Since 2014, we have seen some interesting subtle changes to the Southgate property market as buying patterns of landlords have changed ever so slightly.
The background to this story was the recently published set of buy-to-let (BTL) lending statistics. Looking back 12 months ago, 6,700 BTL mortgages were granted (in the same month) for £900m, meaning the average BTL mortgage was £134,300. Looking at last month’s figures, and as one might expect with the Brexit issue overhanging the property market, the lending figures were down, surprisingly, less than I thought. Last month, just over 6,100 new buy-to-let mortgages were granted for a total sum of £800m (meaning the average landlord mortgage was a respectable £131,100).
Curiously, I analysed the 2014 statistics, in the corresponding same month, only £1,030 million was borrowed on 8,300 buy-to-let properties (meaning the average buy-to-let mortgage was £124,100). It seems Brexit and the adverse press commentary on the housing market is having no effect on Investors buying habits.
Looking closer to home in Southgate, throughout 2018, I have been regularly chatting to more and more landlords be they seasoned professional Southgate BTL landlords or FTL’s (first time landlords) and their attitude is mostly positive.
Instead of participating in the negativity, those Southgate landlords that look with their eyes, will see the Southgate property market is doing reasonably well, with medium term rents and property values rising; as quite obviously from the mortgage figures .. landlords are still buying.
The question I get asked all the time is .. “What type of buy-to-let property should I buy”? You can make money from property through both the rent (expressed as a yield when compared to the value of the property) and how the actual value of the home itself changes.
Since 2014, property values in Southgate have risen by 26.4 % We have records of what each type of property (i.e. Detached/Semi/Terraced/Apartments) has achieved per square metre going back 20 years … and looking back over the last 5 years, these are the numbers .
The types of homes have similar percentage increases, whilst there are slight differences, in monetary terms, this equates to thousands of pounds.
The table below gives the breakdown in percentage terms.
The data indicates that detached and semi-detached homes have performed the best. However, like the £/Sq.M figures, these are just averages. When investing, the property you choose should give you a balance of yield and good long term Capital Gain.
For example, Southgate apartments haven’t been the lowest performers in terms of capital growth, though tend to generate a slightly better yield than houses. In part, it’s because several sharers can afford to pay more than a single family. However, houses tend to appreciate in value more rapidly and may well be easier to sell, simply because there are fewer being built.
Whilst these figures are averages, it’s a good place to start from. The bigger picture here though is this – irrespective of the economic and political headwinds, Southgate people still need a roof over their heads, and we as a Country, haven’t built enough homes to keep up with the demand since the late 1980’s.
So, what does it all mean for the short term? The market has tightened up in the past year and I foresee the trend continuing into 2020. Though based on the local market data in this analysis, in the medium term, demand has outstripped supply and prices and rents have increased.
The lack of social housing is compounding the supply issue. Neither Enfield Council nor Westminster have the billions of pounds required building the one hundred thousand Council houses per year nationally for the next decade to fix this issue. As the population grows, its Private sector landlords and house builders that have taken up the mantle.
Before I go …on average, housing associations and local authorities have built around 26,500 houses each year since 2010. The Labour government had a lower average, building about 19,000 homes per year, yet in the 1960’s, under both administrations, 180,000 councils were built per year!
If you would like to discuss any aspect of the Southgate property market or would like some further advice about the value of your home, we would love to hear from you, give me a call on 020 8366 9777 or email me [email protected]