The Ashford Property Market – How Does it Compare Historically to the Wider SE and Nationally?

 

Living in our own homes or owning buy to let property in Ashford and the surrounding areas, it’s often easy to ignore the regional and national pictures when it comes to property. For homeowners or landlords in Ashford, consideration must be given to these wider markets, as directly and indirectly, they have a bearing on us in Ashford.

Locally, the value of property in Ashford and the number of people moving both remain largely steady overall, although looking across at the different regions, there are certainly geographical variations. According to property professionals in the posh upmarket central London areas of Mayfair and Kensington, the number of people looking to buy and registering interest with agents is continuing to climb after 18 months in the doldrums, whilst in other parts of the UK, there is restraint amongst both buyers and sellers in some locations.

The things that affect the national property market are the big economic numbers

Nationally, over the last few months, thankfully, the economic forecast and predictions have improved, notwithstanding Brexit’s uncertainties. Inflation has mercifully throttled back its high growth seen in 2016 to the current level of 2.1% (from 2.7% average last year), coupled with marginally stronger wage growth at 2.5%. Unemployment is at a 42-year low at 4.2% and UK consumer spending power rose to an all-time high last month to £331.04bn – all positives for consumer sentiment.

Looking further afield, a resilient property market depends on the UK’s economic health with the outside world

If Sterling further weakens, that makes imports more expensive, meaning inflation increases and, as I talked about a few weeks ago in my blog… interest rates could be still further raised keep inflation under control, which in turn could seriously affect the property market. On the assumption the Brexit negotiations are ultimately benign or favourable to the UK however, economic growth should continue to be upward and positive, meaning consumer confidence would be increased … which is a vital element to a good housing market.

Looking closer to home now, Ashford landlords and Ashford homeowners might be interested in how the regional and Ashford markets have performed over the last 20 years (compared to the National picture). Let’s look at the regional picture first:

South East has outperformed the Ashford housing market by 0.86%…

…nationally, though, Ashford has actually outperformed the country by 16.36%

That means a typical Ashford property owner has profited by an additional £53,144 over the last 20 years compared to the average homeowners and landlords across the country.

I found it interesting to see the ups and downs of the Ashford, South East and National markets in this graph. How the lines of graphs roughly go in the same direction, with Ashford following the regional trend more closely than the national trend (as one would expect), how the 2007/08 property crash timings and effects were slightly different between the three lines and finally how the property markets performed in the post-crash years of 2011 to 2014 … fascinating!

Ashford property market compared to south east and nationally

So, what does this mean for Ashford homeowners and landlords?

Well, house prices going up or down are only an issue when you come to sell or buy. In the last 12 months, only 1,076,288 (let’s call it’s a straight million between friends!) properties changed hands out of 27.2 million households in the UK in 2017, meaning only 3.7% would have been affected if property values had dropped in the last year.

Property values in Ashford are 298.61% higher than the summer of 1998

Yet this has been a long-term gain. The number one lesson in property is that it is a long-term game. The biggest issue in property isn’t house values or prices … it’s the number of homes built, because the number of households nationally has only increased by 6% since 2007, whilst the population has grown by 7.6%. That doesn’t sound a big deal, until you express it another way…

If the UK population had only grown by the same percentage as the growth in UK households over the last decade, there would be 1,000,000 less people living in the UK today!

The final thought for this article is this, apart from central London, over the last 20 years it hasn’t mattered what part of the UK you were in with regards to the property market. For both landlords and homeowners, property is a long-term game, so look long term and you will win because until they start to build more homes, from the current levels of 180,000 new homes built per year to at least 250,000 homes per year, demand will continue to outstrip supply for both owning and renting!

What Will Happen to Ashford Property Values as Interest Rates Rise?

 

The current average value of a property in Ashford is currently £324,900 with the BOE base rate now at 0.75%. In many of my articles, I talk about what is happening to property values over the short term (i.e. the last 12 months or the last 5 years), but to answer this question we need to go back over 40 years, to 1975.

The average value of an Ashford property in 1975 was £15,729

However, since 1975 inflation in the UK has devalued sterling by 807.5%.

Back in 1975, the average salary was £2,291, the average car was £1,840. A loaf of bread cost 16p, milk 28p a pint and a 2lb bag of sugar was just 30p. Inflation has increased prices, so comparing like for like, we need to change these prices into today’s money. In real spending power terms, an average value of an Ashford house in 1975, expressed in terms of today’s prices is £142,759.

