942% - Rise in Oxford Property Prices since 1981

Roll the clock back 35 years to 1981.  Mrs. Thatcher was Prime Minister, we had a Royal Wedding, England won the Ashes and Bucks Fizz won Eurovision with ‘Making your Mind up’.   Haven’t things changed.  The number of homeowners and property investors who said they wish they had hindsight and bought up every house in Oxford all those years ago, especially when you consider what has happened to Oxford property values,

Oxford Property Values since 1981 have risen by 942%.

Not bad when you consider inflation over the same time period has been 271.9%, meaning in real terms (i.e. after inflation), property values in Oxford are 670.1% higher.   It’s no wonder people can’t afford to buy property anymore and landlords are attracted by bricks and mortar. Yet the changes to the Oxford Property market run much deeper increases in value.  No one could have predicted how the property market has changed in Oxford over the last 30 years.

Looking at the Local Authority data for Oxford City Council in 1981, 29.3% of Oxford people lived in a Council House, whilst today its 21.4% ... a drop which can in part be attributed to Margaret Thatcher allowing Council tenants the right to buy their Council House.  The private rental sector since 1981 has, as one would have expected, also changed.  The proportion of properties privately rented in the Oxford area (i.e. through a private landlord or a letting agency) has seen quite an increase, rising from 18.6% to 28.2% of all domestic property.

So, let us consider those people who own their own home, surely that has had a massive drop?  In 1981, the proportion of people who lived in the Oxford City Council area who owned their own home was 51.9% and today it’s 46.7%. Not the seismic change most of you were probably expecting but a material reduction nonetheless.

Home ownership in the 1980’s and 1990’s in Oxford did in fact rise, but as I have discussed in previous articles in the ‘Oxford Property Market Blog’, that was because nearly every Council tenant was buying their council house. Now there are too few Council houses for the younger generation to move into nor sufficient properties provided by social landlords to make up the shortfall.  This means that the people who would otherwise occupy such properties have no choice but to privately rent.

The Oxford property market is constantly changing but current imbalance between supply and demand for property means that buy to let investment in Oxford is over-reliant on house price growth, with rental yield having been progressively eroded by the ever increasing purchase price.  I see the changes in tax and landlord & tenant law in a different perspective to many commentators – I believe yield should and will become more important as landlords experience the consequential deterioration in their returns.  Some may need to change their buy to let targets, their financing methodology or broaden their portfolio geographically (e.g. look at Kidlington, Bicester or other satellite towns) and by type (e.g. ensuring you have exposure to Oxford’s student demand, and the growth in demand for HMO’s from young professionals).

Like Bucks Fizz said in their song, it’s time to make your mind up. The advice I give to my landlords, and also to you my blog reading friends is this; the changes to come will make some landlords panic, providing a more stable platform for knowledgeable and wise and well advised Oxford landlords to thrive.