Who is to Blame for Crisis in the Falkirk Property Market?

‘A Scotsman’s Home is his Castle’ is (almost!) the phrase that was coined in Victorian times as the UK has a reputation for being a country of home owners  ... but the truth could be further from the point, because in a league of the top 46 economic nations of the world, where owning your property is permissible, the UK is only ranked no.37.

As I have mentioned, at the end of the First World War, 77% of people rented their home (the vast majority renting from a private landlord as Council Housing was still very much in its infancy). Homeownership rose very slowly in the 1920’s and started to grow as the economy grew after the Great Depression. However, after the Luftwaffe had flattened huge swathes of housing in the early 40’s, the priority was to get people into clean and decent accommodation ... so Local Authority’s (Councils) took up the baton and they built large council estates in the 1950’s and 1960’s.

As the UK economy got back on its feet in the middle part of the 20th Century and wages rose, people decided they wanted to own their own home instead of renting. Throughout the post war decades, it became easier to secure a mortgage. Interestingly, by 1977, 61.6% of 30 to 34 year olds were owner occupiers with a mortgage compared to 8.7% of 30 to 34 year olds being in private rented accommodation (the remaining either being in council housing or living with friends or family). Ten years later, in 1987, we saw some significant growth in homeownership, as 68.2% of 30 to 34 year olds had a mortgage and only 4.6% of people privately rented. A decade later and there wasn’t much change in home ownership as, in 1997, the homeownership figure was 68.3% but private renting had jumped to 12.1% in the same 30 to 34 year old age group.

Move on another ten years to the 2007 figures, and this showed a slight drop in homeownership to 65.8% but renting had continued to increase to 18.7% (in the 30 to 34 year old age group). The latest set of figures shows that only 47.2% of 30 to 34 year olds had a mortgage and an eye watering 33.4% of 30 to 34 year olds privately rent.

When we look at the Falkirk figures of homeownership, the latest census in 2011 showed home ownership in Falkirk was 64.7% and private rented was 7.3%. Private renting will increase not because property has become more expensive but because 30 somethings haven’t got a council house to move into (because they were all sold off) – so they have to rent privately. The selling of council housing in the 1980’s (a subject I have talked about in a previous article in the Falkirk Property Blog) artificially grew homeownership in the 1980’s, but as these people have got older, the younger generation didn’t have the same opportunity to buy their council house in the 1990’s, 2000’s or 2010’s. That is why, unless the council start building council houses by the acre, and hundreds of acres at that, private renting will continue to grow in Falkirk.

So if you want blame anyone ... blame the Grocer’s daughter from Grantham – Mrs T …. but before you do – do remember in the 1970s, the UK was called the "sick man of Europe" by critics of the UK government, because of industrial strife and poor economic performance compared to other European countries culminating with the Winter of Discontent of 1978/9 and if it hadn’t been for her we wouldn’t be where we are today.

If you would like any advice on the Falkirk property market, feel free to pop into our office at 6 Vicar Street, Falkirk for a chat, give us a call 0324 469840 or email me on robert@thekeyplace.co.uk.

www.thekeyplace.co.uk

#falkirk #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #privaterentedsector #prs #firsttimebuyers #lettingagents #housebuilding #housingcompletions

My Concerns About The Falkirk Property Market

I am genuinely concerned about the Falkirk property market, but in a way that might surprise you.

Zoopla announced that average ‘asking prices’ rose in the last six months by 1.5% in Falkirk, leaving them 0.9% higher than a year ago. 

Looking at all the data on the Falkirk property market, and putting aside the need for more houses to be built in the next decade to balance out the increase in population not matched by a similar increase in housing being built, my research shows there is a widening gap between what property buyers want and what is available to buy.

In a nutshell, many more buyers are looking for the smaller one and two bed houses (the typical semi detached and smaller terraced houses), whilst there is an over supply of flats and larger four and five bed detached houses.

Demand for smaller houses comes from both first time buyers and the growing number of buy to let landlords, where it is more cost effective and efficient to buy smaller properties to let out compared to flats and larger properties which tend to offer poorer returns in the Falkirk area. Also, landlords with larger loans (on larger more expensive properties) will also be hit harder with the changes in the way tax is paid on buy to let investments that started being implemented from April 2017.

I recently carried out some research on how various types of properties have performed in Falkirk since the year 1999 and what struck me was just how different the various types of properties have performed over the last 20 years and what this means for our property market and for people trying to trade up from their starter home to their next home. In a nutshell, this mismatch of supply and demand isn’t a new phenomenon, it’s been happening under our noses for years! 

In the last 20 years, the average semi-detached house in Falkirk has increased in value from £41,461 to £147,428, the average terraced house’s value has gone from £36,309 to £1109,607, the average detached house has risen in value from £92,957 to £255,715 and the average flat value has increased from £33,202 to £90,046. Nothing seems amiss until you look at the percentage growth.  Average flat and detached house prices have grown by 171.2% and 175.1% respectively over this period.  However, these have been outgrown significantly by semi-detached houses whose value has increased by 255.6% and terraced houses whose value has grown 201.9%.  This means that the gap between semi-detached/terraced houses and flats/detached houses in percentage terms has narrowed enormously (this isn’t just a Falkirk trend, it has happened all across the Country).

I am concerned because more semi-detached/terraces houses need to be built, not only in Falkirk, but in Forth Valley and Scotland as a whole. In particular, there is specific need for more affordable starter homes for the growing demand from both tenants (and the landlords that will buy them) and first time buyers.

The government needs to face up to the fact that unless they can get the planners (to release more building land), the banks (to finance the building of house), the builders (to build houses) and themselves together to ensure long term plans can be made and implemented, this issue will continue to worsen.

It is estimated that the country needs 30,000 houses a year to be built to start to tackle the chronic housing shortage that we have. Last year, only 17,739 properties were built, the year before 16,270 and 14,890 in the year before that.

This means only one thing for Falkirk’s landlords. Unless the Scottish Government start to rip up huge swathes of the Scottish countryside and build on acres and acres of green belt, demand will always exceed supply when it comes to property for the foreseeable future regardless of any short term fluctuations caused by the uncertainty of Brexit.

Therefore investment in the local Falkirk property market as a buy to let investment could be the best move to make as stock market investments are possibly on the wane. Everyone is different and, trust me, there are many pitfalls in buy to let. You must take lots of advice and seek out the best opinion.

If you would like to explore how I can help you with your property investments, or should you require any advice about investing in the Falkirk property market, wish to enquire about our Investment Analysis Reports, Property Sourcing, Residential Lettings or Property Management services, please do not hesitate to contact me on 01324 469840 or at robert@thekeyplace.co.uk.

Alternatively please feel free to pop in and see me at our offices at 6 Vicar Street, Falkirk for a chat, the coffee is always on.

www.thekeyplace.co.uk

#falkirk #property #buytolet #realestate #ownermanagedbusiness #retirement #retirementplanning #privaterentedsector #prs #firsttimebuyers #lettingagents #housebuilding #housingcompletions