Wednesday, 29 March 2017

‘Generation Rent (Forever)’ – 6,509 Canterbury Tenants have no intention of ever buying a property to call home




The good old days of the 1970’s and 1980’s eh … with such highlights lowlights as 24% inflation, 17% interest rates, 3 day working week, 13% unemployment, power cuts ... those were the days (not)… but at least people could afford to buy their own home. So why aren’t the 20 and 30 something’s buying in the same numbers as they were 30 or 40 years ago?

Many people blame the credit crunch and global recession of 2008, which had an enormous impact on the UK housing market. Predominantly, the 20 something first-time buyers who, confronting a problematic mortgage market, the perceived need for big deposits, reduced job security and declining disposable income, discovered it challenging to assemble the monetary means to get on to the property ladder.

However, I would say there has been something else at play other than the issue of raising a deposit - having sufficient income and rising property prices in Canterbury. Whilst these are important factors and barriers to homeownership, I also believe there has been a generational change in attitudes towards home ownership (and in fact the rest of the Country).

Back in 2011, the Halifax did a survey of thousands of tenants and 19% of tenants said they had no plans to buy a home for themselves. A recent, almost identical survey of tenants, carried out by The Deposit Protection Service revealed, in late 2016, that figure had risen to 38.4%, with many no-longer equating home ownership to success and believing renting to be better suited to their lifestyle.

You see, I believe renting is a fundamental part of the housing sector, and a meaningful proportion of the younger adult members of the population choose to be tenants as it better suits their plans and lifestyle. Local Government in Canterbury (including the planners – especially the planners), land owners and landlords need an adaptable residential property sector that allows the diverse choices of these 20 and 30 year olds to be met.

This means, if we applied the same percentages to the current 16,951 Canterbury tenants in their 5,955 private rental properties, 6,509 tenants have no plans to ever buy a property – good news for the landlords of those 2,287 properties. Interestingly, in the same report, just under two thirds (62%) of tenants said they didn’t expect to buy within the next year.

.. but does that mean the other third will be buying in Canterbury in the next 12 months?

Some will, but most won’t … in fact, the Royal Institution of Chartered Surveyors (RICS) predicts that, by 2025, that the number of people renting will increase, not drop. Yes, many tenants might hope to buy but the reality is different for the reasons set out above.  The RICS predicts the number of tenants looking to rent will increase by 1.8 million households by 2025, as rising house prices continue to make home ownership increasingly unaffordable for younger generations.  So, if we applied this rise to Canterbury, we will in fact need an additional 2,552 private rental properties over the next eight years (or 319 a year) … meaning the number of private rented properties in Canterbury is projected to rise to an eye watering 8,507 households.



Friday, 17 March 2017

Canterbury First Time Buyers borrow £58.1m in the last 12 months

Starting with the bigger picture, over the last 12 months in the UK, 1,061,557 properties were sold with a total value of £223.74 bn. To give that some context, ten years ago 1,581,727 properties sold with a total value of £405.56bn, so it can be seen the number of people moving house has dropped by over a third over the last decade.

Whether you are a landlord, homeowner or tenant, it’s always important to keep an eye on the Canterbury property market, not just from your point of view, but also from every player’s point of view. Over the last 12 months, 1,210 properties have sold (and completed) in Canterbury, worth £362.7m. Interestingly the number of properties changing hands in Canterbury has also dropped when compared to a decade ago.

It might surprise you that first time buyers in 2017 will benefit from a slight decline in Canterbury buy-to-let investors.

Those looking to buy a home in the spring and summer of 2017 will face a far less competitive Canterbury property market than the same time of year in 2016, when the urgency to beat the buy-to-let stamp duty hike was in full swing.  

