21 Sep

Slowing Liverpool Property Market? Yes and No!

My thoughts to the landlords and homeowners of Liverpool…

The tightrope of being a Liverpool buy-to-let landlord is a balancing act many do well at. Talking to several Liverpool landlords, they are very conscious of their tenants’ capacity and ability to pay the rent and their own need to raise rents on their rental properties (as Government figure shows ‘real pay’ has dropped 1% in the last six months). Evidence does suggest many landlords feel more assured than they were in the spring about pursuing higher rents on their properties.

During the summer months, historic evidence suggests that the rents new tenants have had to pay on move in have increased. June/July/August is a time when renters like to move, demand surges and the normal supply and demand seesaw mean tenants are normally prepared to pay more to secure the property they want to live in, in the place they want to be. This is particularly good news for Liverpool landlords as average Liverpool rents have been on a downward trend recently. So look at the figures here…

Rents in Liverpool on average for new tenants moving in have risen 1.4% for the month, taking overall annual Liverpool rents 2.3% higher for the year

However, several Liverpool landlords have expressed their apprehensions about a slowing of the housing market in Liverpool. I think this negativity may be exaggerated.

The other side of the coin to property investing is capital values (which will also be of interest to all the homeowners in Liverpool as well as the Liverpool buy-to-let landlords).  I believe the Liverpool property market has been trying to find some level of equilibrium since the New Year.  According to the Land Registry…

Property Values in Liverpool are 3.52% higher than they were 12 months ago, rising by 0.93% last month alone!

The reality is the number of properties that are on the market in Liverpool today have risen, albeit only by 1% since the New Year and that may have an interesting effect on property values. As tenants have had less choice, buyers also have less choice.

Be you a homeowner or landlord, if you are planning to sell your Liverpool property in the short term, it is crucial, even with the slight rise in the number of properties on the market, that you realistically price your property when you bring it to the market … with the increase in choice of properties, the balance of power during negotiation generally sways towards the buyer. Given that everyone now has access to property details, including historic stats for how much property have sold for, they will be more astute during the offer and negotiation stages of a purchase.

However, even with this uplift in the number of properties for sale in Liverpool, property prices will remain stable and strong in the medium to long term. This is because the number of properties on the market today is still way below the peak of summer of 2008, when there were 16,100 properties for sale compared to the current level of 8,255 (if you recall, prices dropped by nearly 20% in Credit Crunch years of ‘08 and ‘09).

Compared to 2008, today’s lower supply of Liverpool properties for sale will keep prices relatively high…and they will continue to stay at these levels for the medium to long term.

Less people are moving than a few years ago, meaning less property is for sale. Fewer properties for sale mean property prices remain relatively high and this is because of a number of underlying reasons. Firstly, buy-to-let landlords tend not sell their properties as often than owner-occupiers, consequently removing the property out of the housing market selling cycle. Secondly, Stamp Duty is much higher compared to 10 years ago (meaning it costs more to move). Next, there is a dearth of local authority rental housing so demand for private rented housing will remain high. Then we have the UK’s maturing owner occupier population, meaning these older people are less likely to move (compared to when they were younger). Another reason is the lack of new homes being built in the country (we need 240k houses a year to be built in the UK and we are currently only building 145k a year!) and finally, the new mortgage rules introduced in 2014 about how much a person can borrow on a mortgage has curtailed demand.

Some final thought’s before I go – to all the Liverpool homeowners that aren’t planning to sell – this talk of price changes is only on paper profit or loss. To those that are moving … most people that sell, are buyers as well, so as you might not get as much for yours, the one you will want to buy won’t be as much, (swings and roundabouts as Mum says!)

To all the Liverpool landlords – keep your eyes peeled – I have a feeling there may be some decent buy-to-let deals to be had in the coming months. One place for such deals, irrespective of which agent is selling it, is my Liverpool Property Blog … www.liverpoolpropertyblog.com

16 Sep

2 Bedroom Apartment – Alexandra Tower L3 1BD – £180,000 – 5.3% Yield!

I have noticed this beautiful two bedroom property in the all popular development Alexandra Tower!

