Oxford Private Rents Average £27.92 per sq. foot

Gone are the days of making money by buying any old Oxford property to rent out or sell on. Nowadays, property investment is part art and part science. The art is your gut reaction to a property, but science must also play its part on a property’s future viability for investment.

Many metrics most property professionals (including myself) use when deciding the viability of a rental property is what properties are selling for, the average rent, the yield and an average value per square foot.

However, another metric I like to use is the average rent per square foot. The reason being it is a great way to judge a property from the point of view of the tenant ... what space do they get for their money. Like people buying a property, tenants must balance between better vs. worse location, more vs. less money and larger vs. smaller accommodation.

I know there are a lot of you in Oxford who like to read statistics on the Oxford property market, so before I talk about the rental figures per square foot, I wanted to share the £ per square foot for sales values. In Oxford, the current AVERAGE figures being achieved by properties are:

·        Oxford Detached Property - £472 / sq ft

·        Oxford Semi Detached Property - £476 / sq ft

·        Oxford Terraced Property - £509 / sq ft

·        Oxford Apartments - £537 / sq ft

So, the rental figures:

The average size of a rental property in the Oxford area is 833.2 sq ft compared to the national average of 792.1 sq ft. This means the average rent per square foot currently being achieved on an Oxford rental property is £27.92 per sq ft per annum

So, what we can deduce from this?  Well the devil is in detail!

Something quite intriguing happens to the figures, in terms of what the property will sell for and what it will rent for, as the size of the property increases.

My research shows that doubling the size of any Oxford property doesn’t mean you will double the value of it … in either value or rent. This is because the marginal value diminishes as the size of the property increases. In Oxford what appears to happen is that a doubling of size gives an approximate 40% to 65% uplift in value, but here comes the even more fascinating part … when it came to the rental figures, doubling the size of the house generates only a 20% to 45% in increase in rent.

Oxford – England’s number 1 for growth potential

Oxford has come first with Cambridge a close second as the city with the best growth potential in the England, according to a report published this week by Arcadis.  The report highlights Oxford as having substantial potential with only Edinburgh rating higher in the UK.

The report states that Oxford and Cambridge are set to be boosted by the Oxford – Milton Keynes – Cambridge corridor.

Arcadis scored cities in several areas including economic performance, branding, housing, quality of life, quality of place, people, growth and infrastructure. These measures were used to identify the attractiveness for future inward overseas investment for social and economic growth. Oxford achieved a total score of 56.1% with Cambridge on 55.8%, with only Edinburgh topping them within the UK with a score of 65.5%. The report looked at a total of 24 UK cities.

Particularly highlighted were collaboration and JV investments as key to fulfilling the potential, especially in housing and infrastructure – which is a key focus of the Oxford-Cambridge Corridor project. The report states that the corridor will improve investment potential by reducing congestion, making housing more affordable and enhancing connectivity. The corridor is expected to play an important part in enhancing future investment, particularly in the following key areas:

·       Housing – to reduce the ratio of average house prices to average earnings;

·       Road congestion – reducing the hours spent per year in traffic jams;

·       Enhanced airport connectivity – to improve journey times to and from key airports

The first two of these has been given top priority in the work of the Oxfordshire Growth Board (consisting of all six Oxfordshire local authorities). The £215 million Housing and Growth Deal between Oxfordshire and the government is expected to be signed off at the end of this month, and will support the opening up of new housing sites around the county and the development of a Local Industrial Strategy for Oxfordshire.

The daily hysterical headline about house prices is misleading

“Oxford house prices are stagnating”  “Oxford homes least affordable in the UK”  “The house price bubble is set to burst”  “Housing Armageddon”.  Just a flavour of the typical narrative of headlines in the printed and digital media daily.  Yes, it seems we Brits are completely obsessed with property, especially when the news is dire!

Given that I am in the business of writing about Oxford’s property market, I thought I’d do a little research to establish some facts and to share them with you.

Hometrack has recently updated its UK Cities house price index with data to December 2017, so it is a good time to take a look and consider the facts.

In general UK citizens feel that they understand property it feels as if it is in our national DNA.  And yet, so many people seem to react to short-term trends, changing their investment decisions because of the headlines they read.

According to Hometrack, an average Oxford property is now worth £425,600, at a time when an average London home is worth £488,300.  So, an average Oxford property is now worth 87% of an average London property.  Only Cambridge gets close to Oxford and London with an average house value of £404,300.  But London prices have been falling so surely Oxford will suffer a similar fate?  Well the truth is no-one knows! Towards the end of last year Oxford properties did dip slightly according to Hometrack, but across the 12 months to December 2017 Land Registry data shows Oxford properties sold for values 6% up on the previous 12 months.  It is also apparent that house prices have performed better than predicted during January.

