Rental trends reported by RIghtmove

Based on Rightmove data, there are 12% more properties available for tenants to choose from compared to the first quarter in 2016.

Nationally, it is taking 10% longer on average to secure tenants than during the same period last year.

In the SE of England, compared with Q4 2016, there has been a 1% reduction in average achieved rent, whereas compared to the same period last year rents are up 1.3%.

Oxford typically tracks the London market quite closely, albeit with a lag and with lower valued peak rents.  Looking at London, compared with rents in Q4 2016, rents in Q1 2017 are up 1.5%, however, when compared to the same period in 2016 rents are 4.2% down.  To date, Oxford rents have held-up well, however, properties are currently taking longer to let than during the same period last year.  Following the buy to let buying spree in March last year, those properties are now coming available, increasing the availability of properties and offering tenants more choice.

Will Oxford experience the falls in rent experienced in London?  Well, I don't have a crystal ball, but on balance I'd predict a period of low growth in rents and for some properties stagnation.  However, I would expect demand to hold-up reflecting the under-supply of homes and the strong fundamentals of the City's economy.

I expect one bedroom properties to hold-up the best with larger properties from 2-bed apartments upwards taking a little longer to let.  Landlords should not panic, but should be open to accepting offers from tenants, recognising the benefit of prolonging a void period.

Demand for professional HMO properties is likely to remain strong, with tenants demanding a high quality of fit and finish, and good quality, well-equipped communal areas and en-suite facilities.

Rooms  without en-suite facilities, or within homes that are rather tired in terms of interior décor and facilities are most likely to be hit by the reducing demand given the narrowing of the gap between top-priced rooms and one-bedroom and studio apartments.  The cost of renting a room in Oxford is very high, and I'd expect to see some.

Let’s unpick the Oxford market a little more

Over the last 5 years Oxford home owners have seen their property increase in value by an average of 37%.  The average price paid for a property based on all registered transactions over the last 12 months was £400,063.  But, last year the total number of transactions fell by 12% compared to the previous 12 months.  So the BIG question is….is oxford losing its shine as a place to invest in property?

Why are transaction volumes down?  Last April the Government applied a stamp duty surcharge on properties bought that were a 2^nd property owned.  This resulted in a surge of transaction during March 2016, which was followed by a real lull in transactions.  Following the new stamp duty rules, there have been fewer completed transactions by landlords buying to privately let their properties.  The government, will chalk that up as a success, believing that it frees the market for owner occupiers, and stops landlord demand pushing-up house prices.

Has demand reduced?  No, demand for Oxford homes has apparently remained constant or at least it has remained balanced with available supply of properties for sale.  Rightmove reports that prices in 2016 were 6% up on the previous 12 months; Zoopla reports that they were just 3.9% higher.  Dataloft which monitors all sales report that in the 12 months to October 2016, prices were up 10%.  Given that Land Registry data is holistic it makes most sense to place most reliance on the Dataloft data.

If demand from landlords has reduced due to the increased costs of stamp duty, one has to assume that demand from owner occupiers has filled the void.

How have different property types performed? The table below shows the average increases in value for different property types for Oxford as a whole, and for grouped post code segments, based on Land registry data for the 12 months to October 2016.  It shows quite broad variation across Oxford and between property types.

Overall, flats/apartments have performed strongly particularly in OX3, OX4 and particularly in OX5.  Terraced properties in OX1 and OX2 have performed strongly, reflecting the higher density of this housing in key post-codes.  Detached home performed strongly across post codes except for OX3.  The street with the highest number of transactions was High Street, OX5.

How will Oxford property prices perform in 2017?  Whilst transaction volumes continue to be below pre-April 2016 levels, the market is stable as we enter 2017.  Nationally, Rightmove is reporting asking prices are up 0.4% in January, which is consistent with the Office of Budget Responsibility (OBR) estimate that prices will rise 3.4% across the country in 2017.  In 2016, Oxford property out-performed the national average of 6.4% and I expect it to continue to out-perform the national average.  When my clients ask me for my prediction, I say the best properties – locationally, and decoratively – will achieve 6%, with the average for Oxford being between 3.5% and 6%.