Alexandra Tower is now a recognizable part of our Liverpool Sky Line due to its impressive height of 290ft and its envious location set right on the edge of the River. With 24 hour concierge, secure entry system, the secure car park and the extremely desirable location, it is easy to see why everyone loves this development so much.

 

This immaculate apartment boasts mouth dropping uninterrupted views from the lounge of the River Mersey, enabling you to watch as the ships sail through the peaceful rhythmic water; and then the bedrooms clearly overlook Liverpool’s iconic Liver Buildings.

 

Just a stone throw away from Liverpool’s business district, this property is ideal for the professional looking to experience City Living at its finest. The property would also attract students, couples, young families, as it has so much to offer every type of tenant!

This property currently has tenants in situ. The current tenants are paying £9,600; and depending on the furnishings we could potentially increase this slightly. This rental income is securing an average gross yield of 5.3%. Group this together with the potential of capital growth, and you will see why I have chosen to share this.

I feel this property is a fantastic buy as it carries along a very high potential for capital growth. As our City grows, more developments will appear, causing some to become obstructed, however on the very edge of the River, nothing is ever going to obstruct this property. The attraction of this development is never going to fade, and we are always going to have the interest from tenants.

Click Here to view the property

If you would like any further advice on this property, development or any other properties, then please do not hesitate to contact me on adamr@liverpoolpropertyblog.com

7 Sep

Liverpool’s New 3 Speed Property Market

“What’s happening to the Liverpool Property Market” is a question I am asked repeatedly.  Well, would it be a surprise to hear that my own research suggests that there isn’t just one big Liverpool property market – but many small micro-property markets?

According to recent data released by the Office of National Statistics (ONS), I have discovered that at least three of these micro-property markets have emerged over the last 20+ years in the city.

For ease, I have named them the …

  1. lower’ Liverpool Property Market.
  2. lower to middle’ Liverpool Property Market.
  3. ‘middle’ Liverpool Property Market.

The ‘lower’ and ‘lower to middle’ sectors of the Liverpool property market have been fuelled over the last few years by two sets of buyers. The first set, making up the clear majority of those buyers, are cash rich landlord investors who are throwing themselves into the Liverpool property market to take advantage of alluringly low prices and even lower interest rates. The other set of buyers in the ‘lower’ and ‘lower to middle’ Liverpool property market are the first-time buyers (FTB), although the FTB market is in a state of unparalleled deadlock as it’s been trampled into near-immobility and incapacity by the new 2014 stricter mortgage affordability regulations and also fewer mortgages with low deposits.

Some of you may be interested to know how I have classified the three sectors ..

  1. lower’ Liverpool housing market – the bottom 10% (in terms of value) of properties sold
  2. lower to middle’ Liverpool housing market – lower Quartile (or lowest 25% in terms of value) of properties sold
  3. middle’ Liverpool housing market – which is the median in terms of value

…. and if one looks at the figures for Liverpool City Council area you can see the three different sectors (lower, lower/middle and middle) have performed quite differently.

Liverpool City Council Property Market – Sold Prices Price Paid in 1995 Price Paid in 2017 Percentage Uplift

1995 – 2017

Lower (Bottom 10%) £15,173 £52,000 342.71%
Lower to Middle (Lower Quartile) £23,000 £76,000 330.43%
Middle (The Median) £38,736 £139,003 358.85%

 

You can quite clearly see that it is the ‘middle’ market that has performed the best.

 

You might ask, what do all these different figures mean to homeowners and landlords alike?  Quite a lot – so let me explain. The worst performing sector (with the lowest Percentage uplift) was the ‘lower to middle’ housing market. Therefore, interestingly, if we applied the best percentage uplift figure (i.e. from the ‘middle’ market percentage uplift), to the ‘lower to middle’ 1995 housing market figure, the 2017 figure of £76,000, would have been £82,536 instead.