Many landlords brought forward their purchases to beat the tax, and since then, the number of buy-to-let purchases has dropped slightly. First time buyers have taken advantage of that and have increased their buying. In fact, looking at the Bank of England figures, this is what UK lenders have lent on buy-to-let properties versus first time buyers over the last 12 months  …

Q4 2015 - £1bn buy-to-let mortgages vs £1.31bn for first time buyers
Q1 2016 - £1.35bn buy-to-let mortgages vs £1.08bn for first time buyers
Q2 2016 - £760m buy-to-let mortgages vs £1.28bn for first time buyers
Q3 2016 - £827m buy-to-let mortgages vs £1.42bn for first time buyers

When looking at the figures for Canterbury itself, first time buyers have borrowed more than £58.1m in the last 12 months to buy their first home. This is a ringing endorsement of their confidence in their jobs and the local Canterbury economy. Those 20 and 30 something’s who are considering being first time buyers in 2017 will find that the number of properties on the market has never been as good as it has for quite a while, meaning you have more choice of properties and less competition from so many buy-to-let landlords than a year ago.


Rightmove announced nationally that new seller enquiries are 26% up on the same time last year giving the stoutest indication that we may see a slight ease in the lack of properties on the market. When I look at the Canterbury market, at this moment in time there are an impressive 267 properties for sale, (so lots of choice). All this will be welcome news amongst Canterbury first-time buyers with a combination of a proportional reduction in new investors and landlords.

Wednesday, 15 March 2017

With 16,951 people in Private Rented Properties in Canterbury - Should you still be investing in Canterbury Buy To Let?

If I were a buy to let landlord in Canterbury today, I might feel a little bruised by the assault made on my wallet after being (and continuing to be) ransacked over the last 12 months by HM Treasury’s tax changes on buy to let. To add insult to injury, Brexit has caused a tempering of the Canterbury property market with property prices not increasing by the levels we have seen in the last few years. I think we might even see a very slight drop in property prices this year and, if Canterbury property prices do drop, the downside to that is that first time buyers could be attracted back into the Canterbury property market; meaning less demand for renting (meaning rents will go down). Yet, before we all run for the hills, all these things could be serendipitous to every Canterbury landlord, almost a blessing in disguise.

Canterbury has a population of 47,941, so when I looked at the number of people who lived in private rented accommodation, the numbers astounded me …

Canterbury - Accommodation Type and the Number of Occupiers
Owned outright - Canterbury
Owned with a mortgage - Canterbury
Shared ownership (part owned and part rented) - Canterbury
Social rented (aka Council Housing) -  Canterbury
Private rented - Canterbury
Living rent free - Canterbury
9,340
10,977
484
9,512
16,951
677
19.5%
22.9%
1.0%
19.8%
35.4%
1.4%

Yields will rise if Canterbury property prices fall, which will also make it easier to obtain a buy to let mortgage, as the income would cover more of the interest cost. If property values were to level off or come down that could help Canterbury landlords add to their portfolio. Rental demand in Canterbury is expected to stay solid and may even see an improvement if uncertainty is protracted. However, there is something even more important that Canterbury landlords should be aware of: the change in the anthropological nature of these 20 something potential first time buyers.

I have just come back from a visit to my relations after a family get together. I got chatting with my nephew and his partner.  Both are in their mid/late twenties, both have decent jobs in Canterbury and they rent. Yet, here was the bombshell, they were planning to rent for the foreseeable future with no plans to even save for a deposit, let alone buy a property. I enquired why they weren’t planning to buy? The answers surprised me as a semi mature person, and it will you. Firstly, they don’t want to put cash into property, they would rather spend it on living and socialising by going on nice holidays and buying the latest tech and gadgets. They want the flexibility to live where they choose and finally, they don’t like the idea of paying for repairs. All their friends feel the same. I was quite taken aback that buying a house is just not top of the list for these youngsters.


So, as 35.4% of Canterbury people are in rented accommodation and as that figure is set to grow over the next decade, now might just be a good time to buy property in Canterbury – because what else are you going to invest in?  Give your money to the stock market run by sharp suited city whizz kids – because at least with property – it’s something you can touch - there is nothing like bricks and mortar!

Sunday, 5 March 2017

171 Canterbury Households Occupied by OAP Renters



 
 
Recent statistics published by the Office of National Statistics show that there are 267,704 private rented households in the Country that are occupied by people aged 65 and older, meaning 4.39% of OAP’s are living in private rented property.
 