That means in real terms, property costs a lot more today, than in the mid 1970’s, but has it always been that way?

Looking at the important dates of the UK property market, you can see from this table, the last two property boom years of 1989 and 2007, show that there was a significant uplift in the cost/value of property (when calculated in today’s prices).

What Will Happen to Ashford Property Values as Interest Rates Rise?

Before we move on, however, hold onto the thought that quite clearly, from the table above – in real terms, Ashford properties are cheaper today than they were in 2007!

So, it made me wonder if there was a link between house prices, inflation and other external economic factors, such as interest rates? Interest rates have a strong influence on inflation and property values, principally because changes in the interest rate affect the cost of mortgage payments for homeowners and they affect the flow of foreign currency in (or out) of an economy, thus altering the exchange rate and prices we can sell our goods and services abroad and the prices we pay on imports.

So how exactly do interest rates affect property values?

When interest rates rise, it has a substantial effect on increasing the monthly cost of mortgages. Higher mortgage payments will discourage prospective homebuyers or people looking to move up market (meaning their mortgage payments go up) – thus making it comparatively cheaper to rent.

Furthermore, the high cost of mortgage payments sometimes also pushes some existing home owners to sell, meaning there is an increase in house sellers and a decline in house purchasers, and as the law of economics state, when supply is increased and demand falls, (house) prices fall. Another fallout of a rise in mortgage payments is a rise in repossessions. Interestingly, repossessions in the UK rose from 15,000 per annum in the late 1980’s to over 75,000 per annum in the early 1990’s, meaning even more properties came onto the market, exacerbating the issue of over supply – and pushing property values even lower.

What Will Happen to Ashford Property Values as Interest Rates Rise?

High interest rates caused property values to fall in mid 1970’s, early 1980’s and most recently, the early 1990’s (remember 15% mortgage rates!) Conversely though, the drop in property values in 2008/2009 was not due to interest rates, but due to the credit crunch and global recession.

So, what will happen as interest rates rise?

It is vital to remember that interest rates are not the only factor affecting property values. It is also possible that when interest rates increase (which they will from the current 0.75%), property values can also continue to rise (it happened throughout the mid to late 1980’s and again between the boom years of 2002 and 2007). When confidence in the economy is good, and we as a Country experience a period of rising real incomes (i.e. after inflation), then the British in the past have continued to buy bricks and mortar, notwithstanding the rise in interest rates.

Another important factor on property values is the supply of housing. A big reason in the current level of Ashford house prices is due to shortage of supply, which has kept property values higher than I would have expected. An additional factor is whether homeowners have a variable or fixed rate mortgage. 90.6% of new mortgages taken in the last Quarter were at a fixed rate, and 66.2% of all mortgaged homeowners are on fixed-rate mortgages, therefore, they will not notice the effects of higher interest rate payments until they re-mortgage in a few year’s time, meaning there is frequently a time-lag between higher interest rates and any effect on property values.

Another key factor on mortgages is the ability to get one in the first place. Back in 2014, mortgage providers were told to be stricter on their lending criteria when arranging mortgages following the footloose days of 125% loan to value mortgages with Northern Rock. These new rules are a lot more rigorous on borrowers’ ability to repay the payments (although the policy appears questionable when, for starter homes, it is nearly always cheaper to buy than rent!).

I think the final point is this … affordability is the key. Look at the graph (the red bars) and you will see in REAL HOUSE PRICE terms – it’s cheaper to buy a home today than it was in 2007, yet why aren’t we seeing people buying property at the levels we were seeing in the 2000’s before the credit crunch?  I will be looking at the reasons why in future articles.

In conclusion, interest rates ARE important – but nowhere near as important in the Ashford (and British) property market than they were 15 or 20 years ago.

So, before I go, one final thought – how do we measure the success of the Ashford property market? Well I believe a good bellwether is the number of property transactions, as that could show a more truthful picture of the health of the market than property values. Maybe I will talk about that in an up and coming article?

Will the Ashford Property Market Crash?

 

And if it does … who might be the winners and losers?