We are often told that investment in property should be long-term, but does the long-term data support that assertion?  Below is an analysis that shows Oxford house prices (in Green) vs UK house prices (in Brown).

Oxford vs UK House Prices

From the graphic it can be seen that the UK house price index had a positive consistent growth curve over the period from 1998, to 2008 after which it had a steep dip during 2009/10 with a progressive recovery to the end of 2017 as which point prices had recovered to their 2007 highs.  In comparison, since 1998 Oxford property has consistently out-performed the UK average, following a steeper growth curve, experiencing a more dramatic short-term fall during 2008/9, since when, it’s recovery has been significantly steeper recovering 2009/10 losses during 2012/13.

Oxford vs London House Prices

So how has Oxford done compared to London?  Well the analysis above shows how closely Oxford (green) typically tracks the London market (Brown).  With a gap in average values opening since 2013 as London out-performed the wider UK market because wage growth recovered more strongly and foreign investment drove the market forward.

And, let’s not forget the rivalry with Cambridge.  How does Oxford compare with Cambridge?  The analysis below is also notable for the close tracking of Oxford (dark green) and Cambridge property (teal) prices, demonstrating that both Cities benefit from their world-renowned Universities, their proximity to London and their long-term investment in the knowledge-based services sector.

Oxford vs Cambridge House Prices

What these analyses really show is that property is a reliable long-term investment, and that property owners should not be blown off course by short-term fluctuations and alarming headlines.  Even a multi-generational event like the credit crunch, which had a profound effect on property for 12 to 24 months, is now a matter of history with the long-term trend of growth having been restored.

Can house prices predict 6 Nations success?

The Six Nations Championship kicks-off today with England defending their 2017 title.  But with Scotland and Ireland showing great form in the Autumn, how can we predict the likely victor in 2018?

Well last year the first and second placed teams (England and Ireland) were also top of the leaderboard in terms of annual house price growth.  So it goes without saying, that must be a great way to predict success this year....

Applying this irrefutable logic, I confidently predict that Ireland will win the Championship this year, with England second and Wales third.  While Scotland flattered to deceive in the autumn and will place just fourth ahead of France, with Italy picking up the wooden spoon!

But will Ireland win the Grand Slam?  Well for that we will have to wait and see until St Patrick's Day when they travel to Twickenham for the final and deciding game.

Whatever your colours, this looks to be an excellent and tight Championship, but house prices never lie!

Why is Oxford the UK’s least affordable City?

On average a UK City home costs 7 times annual average income, not since 2007 has property been less affordable when the average was 7.5 times annual average income.

Contrary to popular belief London is not the least affordable City when property price is compared to average income, that dubious accolade goes to Oxford, out on its own at 11.5 times average earnings.  Next comes our other world-famous city of learning Cambridge at 10.5 times earnings.

Each of London, Oxford and Cambridge have average house prices above £400,000 with Oxford average price being £422,055 over the last 12 months.

Whilst London property has stagnated during 2017, the Capital has also experienced the strongest earnings growth, rising out of the credit crunch malaise faster and stronger than Cities such as Oxford, Cambridge and Bath.  Cities popular with commuters to London such as Brighton and Winchester have also experienced property price inflation with people benefitting from London earnings demanding property and widening the gap for people who live and work locally.

Despite fewer completed sales, demand for Oxford homes has remained strong.  In north Oxford, Kidlington property saw increases as high as 25% during 2015 and 2016 due to the new Oxford Parkway station making the village a commuting hotspot, and whilst price growth stagnated in 2017, Kidlington remains a buoyant local market.

So why is Oxford so expensive?  First and foremost, Oxford offers a superb built environment combining historic and modern architecture and vibrant sports and leisure attractions.  It is a Cit that attracts 30,000 students annually many of whom live in private rented properties, and is a world recognised seat of learning and centre for the knowledge industries.  It is strategically located in the Centre of England offering easy access North, South, East and West, and is surrounded by beautiful Cotswold countryside.  Who wouldn’t want to live in Oxford?

But, the City and County Councils have failed to enable and encourage sufficient new build homes, resulting in a supply constrained property market.  In 2017, less than 1% of the homes sold in Oxford were new build.  That under-supply of new affordable homes to suitable for first-time buyers and/or to down-sizing retired residents, is causing there to be a chronic under-supply of 2 and 3 bedroom homes.  Whlst Government policy aimed at helping first time buyers is positive, in Oxford first time buyers are not limited by stamp duty, but rather the size of deposit required by mortgage lenders.

For people who own an Oxford home the strength in values is an important part of their wealth planning, for the city as a whole it is the biggest strategic risk that the City faces.  At present it is hard to see how local or national public policy will address this crisis.