It got me thinking two things. How many of these OAP’s have always rented and how many have sold up and become a tenant?  In retirement, selling up could make financial sense to the mature generation in Canterbury, potentially allowing them to liquidate the equity of their main home to enhance their retirement income.  I wanted to know why these older people rent and whether there was opportunity for the buy to let landlords of Canterbury?

The Prudential published a survey recently that said nearly six out of ten OAP renters had never owned a home.  Two out of ten OAP renters were required to sell up because of debt, just about one in ten OAP renters sold their property to use the money to fund their retirement and the remaining one out ten OAP renters, rented for other reasons.
 
Funding retirement is important as the life expectancy of someone from Canterbury at age 65 (years) is 19.4 years for males and 21.3 years for females (interesting when compared to the National Average of 18.7 years for males and 21.1 years for females).  The burdens of financing a long retirement are being felt by many mature people of Canterbury.  The state of play is not helped by rising living costs and ultra-low interest rates reducing returns for savers.
 
So, what of Canterbury?  Of the 4,743 households in Canterbury, whose head of the household is 65 or over, not surprisingly 3,318 of households were owned (69.96%) and 1,111 (23.42%) were in social housing.  However, the figure that fascinated me was the 171 (3.61%) households that were in privately rented properties.
 
Anecdotal evidence, by talking to both my team and other Canterbury property professionals is that this figure is rising.  More and more Canterbury OAP’s are selling their large Canterbury homes and renting something more manageable, allowing them to release all of their equity from their old home.  This equity can be gifted to grandchildren (allowing them to get on the property ladder), invested in plans that produce a decent income and while living the life they want to live.

These Canterbury OAP renters know they have a fixed monthly expenditure and can budget accordingly with the peace of mind that their property maintenance and the upkeep of the buildings are included in the rent.  Many landlords will also include gardening in the rent! Renting is also more adaptable to the trials of being an OAP - the capability to move at short notice can be convenient for those moving into nursing homes, and it doesn't leave family members panicking to sell the property to fund care-home fees. 

Canterbury landlords should seriously consider low maintenance semi-detached bungalows on decent bus routes and close to doctor’s surgeries as a potential investment strategy to broaden their portfolio.  Get it right and you will have a wonderful tenant, who if the property offers everything a mature tenant wants and needs, will pay top dollar in rent!

Wednesday, 22 February 2017

Canterbury Unemployment Drops to 5.7% and its effect on the Canterbury Property Market






It was late May 2016, The Right Hon. Member for Tatton, Mr George Osborne, published an official HM Treasury analysis stating UK house prices would be lower by at least 10% (and up to 18%) by the middle of 2018 compared with what is expected if the UK remained in the European Union. So, eight months on from the Referendum, are we beginning to show signs of that prophecy? The simple answer is yes and no.
 
Good barometers of the housing market are the share prices of the big UK builders. Much was made of Barratt’s share price dropping by 42.5% in the two weeks after Brexit, along with Taylor Wimpey’s equally eye watering drop in the same two weeks by 37.9%. Looking at the most recent set of data from the Land Registry, property values in Canterbury are 0.89% up month on month (but a few months previous saw values drop to as low as 0.59%) – so is this the time to panic and run for the hills?
 
Doom and Gloom then? Well, let me consider the other side of the coin.
 
Well, as I have spoken about many times in my blog, it is dangerous to look at short term. I have mentioned in several recent articles, the heady days of the Canterbury property prices rising quicker than a thermometer in the desert sun between the years 2011 and late 2016 are long gone – and good riddance. Yet it might surprise you during those impressive years of house price growth, the growth wasn’t smooth and all upward. Canterbury property values dropped by an eye watering 1.78% in February 2012 and 1.09% in November 2013 – and no one batted an eyelid then.
 