Those Ashford people wanting property values to fall would be 30 or 40 something’s, sitting on a sizeable amount of equity and hoping to trade up (because the fall in value of your current property will be much less than the same percentage drop of a more expensive propertyand trading up is all about that price difference). If you have children planning to buy their first home or you are a 20 something wanting to buy your first home – you’d like them to fall. Also, landlords looking to add to their portfolio will want to bag a bargain (or two) and they would love a fall in values!

Yet, if you have recently bought an Ashford property with a hefty mortgage, you’ll probably want Ashford property values to rise. If you are retired and are preparing to downsize, you will also want Ashford property values to rise (because you will then have more cash left over after the move). Also, if you are a landlord looking to sell your portfolio or a Ashford home owner who has remortgaged to raise money for other projects (meaning you may have very little equity), you will want Ashford property values to rise to enable you to put a bigger deposit down on the next purchase.

So, before I discuss my thoughts on the future, it’s important to look at the past…

The last property crash, caused by the Global Financial Crisis, was between Q3 2007 and Q3 2009 … when property values in Ashford dropped 12.98%

…taking an average property from £214,183 in September 2007 to £186,388 by September 2009 … and since then – property values have over the medium-term risen (as can be seen on the graph).

Will the ashford property market crash

So … what is happening now?

The simple fact is people in the UK are moving less (and hence buying and selling less). Estate agents up and down the land are blaming “Brexit” for this but the reality is that the problems in the British housing market are a lot greater than measly old Brexit!

There is a direct link between how people feel about the property market (sentiment) and the actual performance of the property market. However, the question of whether people’s sentiment moves as a result of changes in the property market, or whether changes in the property market drive sentiment is a question that baffles most economists – you see if someone feels assured about their financial situation (job, money etc.) and the future of property, they are more likely to feel assured to spend their hard-earned earnings on property and buy and if you think about it … vice versa. So, I believe Brexit isn’t the issue  – it’s just the “go to” excuse people are using. Humans don’t like uncertainty, and Brexit itself is causing uncertainty – it is, after all, a great unknown.

So, is it the flux of global politics?

Politics are causing hesitation in the stratospheric £5m+ markets of Mayfair and other high value Monopoly board pieces – but certainly not in provincial Ashford (I don’t think Ashford is too high up on the investment list of Saudi Princes and Russian Oligarchs) … no the issues are much closer to home.

So, coming back to reality, one the biggest driving factors in the current state of play in housing market has been the part Buy To let landlords have played in the last 15 years. Making money as a buy to let landlord in these golden years was as easy as falling off a log – but not anymore! Landlords had been getting off quite lightly when it came to their tax position, but with Osborne changing the taxation rules on buy to let … things have become a little more difficult for landlords.

Landlords have been hit with a supplementary rate of stamp duty, meaning they pay 3% more stamp duty than first time buyers. High rate taxpayers in the past have been able to offset the interest payments from their buy to let mortgages against their self-assessment tax bills – at their marginal rate. Between now and 2020 … this is being reduced in small steps, so they will only be able to claim back relief at the basic rate of tax. The bottom line is that it will be much tougher for investors to make money on buy to let. Tied in with this, the mortgage rules were changed a few years ago, meaning it’s also become slightly tougher to obtain buy to let mortgages (although being honest – they needed to).

…and what of Ashford first time buyers?

Well, if you recall a few weeks ago in my blog on the Ashford Property Market, I mentioned that last year was the best year for over decade for first time buyers. For the last 30 years, buy to let investors have consistently had more purchasing power than first time buyers, as they were older and more established, together with their tax breaks. Yet, now as many amateur landlords are having second thoughts in staying in buy to let, this has given first time buyers their chance to get on to the property ladder.

What will happen to Ashford property values?

The simple fact is we don’t currently have the conditions that caused the crash in 2007 (sub-prime lending in the US, causing banks not to lend to each other, stalling the global economy as a whole). Assuming everyone is sensible on the Brexit negotiations, the biggest issue is interest rates.  As long as interest rates remain comparatively low (and don’t get me wrong – I think we could stand Bank of England base interest rates rising to 1.5% to 2.5% and still be OK, then the thought of a massive property market crash looks improbable.

Yet correspondingly, I cannot see Ashford property values rising quickly either.

The double-digit growth years in property values between 1999 and 2004 are long gone. A lot of that growth was caused by an explosion of buy to let landlords buying property to accommodate the influx of EU migrants in those years.  Mark Carney at the Bank of England can’t make interest rates any lower, so it’s difficult to envisage how credit conditions can get any easier than they are!

