I am genuinely concerned about the Clacton
property market, but in a way that might surprise you. Rightmove announced that average ‘asking prices’
rose last month by 1.2% in the East, leaving them 7.4% higher than a year
ago. Whilst it could be said that
monthly change is very modest, in the same period a year ago, we saw a slight
monthly rise of 0.7% in the East, which is more the norm given the onset of
schools breaking up and everyone going on holiday.
Looking at all the data on the Clacton property market;
putting aside the need for more houses to be built in the next decade to
balance out the increase in population (helped in part by inward European
migration) but 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 properties (the typical terraced and smaller semi detached
houses/apartments), whilst there are a larger proportion of the four and five
properties, which are the typical detached properties available.
Demand for smaller properties 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 larger
properties which tend to offer poorer returns.
Also, landlords with larger loans (on those larger more expensive
properties) will also be hit harder with the changes in the way tax is
paid on buy to let investments, which start in 2017.
If you recall, a few weeks ago I did some research on how
different types of properties had performed in Clacton
since the year 2000. I revisited those
calculations and it hit me how different types of properties had performed over
the last 15 years. In a nutshell, this
mismatch of demand and supply isn’t a new phenomenon, it’s been happening under
our noses for years!
In the last 15 years, the average terraced house in Clacton has risen in
value from £58,664 to £136,999 whilst the detached house has risen in value from £90,043 to
£205,815. Nothing seems
amiss until you look at the percentage growth.
The terraced has grown in value by 134% whilst the detached by only 129%
meaning the gap between the inexpensive terrace’s and expensive detached
properties has in percentage terms narrowed ever so slightly.
I am concerned because more houses need to be built, not
only in Clacton, but in the East and the UK 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 Tories need to face up to the fact that
unless they can get the builders, the planners (to release more building land),
the banks (to finance it) and themselves together, to ensure long term plans
can be made, and implemented, this issue will continue to worsen.
The country needs 200,000 houses a year to be built to keep
up with demand, let alone reverse the imbalance between demand and supply. Last year, only 141,040 properties were
built, the year before 135,510 and 146,850 in the year before that. This means only one thing for Clacton landlords.
Unless David Cameron starts to rip up huge swathes of the British
countryside and build on acres and acres of green belt, demand will always
exceed supply when it comes to property for the foreseeable future.
Therefore, investment
in the local Clacton property market as a buy
to let investment could be the best move to make as the 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.