You see, property values in Canterbury are still 11.35% higher than a year ago, meaning the average value of a Canterbury property today is £340,900. Even the shares of those new home builders Barratt have increased by 43.3% since early July and Taylor Wimpey’s have increased by 37.3%. The Office for Budget Responsibility, the Government Spending Watchdog, recently revised down its forecast for house-price growth in the coming years - but only slightly.
 
The Canterbury housing market has been steadfast partly because, so far at least, the wider economy has performed better than expected since Brexit. There is a robust link between the unemployment rate and property prices, and a flimsier one with wage growth. Unemployment in the Canterbury City Council area stands at 4,000 people (5.7%), which is considerably better than a few years ago in 2013 when there were 6,400 people unemployed (9.6%) in the same council area.
 
However, inflation is the only thing that does worry me. Looking at all the pundits, it will get to at least 3% (if not more) in the latter part of 2017 as the drop in Sterling in late 2016 renders our imports with higher prices. If that transpires then the Bank of England, whose target for inflation is 2%, may raise interest rates from 0.25% to 2%+. However, that won’t be so much of an issue as 81.6% of new mortgages in the UK in the last two years have been fixed-rate and who amongst us can remember 1992 with Interest rates of 15%!
 
Forget Brexit and yes inflation will be a thorn in the side – but the greatest risk to the Canterbury (and British) property market is that there are simply not enough properties being built thus keeping house prices artificially high. Good news for those on the property ladder, but not for those first-time buyers that aren’t! In the coming weeks in my articles on the Canterbury Property Market, I will discuss this matter further!

Tuesday, 14 February 2017

£5.93bn – The total value of all Canterbury Property Market




“How much would it cost to buy all the properties in Canterbury?”
 
This fascinating question was posed by the 11-year-old son of one of my Canterbury landlords when they both popped into my offices before the Christmas break (doesn’t that seem an age away now!). I thought to myself, that over the Christmas break, I would sit down and calculate what the total value of all the properties in Canterbury are worth … and just for fun, work out how much they have gone up in value since his son was born back in the autumn of 2005.
 
In the last 11 years, since the autumn of 2005, the total value of Canterbury property has increased by 56% or £2.13 billion to a total of £5.93 billion. Interesting, when you consider the FTSE100 has only risen by 30.78% and inflation (i.e. the UK Retail Price Index) rose by 37% during the same 11 years.
 
When I delved deeper into the numbers, the average price currently being paid by Canterbury households stands at £312,103.… but you know me, I wasn’t going to stop there, so I split the property market down into individual property types in Canterbury; the average numbers come out like this ..

 

Canterbury Property Market
Average Value of a Detached Property
Average Value of a Semi-Detached Property
Average Value of a Terraced/Town House Property
Average Value of an Apartment
£470,727
£319,962
£291,891
£186,456

 

... yet it got even more fascinating when I multiplied the total number of each type of property by the average value. Even though detached houses are so expensive, when you compare them with the much cheaper semi-detached houses, you can quite clearly see detached properties are no match in terms to total pound note value of the semi-detached houses.

 

Total Value of all the Canterbury Detached Properties
Total Value of all the Canterbury Semi-Detached Properties
Total Value of all the Canterbury Terraced/Town House Properties
Total Value of all the Canterbury Apartments
£1,505,855,673
£1,895,454,888
£1,558,989,831
£971,803,460

 

So, what does this all mean for Canterbury?  Well as we enter the unchartered waters of 2017 and beyond, even though property values are already declining in certain parts of the previously over cooked Central London property market, the outlook in Canterbury remains relatively good as over the last five years, the local property market was a lot more sensible than central London’s.
 
 
Canterbury house values will remain resilient for several reasons. Firstly, demand for rental property remains strong with continued 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 Canterbury not keeping up with current demand, let alone eating into years and years of under investment – means 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 Canterbury has always, and will always, ride out the storm.
 
In the coming weeks, I will look in greater detail at my thoughts for the 2017 Canterbury Property Market. As always, all my articles can be found at the Canterbury Property Market Blog www.canterburypropertyblog.com .

