27th September 2019
Last week Propertymark, the national trade association for estate agents (formerly the National Association of Estate Agents), published figures for the number of house hunters in the market. The national average for each estate agency branch rose from 303 to 316 in July, year on year. I am assuming (it doesn’t state) that this is for house buyers only as our buyer/tenant database shows we listed just over 300 applicants on our system in July alone, on top of the number of ‘house hunters’ already registered with us!
In June we registered a total of 284, July showing a modest increase of just over 6.5%. We can analyse our stats far quicker than Propertymark can analyse the national trends. Our figures for August showed the usual seasonal drop, although listing a further 289 in August was only a 4.6% fall month-on-month. September’s figures to-date for new registrations are running at nearly 20% up on the August figures, showing continued growth in demand for housing per se.
Buyer demand is being driven by the very competitive (and attractive) low-interest rate mortgages which are currently on offer. First time buyers can now ‘lock in’ to a 5 year fixed rate mortgage which, as one couple last week told me, made their mortgage repayments over £100pcm less than the rent they were paying on an almost identical house they’ve just purchased. The lack of any Stamp Duty liability on property priced under £300,000 is also stimulating first time buyers.
Tenant demand in Leeds is at record levels, the recent Tenant Fee Act makes it initially cheaper for tenants to apply for a rented property. The reduction in up-front costs for tenants has driven up annual rents, in some cases, well beyond the initial savings made by the Tenant Fee Act. Many agents, including myself, predicted this would happen. Propertymark warned Government the Act was not likely to bring about overall savings for tenants, despite the ‘headline savings’ on offer.
The Brexit debacle appears to be having no adverse impact on the local housing market. We’re still listing significantly lower numbers of property for sale and to let than 10 years ago, which as we all know has created a housing shortage and driven up property prices.
We’ve lost a small number of properties from our rental department as a consequence of the recent tax imposition on landlords, and the overall higher costs of letting following the Tenant Fee Act. Dedicated landlords are continuing to let now that rental values have risen off the back of the Tenant Fee Act, with most seeing an overall gain in profit over a 12 – 24 month letting period. I have always said property investment is a long-term project, and I’m confident that as we’ve seen since the 1950’s, every 10 year period of property ownership will continue to show gains.
With some landlords exiting the property market there should be an additional availability of housing stock for first time buyers. I wonder whether that will be balanced by the increase in Buy-to-Let demand as UK based investors have less and less choice over where to invest given the very low interest rates on offer, and as more and more overseas investors seek a home for their money whilst our exchange rate is so attractive.
We live in interesting times.