Harlow Housing Crisis? Only 1.2% of Harlow Homes Are For Sale

Harlow Housing Crisis? Only 1.2% of Harlow Homes Are For Sale

The Harlow Property Market continues to disregard the end of the world prophecies of a post Brexit fallout with a return to business as usual after the summer break.

The challenge every Harlow property buyer has faced over the last few years is a lack of choice – there simply hasn't been much to choose from when buying (be it for investment or owner occupation). Levels are still well down on what would be considered healthy levels from earlier in this decade, as there is still a substantial demand/supply imbalance. Until we start to see consistent and steady increases in properties coming on to the market in Harlow, the market is likely to see upward pressure on property values continue.

However, there may be hope for first time buyers, with homeowners looking to move upmarket and buy to let landlords looking for their next investment, the Harlow property supply crisis just might be starting to ease, as the number of new properties coming onto the market in Harlow has increased.

For example, last month CM17 saw 72 new properties coming on to the market, not bad when you consider at one point during the year it was as low as early 30’s. With the average Harlow property value hitting a record high, reaching almost £313,000 according to my research, this shortage of properties on the market over the last two years has contributed to this ‘fuller' average property figure, but there is a glimmer of hope that the Harlow's supply crisis may be starting to ease.

As I write this article, 1.23% of Harlow properties are up for sale. In terms of actual chimney pots, that equates to 350 properties on the market in Harlow (within 3 miles of the centre of Harlow) – which, when compared to only a year ago when that figure stood at 245, is a serious increase in the number of properties available to buy. Split down into the type of property, it makes even more fascinating reading...

 

·         Detached Properties in Harlow  - 105 on the market a year ago compared to 105 on the market now – no change

·         Semi Detached Properties in Harlow - 35 on the market a year ago compared to 88 on the market now - an increase of 151%

·         Terraced Properties in Harlow - 48 on the market a year ago compared to 92 on the market now - an increase of 92%

·         Flats / Apartments Properties in Harlow  - 40 on the market a year ago compared to 52 on the market now - an increase of 30%

With realistically priced properties flying off the shelves and this increase in new properties (especially semis and terraces), this is evidence of strength in the Harlow housing market that many didn't expect. Many believed that the Harlow property market wasn't going to be strong enough post Brexit - as what was a sellers' market before the Brexit vote and Buyers' market in the early months after it, may now be somewhere in between and the market might just be coming back into balance.

However, all this will mean property values won't continue to grow at the same extent they have been over the last 12 to 18 months, and in some months (especially on the run up to Christmas and early in the New Year), values might dip slightly. This won't be down to Brexit but a re-balancing of the Harlow Property Market – which is good news for everyone.

For more thoughts on the Harlow Property Market, please visit the Harlow Property Blog http://harlowproperty.blogspot.co.uk/

Private Renting set to grow by 1,600 Harlow households by 2025

Private Renting set to grow by 1,600 Harlow households by 2025

I was having a most interesting chat the other day with a Harlow landlord when we were looking at a property. As I am sure you are aware, I am always happy to cast my eye over any potential buy to let purchase in Harlow, be that you emailing me a Rightmove link, a brochure in the post or even treading the carpet and seeing it together. I don't charge for that, and you don't even need to be a client of mine. We got talking about the Harlow Property Market and this landlord brought up the subject of a report he had read from the Royal Institution of Chartered Surveyors (RICS) and PricewaterhouseCoopers (PwC) that stated almost 1.8m new rental homes are needed by 2025 to keep up with current demand from tenants. He wanted to know what this meant for Harlow.

Well my blog reading friends, some commentators said last Winter that buy to let was about to die, what with the new stamp duty changes and how mortgage tax relief will be calculated. Others even said 500,000 rental properties would flood the market nationally in the 12 months after the new Stamp Duty rules came into force on the 1st April 2016 as landlords left the rental market. Well, all I can say is, I wish all the landlords of those half a million properties would hurry up and put them on the market – because I have plenty of other potential landlords wanting to buy them!

Back to the matter in hand.. if the RICS and PwC are indeed correct, what does this mean for Harlow? The fact is, as a country, we are facing a precarious rental shortage and need to get Harlow building in a way that benefits a cross-section of Harlow society, not just the fortunate few. I call on the Prime Minister to drop the higher stamp duty tax on buy to let purchases to ease the pressure on the rental market.

Of the 34,700 households in Harlow, currently 9,100 tenants live in 3,800 private rented properties. If we apportion those 1.8m households equally around the Country, that means in nine years’ time, the number of rental properties in Harlow needs to rise by 1,600 (i.e. 42.8%) .. taking the total number of rented properties in the city to 5,400.

That means Harlow landlords need to buy around 200 properties a year between now and 2025 to meet that demand – because according to my calculations, an additional 3,900 people will want to live in all those 'additional' Harlow rental properties – so why is the government penalising landlords?

Thankfully the new housing minister Gavin Barwell detached Teresa May's new administration from the Cameron/Osborne laser-like focus of just home ownership to solve our housing issues, saying "we need to build more homes for every single type of person needing a home and not focus on one single tenure". The private rented sector became a stooge under David Cameron's watch and still, with increasingly unaffordable Harlow house prices, the majority of new Harlow households will be relying on the rental sector in the future to house them. I can only say Westminster must put in place the measures that will allow the rental sector to flourish. Any restrictions on the supply of rental property will push up rents (bad news for tenants), thus side-lining those members of Harlow society who are already struggling. Let's hope this new Government continues to see the contribution landlords give to the country as a whole.