Now, I have specifically not mentioned the upper reaches of the Liverpool housing market for several reasons.  Firstly, the lower or middle market is where most of the buy to let investment landlords buy their property and where the majority of property transactions take place. Secondly, due to the unique and distinctive nature of Liverpool’s up-market property scene (because every property is different and they don’t tend to sell as often as the lower to middle market), it is much more difficult to calculate what changes have occurred to property prices in that part of the Liverpool property market – looking at the stats for the up-market Liverpool property market from Land Registry, only 29 properties in Liverpool (and a 5 mile radius around it) have sold for £1,500,000 or more since 1997.

So, what should every homeowner and buy to let landlord take from the information that there are many micro-property markets? Well, when you realise there isn’t just one Liverpool Property Market, but many Liverpool “micro-property markets”, you can spot trends and bag yourself some potential bargains. Even in this market, I have spotted a number of bargains over the last few months that I have shared in my Property Blog and to my landlord database, especially in the ‘lower’ and ‘lower/middle’ market. If you want to be kept informed of those buy to let bargains, have a look at my blog www.liverpoolpropretyblog.com it’s free to do so and I’m sure you wouldn’t want to miss out – would you?

I would love to know if you have spotted any micro-property markets in Liverpool.

31 Aug

Supply and Demand Issues mean Liverpool Property Values Rise by 3.5% in the Last 12 Months

The most recent set of data from the Land Registry has stated that property values in Liverpool and the surrounding area were 3.55% higher than 12 months ago and 10.06% higher than January 2015.

Despite the uncertainty over Brexit as Liverpool (and most of the UK’s) property values continue their medium and long-term upward trajectory. As economics is about supply and demand, the story behind the Liverpool property market can also be seen from those two sides of the story.

Looking at the supply issues of the Liverpool property market, putting aside the short-term dearth of property on the market, one of the main reasons of this sustained house price growth has been down to of the lack of building new homes.

The draconian planning laws, that over the last 70 years (starting with The Town and Country Planning Act 1947) has meant the amount of land built on in the UK today, only stands at 1.8% (no, that’s not a typo – its one point eight percent) and that is made up of 1.1% with residential property and 0.7% for commercial property. Now I am not advocating building modern ugly carbuncles and high-rise flats in the Cotswolds, nor blot the landscape with the building of massive out of place ugly 1,000 home housing estates around the beautiful countryside of such villages.

The facts are, with the restrictions on building homes for people to live in, because of these 70-year-old restrictive planning regulations, homes that the youngsters of Liverpool badly need, aren’t being built. Adding fuel to that fire, there has been a large dose of nimby-ism and landowners deliberately sitting on land, which has kept land values high and from that keeps house prices high.

Looking at the demand side of the equation, one might have thought property values would drop because of Brexit and buyers uncertainty. However, certain commenters now believe property values might rise because of Brexit. Many people are risk adverse, especially with their hard-earned savings. The stock market is at an all-time high (ready to pop again?) and many people don’t trust the money markets. The thing about property is its tangible, bricks and mortar, you can touch it and you can easily understand it.

The Brits have historically put their faith in bricks and mortar, which they expect to rise in value, in numerical terms, at least. Nationally, the value of property has risen by 635.4% since 1984 whilst the stock market has risen by a very similar 593.1%. However, the stock market has had a roller coaster of a ride to get to those figures. For example, in the dot com bubble of the early 2000’s, the FTSE100 dropped 126.3% in two years and it dropped again by 44.6% in 9 months in 2007… the worst drop Liverpool saw in property values was just 17.99% in the 2008/9 credit crunch.

Despite the slowdown in the rate of annual property value growth in Liverpool to the current 3.55%, from the heady days of 6.55% annual increases seen in late 2014, it can be argued the headline rate of Liverpool property price inflation is holding up well, especially with the squeeze on real incomes, new taxation rules for landlords and the slight ambiguity around Brexit. With mortgage rates at an all-time low and tumbling unemployment, all these factors are largely continuing to help support property values in Liverpool (and the UK).

For more thoughts on the Liverpool Property Market, please visit the Liverpool Property Market Blog www.liverpoolpropertyblog.com