Monday, 6 February 2017

£25m a year black hole in the Canterbury Property Market - Is Buy to Let Immoral? (Part 2)




An Englishman’s Home is His Castle as Maggie Thatcher lauded - everyone should own their own home. In 1971, around 50% of people owned their own home and, as the baby-boomers got better jobs and pay, that proportion of homeowners rose to 69% by 2001. Homeownership was here to stay as many baby boomers assumed it’s very much a cultural thing here in Britain to own your own home.
 
But on the back of TV programmes like Homes Under the Hammer, these same baby boomers started to jump on the band wagon of Canterbury buy to let properties as an investment. Canterbury first time buyers were in competition with Canterbury landlords to buy these smaller starter homes … pushing house prices up in the 2000’s (as mentioned in Part One) beyond the reach of first time buyers. Alas, it is not as simple as that. Many factors come into play, such as economics, the banks and government policy. But are Canterbury landlords fanning the flames of the Canterbury housing crisis bonfire?
 
I believe that the landlords of the 5,955 Canterbury rental properties are not exploitive and are in fact, making many positive contributions to Canterbury and the people of Canterbury. Like I have said before, Canterbury (and the rest of the UK) isn’t building enough properties to keep up the demand; with high birth rate, job mobility, growing population and longer life expectancy.
 
According to the Barker Review, for the UK to standstill and meet current demand, the country needs to be building 8.7 new households each and every year for every 1,000 households already built. Nationally, we are currently running at 5.07 per thousand and in the early part of this decade were running at 4.1 to 4.3 per thousand.
 
It doesn’t sound a lot of difference, so let us look at what this means for Canterbury …
 
For Canterbury to meet its obligation on the building of new homes, Canterbury would need to build 173 households each year. Yet, we are missing that figure by around 72 households a year.
 
For the Government to buy the land and build those additional 72 households, it would need to spend £25,422,838 a year in Canterbury alone. Add up all the additional households required over the whole of the UK and the Government would need to spend £23.31bn each year … the Country hasn’t got that sort of money!

With these problems, it is the property developers who are buying the old run-down houses and office blocks which are deemed uninhabitable by the local authority, and turning them into new attractive homes to either be rented privately to Canterbury families or Canterbury people who need council housing because the local authority hasn’t got enough properties to go around.

The bottom line is that, as the population grows, there aren’t enough properties being built for everyone to have a roof over their head. Rogue landlords need to be put out of business, whilst tenants should expect a more regulated rental market, with greater security for tenants, where they can rely on good landlords providing them high standards from their safe and modernised home. As in Europe, where most people rent rather than buy, it doesn’t matter who owns the house – all people want is a clean, decent roof over their head at a reasonable rent.
 
So only you, the reader, can decide if buy to let is immoral, but first let me ask this question - if the private buy to let landlords had not taken up the slack and provided a roof over these people’s heads over the last decade .. where would these tenants be living now? ….. because the alternative doesn’t even bear thinking about!
 

Tuesday, 31 January 2017

Canterbury’s private renting set to hit 8,397 households by 2021 - Is Buy to Let immoral? (Part 1)




Can we blame the 55 to 70-year-old Canterbury citizens for the current housing crisis in the city?
 
Also known as the ‘Baby Boomer Generation’, these Canterbury people were born after the end of the Second World War as the country saw a massive rise in births as they slowly recovered from the economic hardships experienced during wartime.
 
Throughout the 1970’s and 1980’s, they experienced (whilst in their 20’s, 30’s and 40’s) an unparalleled level of economic growth and prosperity throughout their working lifetime on the back of improved education, government subsidies, escalating property prices and technological developments, they have emerged as a successful and prosperous generation.
 
...Yet some have suggested these Canterbury baby boomers have (and are) making too much money to the detriment of their children, creating a ‘generational economic imbalance’, where mature people benefit from house-price growth while their children are forced either to pay massive rents or pay large mortgages.
 
