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www.OxfordPropertyBlog.co.uk is hosting a Landlord seminar

On 2 March 2017, we will host a seminar featuring expert speakers from Martin & Co, Hedges Law, Critchleys Chartered Accountants and...

Thursday 27 July 2017

Oxford is a favourite place for people moving out of London


The number of people leaving the capital has reached a 5-year high, with net departures to homes elsewhere in the UK reaching 93,300 people in the year to June 2016 – an increase of more than 80% on five years previously according to the ONS.

Apart from people in their 20’s there is a net outflow across all age groups with thirty-somethings being most likely to look for somewhere more affordable to buy a family home.

Those who live in the Capital’s richest boroughs are more likely to move to more affluent areas.  People in Kensington and Chelsea tending to move to Cambridge; Westminster residents heading to Oxford and those in Hammersmith and Fulham moving to Elmbridge in Surrey.  Other popular places for relocation include St Albans and Slough.

It is perhaps no surprise that the popular new places remain within communing reach of London, and have vibrant community, social and cultural attractions.  As I have predicted in this blog, these people are looking for family homes or 3 beds or more, ease of access to train and road links to London, and proximity to open spaces, supermarkets and social venues. I expect to see these properties to increase in popularity for both buyers and renters over the coming 2 or 3 years.

Tuesday 25 July 2017

The boards begin telling the story this summer

A good afternoon to you all,
It's well documented that we have witnessed a gentle slowing in our rental and as you know it is something we have been very keen to share with you all both through social media and direct conversations. 
Much has been suggested about the reasons behind this change in our market and adding further to this change Is  a cooling in the lettings board activity leading to the markets busiest period.
In a recent report of Agency Expresses‘property activity index’ shows that while figures for new listings in the ‘To Let’ category did see a marginal increase of 0.9 per cent, ‘Let’ properties fell 1.9 per cent. 
Over a three-month rolling period figures recorded across the UK remain down with new listings dropping 2.3 per cent and properties ‘Let’ down 4.9 per cent. Records also show the figure for properties ‘Let’ during last month is at its lowest June level since 2014.
Only five of the 12 regions recorded by the index reported increases in new listings ‘To Let’ and properties ‘Let’.
This month’s top performing region was Central England. Figures for new listings ‘To Let’ sat at a robust 25.4 per cent increase, marking the region’s largest month on month increase for June since the index began in 2012.
Over a three-month rolling period Central England remained at the top of the leader board with figures for new listings sitting at 4.9 per cent up.
The largest declines in this month’s Property Activity Index were made in the North East. New listings ‘To Let’ fell by no less than 23.5 per cent as did properties ‘Let’ down 26.1 per cent. 
The next 3 months in this busiest period will truly determine how affected our market has been by the recent legislative/government changes and what we can expect for the remainder of 2017.

Friday 21 July 2017

Oxford is one of 13 UK cities experiencing lower growth in house prices than a year ago according to Hometrack


13 cities have a lower annual growth rate than a year ago with London, Bristol and Oxford recording the greatest slowdown as affordability and political uncertainty impact demand.

The average prices of a house in the UK’s largest cities increased by 5.1% in the 12 months to June 2017, but growth in London slowed to 2.6%, the lowest rate for over five years.

The annual growth is down from the 8.8% recorded in June last year although it is still robust in larger northern cities such as Birmingham, Manchester and Edinburgh, according to the figures from the latest Hometrack cities house price index.

Growth in the first half of 2017 ranged from 0.2% in Aberdeen to 6.1% in Birmingham and while price growth is higher in seven cities, the scale of the increases compared to June 2016 are more modest.

Prices in Cambridge were up just 1.9%, in Oxford by 2.1%, in Newcastle by 2.4% and in Aberdeen were down 2.7%.

Sustained house price growth in large regional cities has pushed house prices ahead of their 2007 peak in 16 of the 20 cities covered by the index.

Looking ahead to the second half of 2017 the report suggests that even with a material slowdown in the rate of house price growth across south eastern England, house price inflation is holding up despite the squeeze on real incomes and uncertainty around Brexit.

At the end of 2016 Hometrack predicted that city house price growth over 2017 would be 4% but on current trends the firm now expects this to be closer to 6% or 7%. ‘There remains material upside for house prices outside south-eastern England.

Cities such as Bristol, Oxford and Cambridge are seeing slower growth but this is probably due to prices having risen strongly over the last decade, widening the gap with average earnings and impacting affordability for many people.  Major University towns are also braced for reduced demand from foreign nationals for places in their institutions.