Balance of probabilities … Ashford property values will hover either side of inflation over the next five years, but if we did have another crash, what exactly would that mean to Ashford homeowners – if they dropped by the same percentage amount, as they did in the last crash?

If Ashford property prices dropped today by the same percentage as they did in the Global  Crisis back in 2007/9 … we would only be return to the property values being achieved in January 2016 … and nobody was complaining about those!

Therefore, looking at the number of people who have bought homes in the area since January 2016, that would affect approximately only 17% of local home owners and landlords … and only a small percentage would actually lose – because you only lose money if they decide to sell (and many of those sellers would fall into the category mentioned above that should relish a price fall). So, really not many people would lose out.

Interesting don’t you think?

Ashford Property Market – Asking Prices Down 1.5% Over Last 12 Months BUT – Is That the Real Picture?

 

The average asking price of Ashford property decreased by 1.5% or £4,742 compared to a year ago, taking the current average asking price to £306,797, compared with £311,539 this time last year. But is it really that simple? Sometimes you need to take a look at the bigger picture.

The overall drop in asking prices could be put down to sellers being more realistic with their pricing and looking to benefit from the impending mortgage interest rate rises later in 2018. Great news for first, second and third time buyers in Ashford – starting their property hunting in the usually active spring market with the opportunity of paying less for the property of their dreams. Even better news is that whilst first time buyers also have to pay less for their property, they also have the bonus of the Chancellor stopping Stamp Duty being paid by first time buyers!

So, looking at the different sectors of the Ashford property market, splitting it down into property types, one can see what is happening to each sector of the market with regard to their average asking prices now compared to a year ago. Firstly, looking at the Pound note amounts …

Ashford asking prices are down in last 12 months

Interestingly, when one looks at the percentages, the individual figures seem to tell a different story to the overall figure. There is quite clearly upward pressure in the asking price in the apartments, terraced and semi-detached property types, with both first-time-buyer and second-time-buyer properties at new Ashford asking price highs. It seems possible that less expensive detached property types on the market right now are dragging the average down.

Ashford asking prices are down in last 12 months

Now, I must stress any growth in the asking prices of Ashford property doesn’t necessarily mean the value of Ashford property is going up by the same amount … nothing could be further from the truth. Only time will tell if the current levels of Ashford asking prices is a catch-up abnormality after a couple of months of restrained asking price rises in the first few months of 2018, or an initial sign that we are in for a better 2018 Ashford Property market than was expected at the start of the year?

I believe these asking prices must be viewed with a pinch of salt, as it will be fascinating to see whether Ashford properties actually sell at these higher asking prices. Just because house sellers (be they owner-occupiers or landlords liquidating their assets) are asking for more money it doesn’t mean buyers will be enthusiastic to part with their hard earned cash. Like my parents would say to me years ago, “You can ask … but you might not get”.

Also, Ashford homeowners and landlords wanting to sell their property need to be aware of progressively strained buyer mortgage affordability and the further sellers increase asking prices, the more buyers will hit their maximum on the amount they are able borrow on a mortgage.

However, those Ashford buyers who need a mortgage, whether owner-occupier or landlord, will paradoxically benefit from lower mortgage payments before interest rates rise … maybe another reason for the uplift in the number first time buyers and landlords buying? Only time will tell!

Ashford Property Market – Which Houses are Actually Selling?

 

Beast from the East, Russia, Syria, Facebook, Brexit, Trump, House prices up, House prices down … the Press is full of column inches on the Brits’ favourite subjects of politics, scandal, weather and not forgetting the property market. As an agent belonging a national group of letting agents, and talking to property professionals from around the UK, the one thing that is immediately apparent is the UK does not have one property market. It is a hodgepodge patchwork of many small property markets all performing in different ways.

And that made me think … is there just one Ashford Property Market or many?