Back in the Spring, there was a surge in Harlow landlords buying buy to let property in Harlow as they tried to beat George Osborne’s new stamp duty changes which kicked in on the 1^st April 2016. To give you an idea of the sort of numbers we are talking about, below are the property statistics for sales either side of the deadline in CM19.

 

Jan 2016 – 21 properties sold

Feb 2016 – 14 properties sold

March 2016 – 36 properties sold

April 2016 – 10 properties sold

May 2016 – 13 properties sold

 

Normally, the number of sales in the Spring months is very similar, irrespective of the month. However, as one can see, this year was a completely different picture as landlords moved their purchases forward to beat the stamp duty increase. You would think that even with a basic knowledge of supply and demand economics, rents would be affected in a downwards direction?

 

However, there appears to be no apparent effect on the levels of rent being asked in Harlow - and more importantly achieved - and this direction of rents is not likely to inverse any time soon, particularly as legislation planned for 2017 might reduce rental stock and push property values ever upward. The decline of buy to let mortgage interest tax relief will make some properties lossmaking, forcing landlords to pass on costs to tenants in the form of higher rents just to stay afloat. Even those who can still operate may be deterred from making further investments, reducing rental stock at a time of severe property shortage.

 … but it’s not all bad news for tenants. Whilst average rents in Harlow since 2005 have increased by 18.6%, inflation has been 38.5% over the same time frame, meaning Harlow tenants are 19.9% better off in real terms when it comes to their rent (which is a sizeable chunk of most people’s monthly household budgets)

 

Year	Average Rent in Harlow per month
2005	974
2006	1001
2007	1022
2008	1051
2009	1057
2010	1043
2011	1060
2012	1079
2013	1087
2014	1097
2015	1123
2016	1155

 

 

I found it particularly interesting looking at the rent rises over the last five years in Harlow, as it was five years ago we started to see the very early green shoots of growth of the Harlow economy.  As a whole, following the Credit crunch (2011), rents in Harlow have risen by an average of 1.9% a year – fascinating don’t you think?

 

The view I am trying to portray is that while renting is often portrayed as the unfavorable alternative to home ownership, many young Harlow professionals like renting as it gives them adaptability with their life. Rents will continue to rise which is good news for landlords as buy to let is an investment but, as can be seen from the statistics, tenants have also had a good deal with below inflation increases in rents in the past. It’s a win-win situation for everyone although on a very personal note, it’s imperative in the future that tenants are not thwarted from saving for a deposit by excessive rental hikes – there has to be a balance.

 

For more thoughts and opinions on the Harlow Property Market, if you are a Harlow Homeowner or Harlow landlord, please visit the Harlow Property Blog http://harlowproperty.blogspot.co.uk/

 

House Prices in Harlow rise by more than 22% in the last 18 months

Over the last month, the Harlow property market has seen some interesting movement in house prices, as property values in the Harlow Council area rose by 1.5% in the last month, to leave annual price growth at 16.2%. These compare well to the national figures where property prices across the UK saw a monthly uplift of 0.42%, meaning the annual property values across the Country are 8.3% higher, this is all despite the constraining factors of Stamp Duty changes in the spring and more recently our friend Brexit.

Looking at the figures for the last 18 months makes even more fascinating reading, whereby house prices are 22.3% higher, again thought provoking when compared to the national average figure of 13.6% higher.

However, it gets more remarkable when we look at how the different sectors of the Harlow market are performing. Over the last 18 months, in the Harlow Council area, the best performing type of property was the detached, which outperformed the area average by 1.64% whilst the worst performing type was the apartment, which under-performed the area average by 2.26%.

 Now the difference doesn’t sound that much, but remember two things, this is only over eighteen months and the gap of 3.9% (the difference between the detached at +1.64% and apartments at -2.26%) converts into a few thousand pounds disparity, when you consider the average price paid for a detached property in Harlow itself over the last 12 months was £478,700 and the average price paid for a Harlow apartment was £168,900 over the same time frame.

 I know all the Harlow landlords and homeowners will want to know how each of the property types have performed, so this is what has happened to property prices over the last 18 months in the area...

·         Overall Average          +22.3%

·         Detached                     +24.3%

·         Semi Detached            +24.1%

·         Terraced                     +22.7%

·         Apartments                 +19.5%

 

 

So what does all this mean to Harlow homeowners and Harlow landlords and what does the future hold? 

 

When I looked at the month-by-month figures for the area, you can quite clearly see there is a slight tempering of the Harlow property market over these last few months. I have mentioned in previous articles that the number of properties on the market in Harlow has increased this summer, something that hasn’t happened since 2008. Greater choice for buyers means, using simple supply and demand economics, that top prices won’t be achieved on every Harlow property. You see, some of that growth in Harlow property values throughout early 2016 may have come about because of a surge in house purchase activity, an indirect result of the increase in stamp duty on second homes from April, thus providing a temporary boost to prices.

 

However, it may be possible the recent pattern of robust employment growth, growing real earnings and low borrowing costs will tilt the demand/supply seesaw in favour of sellers and exert upward pressure on prices once again in the quarters ahead.

 

 

...And Harlow property values, assuming that everything goes well with Brexit, I believe in twelve months’ time we should see values in the order of 6% to 10% higher.