It is worth pointing out for readers’ clarity that the headlines sometimes mask the fact that it is a reduction in GROWTH as opposed to an absolute reduction in house values.  At 2.1% Oxford house prices struggled to keep pace with inflation, but continued to grow ahead of earnings, exacerbating the affordability gap for many people, forcing many to live outside of the City commuting in daily by car, train and bus.

Is the Oxford Property Market stalling?


Everyday thousands of column inches are being used to make comment on the UK housing market.  As is usually the case, the headlines are overwhelmingly full of foreboding – after all good news doesn’t sell!  But, what is the true picture for Oxford?

Oxford remains the UK’s least affordable city for residents to buy a house, with an average house costing over 16 times average income.  So Oxford is prime for the building of new homes right?  Well, no!  Over the last 3-month period new build homes in Oxford accounted for just £1.27m of £217m value of homes sold in the City – that’s just over half of 1%!  And, therein lies the real challenge for Oxford, which now has 45,000 people commuting daily many traveling because they can’t afford to live closer to their workplace in the City.  This in turn is causing road congestion, rail congestion and long bus journeys.  It is driving a new growth segment in the Oxford rented sector – that being professional Houses in Multiple Occupation (HMO) – shared houses for young professionals who can not afford to buy or rent their own property, but no longer want to live like they did as a student.

So, house sales are booming then?  Well, no!  The table below shows data for key Oxford post codes, over the last 12 months, compared with the 12 months previously.  The analysis shows that whilst prices have continued to rise for the most part, transaction volumes a down significantly, suggesting that more people are staying put, with fewer people being able to buy a home in the City.  To date, prices have held-up strongly, because the reduced supply is balancing-out any reduced demand for new homes.  However, in April Hometrack UK City index reported that Oxford had slipped into negative house price growth, with the May 2017 report just tipping into positive territory at 1.6% year on year (YoY) growth vs. 8.2% YoY growth in May 2016.

Postcode/Town
Average value (£)
% change in value
Number of transactions
% change in transactions
OX1
460,407
12%
214
-48%
OX2
538,814
2%
490
-29%
OX3
406,212
7%
372
-37%
OX4
345,006
6%
578
-27%
OX5
344,416
-1%
366
-9%
Bicester
329,745
6%
1,077
-13%
Banbury
292,016
7%
2,756
-16%
Abingdon
328,638
6%
3,873
33%
South East England
307,611
9%
30,325
-51%

An important part of the Oxford property market is accommodation for the City’s 30,000 students.  With Universities announcing increases in tuition fees, and a net reduction of 4% in student applications with applications from the EU down over 5%, the City may experience a surplus of student accommodation, reversing the under-supply of recent years.  Together with the ban on fees charged to tenants by landlords and their agents which will be introduced by the Government, the City’s student landlords are certain to experience greater competition when attracting tenants, and an increase in costs.  The best way for such landlords to compete will be to invest in their properties offering better fixtures, fittings and décor, reflecting feedback from their agents about what students demand.  For many, it may be more sensible to re-fit and re-configure their property to appeal to the growing market for professional sharers mentioned above.  This sector demand en-suite facilities, large double bedrooms and well fitted, large communal kitchens.

In summary, Oxford prices have held-up to date, but show signs of weakening.  Oxford remains top of the charts for unaffordability, and the continued lack of new-build affordable homes is pushing demand to outlying towns and villages.  Demand for rented accommodation is changing, and the City is suffering reduced demand from foreign nationals wishing to live and study in the City.


Oxford property prices

This article was published in the Oxford Mail on 20/07/2017 and is re-published in full).  
Hi everyone, I thought the article below would be of interest!

OXFORD has been highlighted as one of five top growth areas for house prices over the past decade.
Growth in UK house prices has slowed in 2017 but new figures released by the UK House Price Index showed prices in Oxford rose by 43.5 per cent over the past decade.
Cambridge showed the second-highest increase over the decade with a 55.9 per cent increase, behind London with 61.7 per cent.

In Oxford in 2007/2008 the average house price in Oxford was £289,855, compared to £415,527 in April.

Kate Faulkner, property expert on website propertychecklists.co.uk, said: “It’s clear that property prices continue, in the main, to slow.