I like to keep an eye on the property market in Ashford on a daily basis because it enables me to give the best advice and opinion on what (or not) to buy in Ashford for buy-to-let landlords. So, I thought, how could I split the Ashford housing market into segments, so I could clearly see which parts of the market were performing the best and the worst.
I decided to divide the Ashford property market into four equal-sized price bands. Each price band would have around 25% of the property in Ashford, from the lowest in value (the Lowest Quartile or 25%) all the way through to the highest 25% in terms of value, the Upper Quartile. Looking at the market, I have calculated that the price bands in Ashford are as follows:

• Lowest Quartile (lowest 25% in terms of value) … Up to £200,000
• Lower-Middle Quartile … £200-260,000
• Middle-Upper Quartile … £260 -325,000
• Upper Quartile (highest 25% in terms of value) … £325,000 +

So, having split the Ashford Property Marketinto four approximately equal segments, the results in terms what price band has sold the most (subject to contract) is quite enlightening –

which quartile of ashford properties are selling?

The best performing price range in Ashford is the lower quartile up to £200,000. As I would expect, the upper quartile (the top 25%) is finding things tougher. Interestingly for Ashford landlords, the middle market is also selling well, meaning there are plenty of Ashford landlords buying properties to add to their buy to let portfolios. Even though the number of first time buyers did increase in 2017, it was from a low base and the vast majority of 20 something’s still cannot currently buy, yet need a roof over their head (hence the need to rent somewhere).

which quartile of ashford properties are selling?

It is a fact that the British (and Ashford’s) housing markets have ridden the storms of the Oil Crisis in the 1970’s, the 1980’s depression, Black Monday in the 1990’s, and latterly the Credit Crunch together with various house price crashes in 1973, 1987 and 2008. No matter what happens to us – Brexit or anything else – unless the Government starts to build hundreds of thousands of extra houses each year, demand will always outstrip supply … so maybe now is a time for Ashford landlord investors to bag a bargain?

Want to know where those Ashford buy to let bargains are?

Follow my Ashford Property Blog or drop me an email because irrespective of which agent – myself or any of the other excellent agents in Ashford, many local landlords ask me my thoughts, opinion and advice on what (and what not) to buy locally … and I wouldn’t want you to miss out… would you?

Ashford Property Market Value Greater Than Next PLC

 

The value of all the homes in Ashford has risen by more than 261% in the past two decades, to £7.471bn, meaning its current worth is greater than the listed company Next PLCs market capitalisation of £7.223bn.

Those Ashford homeowners and Buy-to-Let landlords who bought their homes twenty or more years ago have come out on top, adding thousands upon thousands of pounds to the value of their Ashford property as the younger generations in Ashford continue to be priced out of the market. This is even more remarkable because, in those twenty years, we had the years of 2008 and 2009 following the global financial crisis, which saw a short term drop in Ashford house prices of between 15% and 20% (depending on the type of property). And, although there have been a number of consecutive years of growth in property values recently in Ashford, it hasn’t been anywhere near the levels seen in the early 2000’s.

Twenty years ago, the total value of Ashford property was worth £2.065bn. Over those twenty years, total property values have increased by £5.406bn, meaning today, the total value of all the properties in Ashford is worth £7.471bn. Even more remarkable, when you consider the FTSE100 has only risen by 40.84% in the same period. Also, when I compared it with inflation, i.e. the UK Retail Price Index, inflation had risen by just 72.2% during the same twenty years.

Interestingly, whilst Ashford property has seen steady growth in values Next PLC, who’s current market capitalisation I compared the Ashford property market’s value to, has fallen some 40% in value from an October 2015 peak!

So, what might this mean for Ashford? Well as we enter the uncharted waters of 2018 and beyond, even though property values are declining in certain parts of the over-cooked central London property market, the outlook in Ashford remains relatively good as, over the last five years, the local property market has been a lot more sensible than central London’s.

Ashford house values should remain resilient for several reasons. Firstly, demand for rental property remains strong with persistent immigration and population growth. Secondly, with 0.25 per cent interest rates, borrowing has never been so cheap and finally, the simple lack of new house building in Ashford – not nearly keeping up with current demand, let alone eating into years and years of under-investment mean only one thing – yes it might be a bumpy ride over the next 12 to 24 months but, in the medium term, property ownership and property investment in Ashford has and always will, ride out the storm.

In the coming weeks, I will look in greater detail at my thoughts for the 2018 Ashford Property Market. As always, all my articles can be found at the Ashford Property News Blog.

An Extension to Your Ashford Home Could Add £65,750 to it’s Value

 

As our families grow bigger the need for more space, be it bedrooms or reception rooms, has grown with it. Also, with each generation living longer, and nursing home bills continuing to skyrocket (the average nursing home bill in our area now £706.00 per week), it is not uncommon for families to combine two households together into one larger one.

