Oxford house affordability improving, but slowly

In Oxford, the average home now costs £405,600 according to Zoopla, which is 11.9 times the average single person income of £33,900.  With Oxford house prices static in Oxford according to Zoopla, average wages are now outstripping house prices.

This still places Oxford as the 3rd least affordable City in the UK behind London (13.1 times average income) and Cambridge (12.2 times average income).

So why is Oxford property so expensive?  Some factors are shared by Cambridge - it's a World famous centre of learning, with beautiful historic architecture and positioned well for commuting to/from London and for accessing Cotswold chocolate box villages and countryside at weekends.

But that's not what's driving the high cost of Oxford homes.  The real cause of high house prices is the lack of new starter homes and down-sizer homes being built.  Just 2% of housing is new build, and most new build relates to larger 3, 4 and 5 bed properties targeting affluent families.

Too many Oxford retirees are living in homes that are too large for them because there are no suitable properties for them to down-size into.  At the other end of the scale starter homes are virtually non-existent, forcing many affluent young professionals to rent homes for longer than is necessary.

I am asked daily by Oxford prospective home buyers 'will prices crash with Brexit?'.  My current response is there could be a short-term dip, but I can't see how prices will crash.  Demand for homes in Oxford is high, and sellers expectations of value are also high.  Most sellers will stay put rather than sell at a low price, and if demand surges there will be lower supply and higher demand.

And, the fundamentals will be the same - too few starter homes, too few down-sizer homes and new supply languishing at the low single digit percentage of supply.

Oxford homes owners and landlords may need to weather some 'headwinds' but their assets remain valuable over the medium to long-term.

Fewer Oford homes are finding buyers below asking price and after longer on the market

The Oxford housing market is struggling-on despite the daily gloom-laden newspaper headlines.  But, many sellers are failing to find a buyer.  Why is that?

The number of completed house sales is down 8% over the last 12 months and this is the second year in succession that the total number of houses sold has fallen.  1.909 properties sold in Oxford over the last 12 months.  Are there fewer buyers? Or are buyers waiting to see if Brexit results in a price crash enabling them to buy more with less?

Normally when supply outstrips demand prices fall.  But, over the last 12 months Oxford prices are reported as being 1% higher than 1 year ago.  Not the spectacular rises Oxford homeowners have come to expect, but not the falling values experienced in London.

So Oxford asking prices have held-up well, and Oxford has resisted negative house prices.  So where is the 'but'?  Well it is pretty hard to find, but I have done some digging and spent a little time researching Land Registry data.  When a house sells and the new buyers register their purchase the Land Registry data is updated confirming the agreed price at which the property sold.  It makes interesting reading.

On average Oxford homes are selling around 3.7% below their asking price.  But, there is a quite wide variation depending on postcode.  The best performing is OX4 with sold properties completing c 2.4% below average asking price, and the worst performing is OX5 with completed sales 4.8% below average asking price.  OX2 is discounted around 3.2%; OX3 3.7% and Ox1 3.8% respectively.

On average across Oxford achieved sales price is £15,600 below asking price with the spread from c£17,600 in OX5 to c£9,000 in OX4.

So the message is clear, whilst asking prices are holding firm, the Oxford home owners who are selling successfully are open to negotiation with the buyer.  With average time on market exceeding 17 weeks, it pays to be savvy!

The question I am asked most frequently is 'Bill, what will happen to Oxford house prices after Brexit?'  To which the only valid answer is 'I don't have a crystal ball!'  But, the fundamental drivers of Oxford's high house prices will not be altered by Brexit - there are virtually no new affordable homes being built in the City, and demand for private rented homes and owner-occupied homes continues to outstrip supply.  Whilst Brexit has reduced demand from outside the UK particularly from people visiting the City to study, domestic demand has largely filled this void, and there are signs that the Oxford has reasserted itself as one of the World's great learning centres with foreign students returning to the housing market when compared to 2017/18.

It seems certain that we are set for political and economic turbulence over the coming 6 months, but in the medium to long-term Oxford will remain a great place to live, work and invest.

Landlords having to wait 22.5 weeks for a Court hearing

According to the Residential Landlord Association, it now takes private landlords an average of 22.5 weeks from making a claim to the courts for a property to be repossessed to it actually happening, up from 21.6 weeks since the beginning of the year, new data shows.

One major problem causing the backlog is that the courts are unable to cope when landlords look to repossess properties for legitimate reasons using a Section 8 Notice.

The Government is currently in consultation on proposals to scrap Section 21 repossessions which give landlords access to an accelerated repossession.  If Section 21 is scrapped, there will be a significant increase in cases brought to the courts via Section 8 and the Government MUST publish plans for court reform to create more capacity and bring the current 22.5 weeks to 8 weeks or less.

The Government is being bullied by organisations such as Shelter who have adopted the banner ‘No-fault evictions’ and made that banner synonymous with Section 21 Notices.  This is just wrong.  If a few rogue landlords are finding ways to end tenancies for unlawful or unreasonable reasons, it is that which should be the focus of Government attention and not the accelerated repossession that 95% of landlords and their lettings agents use properly and as originally intended.

Without Court reform, this misguided new legislation will result in further Court congestion, a flood of Section 8 notices and landlords who have to wait 30 weeks or more to repossess their properties for legitimate reasons.

Coming hot on the heels of punitive tax reforms for landlords, and the tenant fee ban which has increased landlord costs, landlords who are already questioning whether to sell their properties, will be pushed out of the market for good.  This in turn will reduce the supply of private rented accommodation at a time when demand has never been higher.

Government has interfered enough in this market, and should not pile more pressure on landlords who already feel battered and bruised.

ARLA confirms rent rises following tenant fee ban

In a market snapshot for June, the Association of Residential Lettings Agents (ARLA) says the number of tenants experiencing rent rises increased to the highest figure on record.  Whilst June was the first month following the new legislation entering into law, the finding seems to confirm that warnings given to Government that rents would rise as a result of the tenant fee ban were valid.

Some 55 per cent of agents surveyed by ARLA saw landlord clients increasing rents during the month, a full 22 per cent up on the previous four weeks which itself had been a previous record high. 

Year-on-year, the number of tenants facing rent increases is up from 31 per cent in June 2017, and 35 per cent in June 2018.

Meanwhile letting agents had an average of 199 properties under management per member branch in June, a decrease from 201 in May.

Demand from prospective tenants also increased marginally in June, with the number of house hunters registered per branch rising to 70 on average, compared to 69 in May.