2 Nov

Liverpool Home Owners Are Only Moving Every 16 Years (Part 1)

As I mentioned in a previous article, the average house price in Liverpool is 4.91 times the average annual Liverpool salary. This is more or less the same as the last peak of 2008, when the ratio was 4.92. A number of City commentators anticipated that in the ambiguity that trailed the Brexit vote, UK (and hence Liverpool) property prices might drop like a stone. The point is – they haven’t.

Now it’s true the market for Liverpool’s swankiest and poshest properties looks a little fragile (although they are selling if they are realistically priced) and overall, Liverpool property price growth has slowed, but the lower to middle Liverpool property market appears to be quite strong.

Scratch under the surface though, and a different long-term picture is emerging away from what is happening to property prices. Liverpool people are moving home less often than they once did. Data from the Office of National Statistics shows that the number of properties sold in 2016 is again much lower than it was in the Noughties. My statistics show…

The Total Number of Property Sales Per Annum in the Liverpool City Council Area Since 1995

1995       –              5,635                                    2006       –              9,459

1996       –              5,842                                    2007       –              9,344

1997       –              6,061                                    2008       –              5,271

1998       –              6,374                                    2009       –              3,324

1999       –              6,864                                      2010       –            3,740

2000       –              6,866                                    2011       –              3,682

2001       –              7,115                                    2012       –              3,480

2002       –              8,686                                    2013       –              4,606

2003       –              10,857                                   2014       –             5,430

2004       –              10,259                                  2015       –              5,630

2005       –              7,917                                    2016       –              6,013

Even though we are not anywhere near the post credit crunch (2008 and 2009) low levels of property sales, the torpor of the Liverpool housing market following the 2016 Brexit vote has seen the number of property sales in Liverpool and the surrounding local authority area level off to what appears to be the start of a new long term trend (compared the Noughties).

Interestingly, it was the 1980’s that saw the highest levels of people moving home. Nationally, everyone was moving on average every decade. Even though it was during the Labour administration of the late 1970’s where the right to buy one’s council house started, it was the Housing Act of 1980 that that really got council tenants moving, as Thatcher’s Tory government financially encouraged council tenants to buy their council-rented homes – for which countless then sold them on for a profit and moved elsewhere. The housing market was awash with money as banks were allowed to offer mortgages as well as the existing building societies, meaning it made it simpler for Brits to borrow even more money on mortgages and to climb up the housing ladder.

But coming back to today, looking at the property sales figures in the Liverpool area since 2010/11, a new trend of number of property sales appears to have started. Interestingly, this has been mirrored nationally. The reasons behind this are complex, but a good place to start is the growth rate of real UK household disposable income, which has fallen from 5.01% a year in 2000 to 1.68% in 2016. Also, things have deteriorated since the country voted to leave the EU as consumer price inflation has risen to 2.7% per annum, meaning inflation has eaten away at the real value of wages (as they have only grown by 1.1% in the same time frame).

With meagre real income growth, it has become more difficult for homeowners to accumulate the savings needed to climb up the housing ladder as the level of saving has also dropped from 4.26% of household income to -1.11% (i.e. people are eating into their savings).

Next week I will be discussing how these (and other issues) has meant the level of Liverpool people moving home has slumped to once every 16 years.

31 Oct

St. Anne’s Court, L3 3JP – One Bedroom Apartment – 11% Gross Yield!

I have just been scrolling through Rightmove and noticed this one bedroom apartment in St. Anne’s Court. Although I have not had dealings with this development myself, I can imagine it to prove popular with tenants due to its location which is very close to Liverpool City Centre.

The property appears to be spacious, and briefly comprises lounge, kitchen, bedroom, storage cupboard, bathroom. The property has double glazing throughout and benefits from residential parking.

I feel the property could achieve approximately £500 pcm, giving this property a fantastic 11% gross yield based on an offer of asking price! I would expect this property to attract young professionals, young couples or students due to its close proximity to the City Centre, and well-proportioned rooms.

This is currently the only property in the development on the market, however looking back at past sold prices, the property appears to of been priced to sell! The past two properties have sold for £60,000, and then the one before that was a two bedroom which sold for £90,000!