If considering such an arrangement, should you ‘trade up’ to a larger home, or instead extend your existing Ashford property to make it big enough for your enlarged family?

In some circumstances the choice will be made for you: If you live in an apartment there is unlikely to be any scope to make it larger. But if you have a house with a garden or perhaps an attic with sufficient headroom, extending your home becomes a viable prospect.

Even if it might ultimately make sense to extend or move, the decision might yet hang on a number of different dynamics – your future plans, money (both saved and access to finance), emotional attachment to your current home, the particular area of Ashford you live in and finally, the type or style of house you prefer.

Interestingly, the average British home of 968 sq ft, as you can see from the table, is in the middle of developed nations when it comes to the size of a property.

Of the 1.11m homes sold in 2016 in England and Wales, the average floor area of the houses was 1,119 sq.ft – that’s about an eighth the size of an Olympic swimming pool.

Apartments averaged 530 sq.ft that’s just over ten times bigger than an average garden shed.

Looking at apartments and houses together, the average size of properties sold in England and Wales 968 sq.ft – are slightly smaller than the European average, and much smaller than households in the US.

 

Should you extend your ashford home or move

 

So back to the question in hand – extending does mean you will likely experience some major inconveniences whilst the work is being carried out. The location of your Ashford property, the quality of construction, what type of room(s) you want to add, your plot, neighbouring building lines, planning regulations and the overall demand for your type of Ashford home, will make a vast difference to the financial repercussions of extending versus moving.

A medium-sized 270 sq.ft single storey extension (around 17ft x 16ft) will add on average £65,750 to the value of an Ashford property.

It’s important to note the end result of the extension needs to provide a sensible and realistic home. A two bed semi-detached house extended to a four bedrooms with no lawn or driveway, or a home with outsized reception rooms downstairs and miniscule bedrooms upstairs, could well be problematic if you come to sell in the future. Irrespective of whether your strategy is to live in your extended home for a long time, you should certainly avoid outlaying a lot of money on any costly building work that might make it tougher to sell in the future.

In terms of costs to build an extension, you can expect to pay on average between £140 to £200 per sq.ft, depending whether the extension is single or double storey and other factors including the quality of finishes and the type of extension (note – I have seen it cost a great deal more than these figures – so please do speak with a builder) … but as a guide, at the upper end of the above price range, that same 270 sq.ft extension on your Ashford home might cost £54000.

However, moving also incurs substantial costs – Estate Agent’s Fees, Removal Van, Survey Fees, Legal fees and Stamp Duty on the property you are buying, plus, of course, any new home will doubtless have areas requiring further expenditure to suit your precise needs and tastes!

Either option will have it’s pros and cons and comparing the costs of extending your Ashford home to that of moving is not a stress-free undertaking.

How realistic each option is may ultimately come down to one thing… your mortgage provider. You will need considerable equity in your Ashford home before you can consider of increasing your mortgage: most lenders will require you to have at least 10% to 20% equity left in your property after the extension or move has been done.

The best advice I can give is don’t assume anything! Get advice and opinion from builders, architects, mortgage brokers/providers and of course… an agent. Consider all your options and make a final educated decision with all the facts in front of you.

Ashford Property Market’s 2.1% ‘New Build Premium’

 

According to the National House Building Council (NHBC), more than 26,142 new homes were registered to be built in the South East last year, on par with 2016 levels of 26,147 dwellings. Great news when you consider it is one of the highest number of new builds in the region since the pre-recession levels of the Credit Crunch and the uncertainty of Brexit and the General Election.

So, when a landlord recently asked me why the brand-new property she was considering buying was a lot more expensive compared to a second-hand/existing property of similar type, accommodation, location and structure I thought this would make a fascinating topic to do some homework on … homework I want to share with the homeowners and landlords of Ashford.

You might believe that the difference between purchasing a new build home against purchasing a second-hand/existing home is just individual preference. Some buyers/tenants like the ostentatious trendy modern feel of a new home, whilst others like a home that has stood the test of time.

So, what is the right answer? Well, I am going to be looking at some statistics that shows there is a real difference in the Ashford Borough Council area’s property market when in to comes to new vs existing homes and the price paid. Looking at the average price paid for existing (second-hand) versus a brand new home since 1996, one can see from the graph below it makes interesting reading:

average prices of ashford new buils versus existing dwellings

On this second graph, one can see the percentage difference in average price paid between new and existing…

relative prices new versus existing ashford dwellings

Yet possibly nothing is ever that easy, as there are issues with these statistics.

