My concerns about the Solihull Property market

I am genuinely concerned about the Solihull property market, but in a way that might surprise you.  Rightmove announced that average ‘asking prices’ fell last month by 0.5% in the West Midlands, leaving them 3.2% 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 0.2% in the West Midlands.

Taking in to account all the data on the Solihull property market and 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.  Buyers in Solihull are looking for the larger proportion of the four and five bedroom properties, whilst there are a larger proportion of the smaller one and two bed properties, traditional semi-detached and smaller terraced houses/apartments 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 Solihull since the year 2000.  I revisited those calculations and it hit me how different types of properties had performed over the last 15 years.  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 detached house in Solihull has risen in value from £205,669 to £528,398, whilst the terraced house has risen in value from £96,879 to £239,700.  This does not seem unusual until you look at the percentage growth.  The detached has grown in value by 157% whilst the terraced by 147% which means that the gap between the inexpensive terraced and expensive detached properties has in percentage terms narrowed (this isn’t just a Solihull thing, it has happened across the Country).

I am concerned as more houses do need to be built, not only in Solihull but the West Midlands and across the UK as a whole.  In particular, there is specific need for more affordable starter homes for the growing demand created within the rental market by the increasing number of tenants and first time buyers.  The Government needs 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 they can ensure long term plans can be made and implemented this issue will get worse.

The country needs 200,000 houses a year to be built to keep up with demand, let alone address 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 Solihull 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 and the rental market will continue to grow.

Therefore investment in the local Solihull property market could be the best move to make, as the stock market hits yet another rocky time and becomes a higher risk investment strategy.  Everyone is different and trust me, there are many pitfalls in buy to let.  You must take plenty of advice and seek out the best opinion.  One source of opinion, specific to the Solihull property market is the Solihull Property Blog http://solihullpropertyblog.blogspot.co.uk/