|---|
| Detached | £74,670 | £236,292 | £161,622 | £673.42 |
| Semi-Detached | £45,643 | £150,517 | £104,874 | £436.97 |
| Terrace | £34,105 | £114,769 | £80,664 | £336.10 |
| Flats & Apartments | £30,629 | £95,449 | £64,820 | £270.08 |
| Overall Tameside Average | £46,261.75 | £149,256.75 | £102,995 | £429.14 |
However, historic growth and profit aside, let’s take a look at what the future has in store. I’ve already been asked by my thoughts on the future of the Buy to Let market in Droylsden, so perhaps now would be the ideal time to take a look at the factors that could affect the future of Tameside (and indeed the country’s) house price growth and profit.
The development of new homes both locally and in the country is obviously an important factor when it comes to price growth and profit; this has picked up in 2017 with 217,350 homes coming on to the UK housing ladder in the last year (a 15% increase on the previous year’s figures of 189,690. However, Philip Hammond has set a target of 300,000 a year, so still plenty to go).
Another factor that will affect property prices is my prediction that the balance of power between Tameside buy-to-let landlords and Tameside first-time buyers should tip more towards the local first-time buyers in 2018.
The Council of Mortgage Lenders expects the number of buy to let mortgages to drop by 34% from levels seen in 2015. This is because of taxes being increased recently on buy-to-let and harder lending criteria for buy to let mortgages, which means I foresee a gradual move in the balance of power in favour of first-time buyers rather than buy-to-let landlords. First time buyers will also be helped by The Chancellor eradicating Stamp Duty for all properties up to £300,000 bought by first-time buyers in the recent budget.
This means Tameside buy-to-let landlords will have to work smarter in the future to continue to make decent returns (profits) from their Tameside buy-to-let investment. Even with the tempering of house price inflation in Tameside in 2017, most local buy to let landlords (and homeowners) are still sitting on a copious amount of growth from previous years.
The question is, how do you, as a Tameside buy to let landlord ensure that continues?
Since the 1990’s, making money from investing in buy-to-let property was as easy as point and clicking. Looking forward though, with all the changes in the tax regime and balance of power, making those similar levels of return in the future won’t be as easy. Over the last ten years, I have seen the role of the forward thinking letting agents evolve from a ‘rent collector’ and basic property management to a more holistic role, or as I call it, ‘landlord portfolio strategic leadership’. Thankfully, along with myself, there are a handful of letting agents in Tameside whom I would consider exemplary at this landlord portfolio strategy where we can give you a balanced structured overview of your short, medium and long-term goals, in relation to your required return on investment, yield and capital growth requirements. If you would like such advice, feel free to drop me a line.
Leave a Reply