The overall average for the whole Ashford Borough Council area for the ‘new build premium’ (new build premium being the additional price a buyer pays for buying a new property compared to a second-hand one) over the last 21 years has been 2.1%. These statistics actually show that it is problematic to compare like with like because it is impossible to completely separate all the different factors of type, accommodation, location and structure etc.

One would have to have a mirror image second-hand Ashford home and a duplicate new build right next door to each other, then calculate out which Ashford house buyers or Ashford buy to let landlords would pay more for? Perhaps if everything was the same (all things being equal), there might not be any difference in what buyers would be prepared to pay… but then again, it’s like new cars versus cars that have a few hundred miles on the clock … there is always a difference on the forecourt … because things are never wholly equal.

What I do know is that my statistics of the Ashford property market show that new build Ashford apartments are worth more to people than their second-hand equivalents, whilst the difference is negligible between new build Ashford detached houses and second-hand Ashford detached houses.

However, I believe the really important lesson in all these statistics is the fact that ‘new build premium’ for new-build versus buying a second-hand property, was higher in the boom years of the late 1990’s to early 2000’s. So, if you want to buy new (which has both advantages and disadvantages) and the only consideration is money … as you can see, now might be a better time to buy new.

With Ashford Property Values Up 3.6% Year on Year – This is My 2018 Forecast

 

Looking at the newspapers between Christmas and New Year, it seemed that this year’s sport in the press was predicting the future of the British housing market. So, to play along, these are my thoughts on the Ashford property market:

With the average 5-year fixed rate mortgage at just 1.98% (from 3.47% in 2014) and 2-year fixed rate at 1.47% (from 2.37% in 2014), mortgage interest rates offered by lenders remain at an all-time low (even with the slight increase in the Bank of England’s base rate a few months ago). Added to this, has been low unemployment of 4% in Ashford, which has contributed to maintaining demand for property in Ashford in 2017 (interestingly – an impressive 1,689 Ashford properties were sold in the last 12 months) and finally, the number of properties for sale has remained limited, thus bolstering Ashford house prices, meaning …

Ashford Property Values are 3.6% higher than a year ago

However, moving into 2018, there will doubtless be greater pressure on incomes if continued inflation starts to eat into wage growth, which will wield a snowballing strain on consumer confidence. Interestingly though, information from the website Rightmove suggests over a third of the property it had listed in October and November had their asking prices reduced – the highest percentage of asking price reductions for the same time frame in over five years. Still, much of that could have been sellers being overly optimistic with their initial pricing.

In terms of what will happen to Ashford property values in the next 12 months, a lot will be depend on progress in the Brexit negotiations and their impact on the whole of the UK economy. A lot of people will talk about the Central London property market in the coming year, and if the financial sectors are negatively affected with a poor Brexit deal, then the London market is likely to see much more of an impact.

Nevertheless, the bottom line is whilst Ashford homeowners and Ashford landlords should be aware of what happens in the rollercoaster housing market of Central London, they should not necessarily panic if prices do drop suddenly there in 2018.

Over the last 8 years, the Central London property market has been in a world of its own (Central London house prices have leapt 89.6%, whilst Ashford has seen a more modest 48.3% price growth). So whilst we may see a major correction in the Capital, more locally perhaps expect something a little more subdued.

Hindsight is always wiser than foresight and predicting economic trends is all well and good if you know what is around the corner. At least we have the Brexit divorce settlement now somewhat sorted and, as the UK economy and the UK housing market are closely intertwined, it will all depend on how we deal as a Country with the final Brexit deal. However, we came through the global financial crisis reasonably intact … I am sure we can get through this together as well?

Oh, and house prices in Ashford over the next 12 months? I believe they will end up around 0.2% to 1.4% higher, although it may well be an unsteady ride!

If you would like to read more articles on the Ashford Property Market – please visit the Ashford Property News Blog

Ashford Apartments 9.2% more affordable than 10 years ago

 

My latest research shows that certain categories of Ashford property are more affordable today than before the 2008 credit crunch.