“Rightmove’s lead indicator on how sellers are feeling suggests that asking prices have reduced for the first time since 2009, although there is a ray of light coming from Nationwide and Hometrack, suggesting a slight uptick this month.

“In reality, what we are seeing is a natural slowdown from the recovery in the South and East, while in the rest of the UK prices have done well in the last few years, albeit not as robust as their southern and eastern counterparts.”

Ms Faulkner added that property market analysts Hometrack said this month that “the annual growth rate in London (3.3 per cent) was at the lowest for five years, but with signs of ‘bottoming out’.
The cost of the average home nationwide still increased by 4.7 per cent in the year to May 2017.
Office for National Statistics figures showed a drop from the 5.3 per cent rise in the year to April, with the average UK house price £221,000 in May.

Investment opportunity in central Oxford

Morning all,

Back on the investment trail and there's no better place to start than OX1. For tenants Kennington is a real winner. It offers quiet village setting with local conveniences, and is within 5 mins drive to Oxford centre. It is also the right end of town for the A34.

https://c.zoocdn.com/dynimgs/listings/resized/265802916/1024x768?primary_brand=zoopla


The most appealing part however is the rental price is attractive to tenants because it's considerably cheaper than most in central Oxford.

On the market with Chancellors you can expect a rent of £895 for this one. If you are to believe the selling agent then you'll have to pay over the £250,000 to get it. Is that right? Well on August 9th 2016 a one bedroom property in this development sold for £225,000. Fast forward 11 months is a one bed flat now worth over £25k more? The market decides that but in this market you'd have to be confident with an offer.

If successful you've got yourself a real winner. No internal decor needed and ready to rent.

A great apartment in a great location, oh and it's also got parking!

Call me for more on this and others.

Best regards

Richard

Friday 14 July 2017

The Oxford Property Market, The Beatles, Sweden and 50 year mortgages


50 years ago, in 1967, the first human heart transplant was performed by Dr Christian Barnard in South Africa. In the same year, Sweden switched from driving on the left-hand side to the right-hand side of the road. The average value of an Oxford property was £6,730, interest rates were at 5.5% and The Beatles released their Sgt Peppers album.  But what the hell has that to do with the Oxford property market today? Quite a lot actually - let me explain my friends!

I have been doing some research on the current attitude of Oxford first-time buyers.  First-time buyers are so important for both landlords and homeowners. If first-time buyers aren’t buying, they still need a roof over their heads, so they rent (good news for landlords). If they buy, demand for Oxford property goes up for starter homes and that enables other Oxford homeowners to move up the property ladder.



First-time buyers are the lifeblood of the property market. They are, however the most susceptible to interest rate rises and the affordability of mortgages. With that in mind, let us see what is happening to them…



The average value of an Oxford property is currently standing at £507,468 and UK interest rates at 0.25%. As each year goes by, it appears the age of the everlasting mortgage has started to emerge, prompted by these first-time buyers, eager to get a foot on the housing ladder. I was reading a report a few days ago where some mortgage companies confessed that the battle to gain big returns from the property market has led to mortgages that will take considerably longer than the customary 25 years to pay off.



Over the last few years, it has been commonplace for first-time buyer mortgages to be 30 and 35 years in length as the ‘Bank of Mum and Dad’ have been helping with the deposit. Now, some high street banks are offering mortgage terms of 40 years. This means first-time buyers could be paying until their mid-60’s.  So, a 50-year mortgage does not seem as far-fetched now as it would have been back in the 1970’s. After all life expectancy for a male then was exactly 69 years and today its 79 years and 5 months!



Over the last ten years, Oxford property prices have continued to rise more than wages, therefore, first-time buyers are looking for bigger loans. If this development continues, the only way repayments can remain reasonable is by increasing the term of the loan.



However, some commentators have said they are worried the mortgage companies are lending money over such a long term, because they threaten leaving some first-time buyers with a generation of debt if the house price bubble bursts.  Interestingly, when I looked at what had happened to average property values in Oxford over the last 50 years, there have been bubbles. First-time buyers should take heart, since as a county we have always recovered from it a few years later.



What if interest rates rise? Well looking at historic UK interest rates, the current rate of 0.25% is at a 300-year low. Mortgages will never be cheaper. I would however, seriously consider fixing the rate to cushion any future potential interest rate rises (since they can only go in one direction when they do change). If Oxford first-time buyers see buying a home as a long-term decision, based on the last 50 years, they should feel very confident that their asset will increase in value over the term of their loan!