Between 2001 and today, average earnings rose by 65%,
but average Canterbury house prices rose by 154.3%
 
The issue of housing is particularly acute with the generation called the Millennials, who are young people born between the mid 1980’s and the late 1990’s. These 18 to 30 years, moulded by the computer and internet revolution, are finding as they enter early adult life, very hard to buy a property, as these ‘greedy’ landlords are buying up all the property to rent out back to them at exorbitant rents ... it’s no wonder these Millennials are lashing out at buy to let landlords, as they are seen as the greedy, immoral, wicked people who are cashing in on a social despair.
 
Like all things in life, we must look to the past, to appreciate where we are now.
 
The three biggest influencing factors on the Canterbury (and UK) property market in the later half of the 20th Century were, firstly, the mass building of Council Housing in the 1950’s and 60’s. Secondly, for the Tory party to sell most of those Council Houses off in the 1980’s and finally 15% interest rates in the early 1990’s which resulted in many houses being repossessed. It was these major factors that underpinned the housing crisis we have today in Canterbury.
 
To start with, in 1995 the USA relaxed its lending rules by rewriting the Community Reinvestment Act. This Act saw a relaxation on the Bank’s lending criteria’s as there was pressure on these banks to lend on mortgages in low wage neighbourhoods, as the viewpoint in the USA was that anyone (even someone on the minimum wage) any working class person should be able to buy a home.  Unsurprisingly, the UK followed suit in the early 2000’s, as Banks and Building Society’s relaxed their lending criteria and brought to the market 100% mortgages, even Northern Rock started lending every man and his dog 125% mortgages.
 
So when we roll the clock forward to today, and we can observe those very same footloose banks from the early/mid 2000’s (that lent 125% with a just note from your Mum and a couple of breakfast cereal tokens), ironically reciting the Bank of England backed hymn-sheet of responsible-lending. On every first time buyer mortgage application, they are now looking at every line on the 20-something’s banks statements, asking if they are spending too much on socialising and holidays ... no wonder these Millennials are afraid to ask for a mortgage (as more often than not after all that – the answer is negative).
 
Conversely, you have unregulated Buy To Let mortgages. As long as you have a 25% deposit, have a pulse, pass a few very basic yardsticks and have a reasonable job, the banks will literally throw money at you ... I mean Virgin Money are offering 2.99% fixed for 3 years – so cheap!
 
So, in Part Two next week, I will continue this emotive article and show you some very interesting findings on why young people aren’t buying property anymore (and it’s not what you think!).
 

Wednesday, 25 January 2017

Canterbury property price rises set to be more restrained in 2017 due to Brexit







While Brexit has not yet had a sizeable impact on the Canterbury housing market, my analysis is pointing to the fact that the economic viewpoint still remains uncertain and Canterbury property price growth is likely to be more subdued during 2017 - although that isn’t a bad thing so let me explain.
 
Since the summer, apart from a little wobble of uncertainty a few weeks after the Referendum vote, property values (and the economy), on the whole has outperformed what most people were anticipating. In fact, when I looked at the property prices for our Canterbury City Council area, these were the results...
 

November 2016          - rise of 0.89%

October 2016              - rise of 1.09%

September 2016         - rise of 1.32%

August 2016                - rise of 1.89%

July 2016                     - rise of 1.78%

June 2016                    - drop of 0.59%

 

The UK property market continues to perform robustly (because we can’t just look at Canterbury as if in its own little bubble) with annual price growth set ended last year at 11.35% and most South East region property market at 9.1%.
 
Talking to fellow agents in London, the significant tidal wave of growth seen from 2013 through to 2015 in the capital has subdued over the last six months. However, as that central London house price wave has started to ripple out, agents are starting to see stronger property growth values in East Anglia and the South East regions outside of London, than what is being seen within the M25. So, fellow Canterbury landlords and homeowners, is this the time to get your surfboards ready for the London wave?
 
Well, we in Canterbury haven’t really been affected by what is happening in the central London property mega bubble (i.e. Kensington, Chelsea, Marylebone, Mayfair etc.). The property market locally is more driven by sentiment, especially the ‘C’ word ... confidence. The main forces for a weaker Canterbury Property market relate to economic uncertainty surrounding the Brexit process, which I believe will impact unhelpfully on consumer confidence in the run up to and just after the serving of the Section 50 Notice by the end of Q1 2017.
 