Roll the clock back to 2007 – before the credit crunch saw Ashford property values plummet. The Ashford property market had reached a peak with Ashford property prices hitting the highest levels they had ever reached.  Between 2008 and 2010, Ashford property values lay in the doldrums and only started to rise in 2011, albeit quite slowly to begin with.

Nevertheless, even though Ashford’s property values have now surpassed those 2007 peaks, my research indicates that Ashford property, especially flats and apartments, are now more affordable than they were before the 2008 credit crunch.

Back in 2007, the average value of an Ashford apartment was £134,529 and today, it stands at £157,133, a rise of £22,604 or 16.8%.

However, between 2007 and today, we have experienced inflation (as measured by the Government’s Consumer Price Index) of 25.97% meaning that in real terms Ashford apartments are 9.2% more affordable than in 2007.

Looking at it another way, if the average Ashford apartment had risen in line with inflation over those 10 years, it would now be worth £169,466 instead of the current £157,133!

The Ashford House Price Index: 145.21

 

I had the most interesting conversation the other day with a local Ashford accountant, who asked me about my articles on the Ashford property market. It was quite humbling to be given praise by such a professional, when he commented enthusiastically on the articles I write. He was particularly interested with the graphs, facts and figures contained within them – so much so he has recommended his clients read them, as most are either Ashford homeowners, Ashford landlords and, quite often, both. However, one question that kept me on my toes was, “With so many House-Price-Indices, how do you know which one to use and how can you calculate what is exactly happening in Ashford?”

To start with, there are indeed a great number of these Indices, including the Land Registry, ONS, Halifax, Nationwide and LSL to name just a few. The issue occurs when these different house price indices, at times, give diverse pictures of the state of the UK housing market. Whilst some indices measure the average value of every property in the UK (sold or unsold), others measure the average ‘price-paid’ of houses that happen to be sold over a fixed time scale… confusing isn’t it?

A lot of the variance between house price indices occurs because of the distinctive ways in which the various indices endeavour to beat these issues. You see, the biggest problem in creating a house price index compared with other indexes (e.g. inflation where the change in the price of a standard item can very easily be measured over time), is that every home is unique and as Ashford people are only moving every 13.5 years, it appears the only thing that can be measured is the price of property sold in a given month.

By their very nature, all of the indices are only able to paint a picture of the UK as a whole or, at best, the regional housing market. As I have said before in my articles on the Ashford property market, it is important to look over at least the medium term when considering house price inflation/deflation. Looking at their month-to-month jumps, many indices look like one of those jumpy lie-detector needles you see in the cold war movies!

I can guarantee you in the coming few months, on a month-by-month basis, one or more of the indices will say property prices will have dropped. Let me tell you, no property market indices are representative of the housing market in the short term. Many indices often show a drop around the Christmas and New Year period, even in the boom years of 2001 to 2007 and 2013 to 2015.

So, back to the question, how do we work out what is happening in the Ashford Property Market and can there be an Ashford House Price Index?

To calculate what may be considered a fair and proper House Price Index for Ashford, I initially needed to decide on a starting place for the index. I have chosen 2008 as far enough away, but still giving a medium to long term view. Next, I split all the house sales into their types (Detached/Semi/House /Apartment) to give us an indication of what is actually selling by postcode district. So, for example, below is a table for the TN24 postcode district (the sample shows 2008, 2016 and 2017:

Then I look at the actual numbers of properties sold in the TN24 postcode district. Below is the graph with the numbers for the years already mentioned:

Sold Ashford TN24 Property by Type in 2008, 2016, 2017

Next, I have looked at the prices paid for those types for every year since 2008, again in this example using the sample years of 2008, 2016 and 2017 for the TN24 postcode:

Average Sale Prices in TN24 by Property Type

Finally, I amalgamated the same data points for the other Ashford postcode districts and surrounding villages, weighted it accordingly, to produce the Ashford House Price Index … which after all that work, currently stands at for Q4 2017 at 145.21 (Q4 2008 = 100).

I hope you found this of interest. Over the coming months and seasons, I shall refer back to the Ashford House Price Index in my Ashford Property News blog, www.ashfordpropertynews.co.uk, to give you a flavour of what is really happening in the Ashford Property Market.

 

Taylors Residential Lettings Limited, Company no. 6002742, Regd Office: Suite 1, Invicta Business Centre, Monument Way, Ashford TN24 0HB