Solihull Property Market - Asking Prices Drop but Values rise

Those of you who regularly read my weekly articles in the Solihull Property Blog will know that I like to keep abreast of the Solihull property market. Something attracted my attention this week about the local property market, something I wanted to share with you.

 Over the last month asking prices in the town have dropped, yet property values have increased.  The average asking price of a Solihull property, according to Rightmove fell 0.1% this month yet the average value of a Solihull property rose by 0.3%.

So how does this relate in monetary terms?  The average asking price of a Solihull property is down slightly to £283,800 whilst the average value is now £332,000. You will note the average value is higher than the average asking price. This is because in Solihull there are more properties on the market for sale, at this moment in time, which are in the lower to middle market, than the middle to upper market, thus reducing the overall average asking price.

So why the difference? Technically an ‘asking price’ can be any price that a homeowner wants to place his or her property on the market for. In the summer months, the market is normally slightly quieter, so those left on the market wanting to sell often temper their asking prices in these months to try and generate interest in their property.

On the other side of the coin, the property ‘value’ is the price that a willing buyer is prepared to pay and a willing seller is prepared to sell at.   Therefore in a nutshell, Solihull property values are continuing to rise and those homeowners in Solihull who have properties on the market last month on average, reduced their asking prices ... great news for buyers!

In previous articles, I have written about the continued fundamental shortage of property coming on to the market compared to buyer demand. That is especially true for homeowners wanting to upgrade to a better house/location.  I can appreciate Solihull home owners are reluctant to put their own property on the market speculatively and wait for the right property to become available this can mean that some high demand locations could suffer from a property stalemate.

‘Most homeowners don’t want to sell and have nothing to buy.’

But that’s the beauty of the much maligned English and Welsh house buying process; vendors can find a purchaser for their property, then ask them to wait. By agreeing a sale (subject to contract) before you try to buy sounds concerning to many, but with fewer properties for sale you need to find a buyer for your property or it is likely you will not be deemed in a ‘proceed-able’ position and may be treated as a less serious buyer yourself. As long as your buyer is aware, if you cannot find the right home for you, you can delay the deal with your purchaser until it you can find the right property for you, or you could rent for short term. If nothing suitable comes along and you lose your buyer then the worst outcome is that you have to find another purchaser or take your property off the market and stay put for the time being; as long as you mention this at the start they should not have committed to any costs until you have agreed your onward purchase.

However, for the landlord/buy to let investors, these potential problems are nothing further from the truth. As I write this article, there are 270 flats for sale, over 62 terraced houses and over 200 semis for sale in Solihull.  Landlord/buy to let investors can usually pick up some bargains in the autumn months, as sellers who are selling their homes often have a pressing need to sell by this time of the year.

The types of houses a Solihull landlord typically buys, are not the same types as the homeowners are wanting to move to; possibly a more up market area of the town as they are attracted by larger semis and detached properties. The best types of properties for buy to let are the smaller flats, terraced and semis (not the big detached ones). There are in fact too many of these smaller properties for sale … just look at the numbers of properties for sale (mentioned in the previous paragraph).

If you are a landlord or thinking of become one for the first time, and you want to read more articles like this about the Solihull Property Market together with regular postings on what I consider the best buy to let deals in Solihull, out of the hundreds of properties on the market, irrespective of which agent is selling it, then you might like to pop into our Solihull property lounge for a drink and a chat. 

Solihull tenants feel the squeeze as rents continue to rise

As my regular readers know, my passion is to talk about the Solihull property market as a property agent, I hope this is of interest to both homeowners and buy to let landlords alike. However, this week, I want to highlight the plight of the tenants of Solihull as more and more of their wages are being taken up by ever increasing rents.

The cost of renting a home in Solihull has nearly broken through the £1000 a month barrier as the average rent for a property in the town, now stands at £980 per month, a rise of 1.2% last month, leaving rents for new lets 4.5% higher than they were 12 months ago.