 

Click Here to view the previous sold prices in the development.

 

Click Here to view the property

 

If you more information on this property, please contact me on adamr@liverpoolpropertyblog.com

30 Oct

Tynwald Close, Liverpool, L13 7DS – Potential 9%-10% Gross Yield

 

I’ve had a look through new properties on the market or recently reduced properties to see if I can spot any potential good buys. Although there isn’t too much new stock on the market, I like the look of this property on Tynwald Close, Liverpool, L13 7DS.

The property is a mid terrace three bedroom house that benefits from driveway, kitchen/diner, new shower-room suite, double glazing, central heating and a rear yard. The property is new to the market with an asking price of over £70,000. The property looks in a good condition and would only need some cosmetic work to get it ready to be let out.

If rented out, then I would suggest a rental income of between £550pcm – £565pcm and if the property could be purchased for £70,000 then it would generate a gross yield of between 9% and 10%.

The property is on the market with Springbok, click here to view the property

If you want more information on this property or any other properties, then contact me on adamr@liverpoolpropertyblog.com

26 Oct

Liverpool Wages Outstrip House Price Growth by 19.04% since 2007

 I recently read a report by the Yorkshire Building Society that 54% of the country has seen wages (salaries) rise faster than property prices in the last 10 years. The report said that in the Midlands and North, salaries had outperformed property prices since 2007, whilst in other parts of the UK, especially in the South, the opposite has happened and property prices have outperformed salaries quite noticeably.

As regular readers of my blog know, I always like to find out what has actually happened locally in Liverpool. To talk of North and South is not specific enough for me. Therefore, to start, I looked at what has happened to salaries locally since 2007. Looking at the Office of National Statistics (ONS) data for Liverpool City Council, some interesting figures came out…

 Salaries in Liverpool have risen by 20.81% since 2007 (although it’s been a bit of a rollercoaster ride to get there!) – interesting when you compare that with what has happened to salaries regionally (an increase of 15.77%) and nationally, an increase of 17.61%.

Next, I needed to find what had happened to property prices locally over the same time frame of 2007 and today. Net property values in Liverpool are 1.77% higher than they were in mid 2007 (not forgetting they did dip in 2008 and 2009). Therefore…

Wages in the Liverpool area have increased at a higher rate than property values to the tune of 19.04% … meaning, Liverpool is in line with the regional trend

All this is important, as the relationship between salaries and property values is the basis on how affordable property is to all buyers. It is also vitally relevant for Liverpool landlords, as they need to be aware of this when making their buy-to-let plans for the future. If more Liverpool people are buying, then demand for Liverpool rental properties will drop (and vice versa).

As I have discussed in a few articles in my blog recently, this issue of ‘property-affordability’ is a great bellwether to the future direction of the Liverpool property market. Now of course, it isn’t as simple as comparing salaries and property prices, as that measurement disregards issues such as low mortgage rates and the diminishing proportion of disposable income that is spent on mortgage repayments.

On the face of it, the change between 2007 and 2017 in terms of the ‘property-affordability’ hasn’t been that great. However, look back another 10 years to 1997, and that tells a completely different story. Nationally, the affordability of property more than halved between 1997 and today. In 1997, house prices were on average 3.5 times workers’ annual wages, whereas in 2016 workers could typically expect to spend around 7.7 times annual wages on purchasing a home.

The issue of a lack of homeownership has its roots in the 1980’s and 1990’s. It’s quite hard as a tenant to pay your rent and save money for a deposit simultaneously, meaning for many Liverpool people, home ownership isn’t a realistic goal. Earlier in the year, the Tories released proposals to combat the country’s ‘broken’ housing market, setting out plans to make renting more affordable, while increasing the security of rental deals and threatening to bring tougher legal action to cases involving bad landlords.

This is all great news for Liverpool tenants and decent law-abiding Liverpool landlords (and indirectly owner occupier homeowners). Whatever has happened to salaries or property prices in Liverpool in the last 10 (or 20) years … the demand for decent high-quality rental property keeps growing. If you want a chat about where the Liverpool property market is going – please read my other blog posts on www.liverpoolpropertyblog.com or drop me note via email, like many Liverpool landlords are doing.