Tuesday 11 July 2017

Landlords, review your borrowing, lock-in low interest rates and beat the September PRA changes that will restrict your access to funds


The next round of the Prudential Regulation Authority (PRA) changes are on the horizon, with portfolio landlords (with 4 or more properties) set to feel the most impact. We understand that the new rules will include properties owned by all entities, both personal and Limited Company. New rules mean that lenders will consider the whole portfolio when calculating stress tests.


Apparently, each property will be stressed at 5.5% - even properties not subject to the loan, which could have an impact on the amount landlords will be able to borrow.



Martin & Co Oxford work closely with London & Country the UK mortgage broker with the largest panel of lenders.  With interest rates at an all-time low, and with commentators expecting the next move to be up, there has never been a better time for landlords to review their borrowing arrangements to beat the more restrictive rules that will be introduced in September, maximising their borrowing, and locking-in the current favourable rates.



If you feel you might benefit from re-financing, either give us a call on 01865 812110 to ask us to arrange for a London & Country experienced mortgage consultant to call you for a confidential telephone assessment of your needs.  Or, call London & County direct providing reference 'Martin & Co, Oxford' by calling 0800 953 0304.

Historically UK borrowers have been reluctant to change their lender, but just like your utility provider, the best deals often result from switching, and at a time when landlord costs are rising, saving £00's per month or borrowing additional £000's can make the difference between growing a portfolio and not.  You lose nothing by calling and finding-out.

Oxford Buy-To-Let Predictions up to 2037


On several occasions over the last few months, in my Oxford Property Blog, I have touched on the fact that the rate of rental inflation (i.e. how much rents are rising by) has eased over the last year. At the same time I flagged that in some parts of the UK rents had actually dropped for the first time in over eight years. Research backs up this prediction.



Rents in Oxford for new tenancies fell by 0.4% in the last 12 months (i.e. not existing tenancies). When we compare that current rate with the historical rental inflation in Oxford, an interesting pattern emerges:

·       2016 - Rental Inflation in Oxford was 5.1%

·       2015 - Rental Inflation in Oxford was 9.4%

·       2014 - Rental Inflation in Oxford was 3.2%



The reason behind this change depends on which side of the demand/supply equation you are looking from. On the demand side (from the tenants point of view) there is the uncertainty of Brexit and the fact that salaries are not keeping up with inflation for the first time in three years. Critically this means tenants have less disposable income to pay their rent. As an aside, it is interesting to note that nationally, rent accounts for 29% of a tenant’s take home pay (Denton House).



On the supply side of the equation (landlords point of view) Brexit also creates uncertainty. However, the biggest issue was a massive upsurge of new rental properties coming on to the market in late 2016, caused by George Osborne’s new 3% stamp duty tax for landlords in the first part of 2016. This meant a lot of new rental properties were ‘dropped’ on to the rental market all at the same time as landlords scrabbled to buy before the new tax was introduced. The greater choice of rental properties for tenants curtailed rental growth/inflation. A slight softening of Oxford property prices has compounded this.  Figures from The Bank of England suggested that first time buyers rose over the last 12 months as some were more inclined to buy instead of rent. Together, these factors played a part in the ongoing moderation of rental growth.



The lead up to the General Election in May didn’t help: after all, people don’t like doubt and uncertainty. So now that the government has a mandate for going forward over the next 5 years hopefully that has removed any stumbling blocks stopping tenants making the decision to move home. Although, it hardly feels like a 5-year government!



Whether it be ‘hard’ or ‘soft’ Brexit (and with the Election result the Tory’s might have to be ‘softer’ on those negotiations) the simple fact is, we aren’t building enough properties for us to live in. Both in Oxford, the South East and the wider UK, long-term population trends imply that rents will soon be growing faster than inflation again. Look at the projections by the Office of National Statistics.







Population Estimates for Oxford City Council over the next 20 years
2016 (actual)
2021
2026
2031
2036
161,870
166,412
171,231
176,689
180,045



Tenants will still require a vibrant and growing rental sector to deliver them housing options in a timely manner. As the population grows in Oxford, and further afield, any restriction to the supply of rental properties (brought about by poor returns for landlords) cannot be in the long-term best interest of tenants. Simply put rents must go up!



I see this as a short-term blip and rents will continue to grow in the coming years. With rents only accounting for 29% of a tenants’ disposable income, the ability for most tenants to absorb a rent increase does exist.