House price inflation has certainly eased in Solihull from the heady days of 2014, but still with retail price inflation (for goods and services) reducing to 0% any increase in property values, no matter how small, means in real terms property is still getting more expensive. Meanwhile, many tenants have given up saving for a mortgage deposit as rents continue to take more and more of their wage packets leaving nothing to save for a deposit. That means, more and more tenants are deciding to rent for the long term and therefore the desire for decent high quality rental properties continues to exceed the available rental stock.

I would go as far as to suggest that rents are a good barometer to the state of the local economy as a whole and strongly believe that the recent increase in Solihull rents are a sign that the Solihull economy is picking up. 

This means Solihull landlords are continuing to capitalise on the Solihull property market. The most recent Land Registry data suggests the annual property price rises in the town have eased over 2015, leaving property values only 3.76% higher than 12 months ago, so as property price growth is easing off, with the increased rents, rental yields are strengthening for the first time in years to compensate. The mortgage market has become more stable after the mad months of May and June after the Tory’s got back into No.10, and so, everything is set to be good news for landlords; even with the Chancellors change of tax rules in the coming years for buy to let mortgages.

You can get some amazingly low mortgage rate deals at the moment, so with mortgage rates so low and returns still extraordinarily attractive, this is a rare situation and a great opportunity to invest in rental properties.

However, (you knew there would be a however!), it’s all about buying the right property at the right price. Not all property types are seeing equal rises in rents, capital growth and time on the market.  For example, the average length of time the 78 Solihull properties, between £500 to £1000 per month, are up for rent is 43 days, whilst the average length of time the 20 properties at £1000 to £2000 per month is 68 days and 4 properties that fall into the £2000 to £5000 per month price bracket is also 68 days. These average timeframes seem long, I have to say that in our experience they are a lot shorter.

When you start comparing different parts of Solihull, the numbers are even stranger!  The bottom line is that you must take advice and opinion. One source of advice and opinion is the Solihull Property Blog. In the Solihull Property Blog, you will see many more articles like this, discussions and even what I consider to be the best buy to let deals around, irrespective of which agent is selling it.

Whether you are a landlord, ‘Homes Under the Hammer’ addict or just a homeowner who is interested in what is happening to the local property market, then please email me or pop into our Solihull property lounge for and drink and a chat. 

A lot can happen in a decade — looking back 10 years at the Solihull Property Market

Doesn't time fly? I was only saying to my partner the other day, whilst looking over old photos, how time does literally fly by. It doesn't seem like two minutes since we were taking the Christmas Decorations off the tree and now the shops are full of Christmas Trees again… so soon! The years add up and sometimes, it’s just good to take stock of what has happened and where we have got to in life.

In today’s article, I want you to go back ten years. Why ten years?  Well, it’s quite an important birthday for me and the team in Solihull which will tell you about that a little later. So with that in mind, as my regular readers will know, my real passion is everything to do with the Solihull property market, so let’s take a step back ten years and see what has happened to the Solihull property market...

• 3,652 days or ten years is a long time in anyone’s books, especially in the property market. So this is what has happened in Solihull over the last ten years...
•  The population of Solihull has increased by 6,908, there are now 205,087 people living in the Solihull area.
• The value of an average detached house in Solihull has risen from £368,917 to £399,964, a rise of £31,047
•  Roll the clock back 10 years, and 6,288 people lived in 2,951 rental properties in Solihull. Now, there are 18,045 people living in 7,795 rental properties
• The value of an average semi detached house in Solihull has risen from £191 347 to £207,450 an increase of £16,103 increase
• Despite the increase in renting, the number of people who own their own home in the Solihull area has hardly changed. Go back ten years and 63,586 properties were owner occupied. Ten years later and that figure has hardly changed at 63,559
•  The value of an average terraced / town house in Solihull has risen from £139,133 to £150,843 an increase of £11,710
• 30,558 properties have sold and changed hands in Solihull over the last ten years
• The value of an average apartment / flat in Solihull has risen from £130,021 to £140,963 a rise of £10,942
•  Under the ‘Right To Buy’ scheme, exactly 800 Solihull Council tenants bought their own Council House
• 5,126 new properties have been built in Solihul
•  Have you noticed less for sale boards? Less people are moving In Solihull.  Ten years ago, 4,160 properties sold in Solihull area in one year. In the last twelve months only 3,237 properties have sold, meaning there has been a drop 22.18% in the number of properties sold.