In addition, the influence of reforms to the taxation of landlords is expected to result in a reduced demand from buy to let landlords, which will limit upward pressure on property values. However, on the other side of the coin, demand from tenants has been strong, but this has been counterbalanced by a strong supply of rental properties. In my opinion, there is a slight risk of rents not growing as much in 2017 as they have in 2016, but by 2018 they will rise again to counteract Philip Hammond’s changes to tenant fees.
 
 
The broader Canterbury rental market looks relatively positive with modest rental growth expected and rents might rise further if landlords begin to sell properties in an effort to offset to the impact of tax rises.
 
So what do I predict will happen to the Canterbury housing market during 2017?  In Canterbury, I believe price values are expected to fall by 2.3% in 2017 compared to a rise of 11.35% this year, then pick up to growth of 1.9% in 2018, 3.1% in 2019, then 4.2% in 2020 and 6.5% in 2021.
 
But these predictions do not take into account any effect of a possible snap General Election or further referendum on ratifying any Brexit deal (if that comes to pass in the future).
 

Thursday, 19 January 2017

Canterbury OAP’s sitting on £1.51 bn of Property





Canterbury people aged over 65 currently hold more housing wealth in their homes than the annual GDP of the whole of the Isle of Anglesey … and this is a problem for everyone in Canterbury!
 
Many retiree’s want to move but cannot, as there is a shortage of such homes for mature people to downsize into.  Due to the shortage, bungalows command a 10% to 20% premium per square foot over houses of the same size with stairs. To add to the woes, in 2014, just 1% of new builds in the UK were bungalows, according to the National House Building Council - down from 7% in 1996.
 
My research has found that there are 4,369 households in Canterbury owned outright (i.e. no mortgage) by over 65 year olds.  Taking into account the average value of a property in Canterbury, this means £1.51 billion of equity is locked up in these Canterbury homes, compared to the GDP of the whole of the Isle of Anglesey being £797 million of GDP.
 
A recent survey by YouGov, found that 36% of people aged over 65 in the UK are looking to downsize into a smaller home.  However, the Government seems to focus all its attention on first-time buyers with strategies such as Starter Homes to ensure the youngsters of the UK don’t become permanent members of ‘Generation Rent’.  Conversely, this overlooks the chronic under-supply of appropriate retirement housing essential to the needs of the Canterbury’s rapidly ageing population. Regrettably, the Canterbury’s housing stock is woefully unprepared for this demographic shift to the 'stretched middle age’, and this has created a new 'Generation Trapped’ dilemma where older people cannot move.
 
Some OAP’s who are finding it difficult to live on their own, are unable to leave their bungalow because of a lack of sheltered housing and ‘affordable’ care home places.  So, older retirees can't leave bungalows, younger retirees can't buy bungalows and younger people can't buy family houses.
 
Interestingly, adding insult to injury, the problem will only get worse, as in the 50 year old to 64 year old homeownership age range there are an additional 2,617 Canterbury households that are mortgage free and a further 2,189 Canterbury households who will be completing their mortgage responsibility.  With Government projections showing the proportion of over 65’s will rise by over a third from the current 17.7% to 24.3% of the population in the next 20 years ... this can only add greater pressure to the Canterbury Property market.
 
House prices have rocketed over the last 40 years because the supply of property has not kept up with demand. With migration, people living longer and high divorce rates (meaning one family becomes two) we need, as a Country, 240,000 properties to be built a year to just stand still.  In the 1990’s and early 2000’s, the Country was building on average 180,000 to 190,000 households a year, but since the Credit Crunch (2009), that has only been between 130,000 and 145,000 households a year.
 
The solution …. release more land for starter homes, bungalows and sheltered accommodation because land prices are killing the housing market as the large firms dominating the construction industry are more likely to focus on traditional houses and apartments.  My opinion – until the Government change the planning rules and allow more land to be built on – Bungalows could be a decent bet for future investment as they continue to attract ever growing premiums?