... and one final thing, our Chairman James, and old school pal Shane Bland started a property management business soon to be joined by Carina and Centrick Property was born.  James worked in the automotive industry, but always had a passion for property. Ten years later, that newly established agency has grown into Centrick Property group; with offices in central Birmingham, Nottingham, Solihull and London.  James, Carina and Shane run the firm as an extended family:  we care, we are friendly and what’s more we are efficient and always strive to be professional.  Over the last decade, we have been selling, renting and managing residential and commercial property, finding tenants for landlords, looking after purchasers and vendors alike.  Currently looking after over one billion pounds worth of client assets, we must be doing something right, we are all very proud to be part of such a successful and caring business.

So, I hope you can join me in celebrating with James, Carina, Shane and all the Centrick Property family in our 10^th Birthday celebrations, as most of you reading this will know, running your own business is one of the hardest, yet fulfilling things you will ever do and to still be successful after 10 years is an incredible achievement.. here’s to the next 10 years !!!

Solihull’s £2.8 billion Mortgage Powder Keg

Eight years ago in the summer of 2007, hardly anyone had heard of the term ‘credit crunch’, but now the expression has entered our daily language and even the Oxford Dictionary.  It took a few months throughout the autumn of 2007, before the crunch started to hit the Solihull Property market but in November / December 2007 and for the following seventeen months, Solihull property values dropped each and every month like the proverbial stone. The Bank of England soon realised in the late summer of 2008 that the British economy was stalling under the continued pressure of the Credit Crunch. Therefore between October 2008 and March 2009, interest rates dropped six times in six months from 5% to 0.5% to try and stimulate the British economy. 

Thankfully after a period of stagnation the Solihull property market started to recover slowly in 2011, but really took off strongly in late 2013 / early 2014 as property prices started to rocket. However the heat was taken out of the market in late 2014/early 2015 with the new mortgage lending rules and some uncertainty, when some residents had a dose of pre–election nerves.  

With the Conservatives having been re-elected in May the Solihull property market regained its composure and in fact, there has been some ferocious competition among mortgage lenders which has driven mortgage rates to record lows. Whilst I have no actual figures to back this up, I know an awful lot of long serving bank managers, mortgage arrangers and people in the finance industry, all of whom have told me on previous occasions when interest rates rose (1987, 1992, 1997 and 2003), it wasn’t the first rate rise that was the catalyst for many homeowners and landlords to remortgage but the second or third increase.  The reason being that it was only by the time of the third rise in the rates, that it started to hit the wallet.  However, the issue is, by the time of the second or third r rise, the best fixed rates, were in all instances, no longer available as they had been pulled by the banks months before.

But here is the good news for Solihull homeowners and landlords, over the last few months a mortgage price war has broken out between lenders, with many slashing the rates on their deals to the lowest they have ever offered.  I read that the well respected UK financial website Moneyfacts said only a couple of weeks ago, that the average two year fixed rate mortgage has fallen, 12 months ago from 3.6% to just under 2.8%.

Interestingly, according to the Council of Mortgage Lenders, the level of mortgage lending had soared to a seven year high in the UK.  So what about Solihull?  In Solihull, if you added up everyone’s mortgage, it would total £2.8 billion.  Even more interesting is when we look at Solihull and split it down into the individual areas of the town,

• B90 - Shirley, Solihull Lodge, Majors Green, Dickens Heath, Cheswick Green   £825.3m
• B91 - Solihull £742m
• B92 - Olton, Elmdon, Bickenhill, Hampton-in-Arden £604.1m  
• B93 - Knowle £446.3m
• B94 - Hockley Heath, Earlswood £202.4m

Since 1971, the average interest rate has been 7.93%, making the current 0.5% very low.  So, if interest rates were to rise by only 2%, according to my research, the 11,147 Solihull homeowners, who have a variable rate mortgage would, combined, have to pay an approximate additional £31,920,000 a year in mortgage payments. 

That means every Solihull homeowner with a variable rate mortgage, will on average have to pay an additional £2,864 a year or £239 a month in interest payments.

I know over the last couple of posts, I have talked about mortgages a lot however, I am not a mortgage arranger but a letting / estate agent and as regular readers know, I always talk about what I consider to be the most important issues when it comes to the Solihull property market and at the moment, in my humble opinion, this is the most important thing!

Should you require any further assistance on the Solihull Property market feel free to pop into our Solihull Property lounge or email me: jane.morcom@centrickproperty.co.uk

How will interest rate rises affect the Solihull property market?

A couple of weeks ago, I mentioned how the Bank of England has been indicating recently that UK interest rates will be going up in the not too distant future. Therefore if you are one of the 19,556 homeowners in Solihull who has a mortgage, it may be worth considering your options and start to budget for an interest rate rise. However if you are a landlord who owns one of the 4,820 rental properties in the town, whilst your exposure to interest rate rises is lower it is most certainly something you should be aware of.

Since the spring of 2009, British interest rates have been at a record low of 0.5%. It’s not a case of if, but more when, they will rise. Some people think it will be before Christmas, although I believe it will be early in to the New Year around Easter time when they do rise. I also expect that the increase will be slow, steady and limited. It depends on what happens to UK wage rises, UK inflation and the general state of the British economy. Nevertheless as much as we would love to pull the shutters and ignore what’s happening in the world, we have to recognise that we are part of a global economy and global economic issues prevent an abrupt and instantaneous rise in interest rates.

Those Solihull landlords who do have a mortgage, need to remember that as interest rates rise and their monthly mortgage costs rise, it’s easy to say you will look at your mortgage next month, before you know it Christmas will be here!  Don’t forget mortgage lenders will remove the juicy low rate mortgage deals a few months before an interest rate rise. Speak to a qualified mortgage advisor, there are lots of them in Solihull and seriously consider fixing your mortgage rate now.  You didn’t buy your Solihull buy to let property for it to become a millstone around your neck. It’s all about mitigating your risks i.e. your costs and maximising your income to make your buy to let property the investment you want it to be.

However on the other side of the coin, two in three landlords who have bought property since 2007 have done so without a mortgage. A rise in interest rates might be a good thing, I’ll give you some background first, and then I’ll explain why. Solihull landlords have seen the return on investment for their Solihull buy to let property over the last couple of years, perform very well indeed with Solihull property values rising by 21.11% since the Spring of 2009. However when rates do rise,  more expensive mortgage rates will ease the demand for borrowing but on the other hand it may temper house price growth; making the property market more competitive... therefore we should see the return of some bargain property buys in Solihull!

Finally although I can ask all Solihull homeowners and Solihull landlords, who have a mortgage that isn’t fixed to recognise that rates will rise throughout 2016 to 2018 and will continue to move steadily upwards towards more viable and feasible long term levels.  I am not qualified to give mortgage advice and this is my personal opinion, so please speak to a qualified mortgage broker and if appropriate, fix your mortgage before interest rates rise. Don’t say I didn’t warn you!

In the meantime, if you are a landlord looking for a bargain now, don’t despair ... there are plenty out there, if you know where to look! One place is Rightmove, another Zoopla plus other smaller, less popular portals. However sometimes you can’t see the wood for the trees. At the time of writing Rightmove had 877 properties for sale in Solihull, Zoopla 178 properties for sale in the town ... where do you start? A lot of savvy Solihull landlords like to pop into our Solihull property lounge and discuss the property market and how I can help them.