- Hits: 330
The simple fact is we are not building enough properties. If the supply of new properties is limited and demand continues to soar with heightened divorce rates, i.e. one household becoming two, people living longer and continued immigration, this means the values of those existing properties continues to remain high and out of reach for a lot of people, especially the blue collar working families of Maidstone.
Looking at some recent statistics released by the Government, the ratio of the lower quartile house prices to lower quartile gross annual salaries in Maidstone Borough Council has hit 10.57 to 1.
What does that mean exactly and why does it matter to Maidstone landlords and homeowners?
If we ordered every property in the Maidstone Borough Council area by the value of those properties, the average value of the lower quartile properties (i.e. lowest 25%) would be £225,000. If we then did the same, and ordered everyone’s salary in the same council area, the average of the lowest quartile (lowest 25%), the average salary of the lowest 25% is £21,277 pa, thus dividing one with the other, we get the ratio of 10.57 to 1.
Assuming there is one wage earner in the house, the chances of a Maidstone working family being able to afford to buy their own home, when it’s over ten times their annual salary, is very slim indeed. The existing affordability crisis of people wanting to buy their own home is the unavoidable outcome of the decade on decade failure to build enough homes to keep up with demand. Nevertheless, improving affordability is not a case of just constructing more homes. Maidstone Borough Council needs to ensure more properties are not only built, but built in the right locations and of the right type and at the right price to ensure the needs of these lower income working families are met, because at the moment, they presently have few options apart from the private rental sector.
Looking at the historic nature of the ratio, it can clearly be seen in the graph below that this has been an issue since the early to mid 2000’s
However, if one looks at the historic data, those on the bottom rung of the ladder (those in the lower quartile of wage earners) used to be housed by the local authority instead of buying. However, the vast majority of council houses were sold off in the 1980’s, meaning there are much fewer council houses today to house this generation.
Many of the lower quartile working class families were given a lifeline to buy their own homes in middle 2000’s, with 100% mortgages, but the with the credit crunch in 2009, that rug (of 100% mortgages) was rudely pulled from under their feet. You see it is cheaper to buy than rent ... it’s the finding of the 5% deposit that is the challenging issue for these Maidstone working class families. So unless the Government allow 100% mortgages back, the fact is, demand for rental properties will outstrip supply.
In the long term, to alleviate that, I would suggest the Maidstone community hold their local politicians at Maidstone Borough Council to account for the actions they could take to ensure the affordability of housing and the extent to which they work with private developers and housing associations and aggressively use the planning tools at their disposal to safeguard the local community getting the new households we need. Maidstone Borough Council could make certain parcels of residential building land for private rented development only, eliminating the opportunity of the land being bought to develop large executive homes, which do not solve the current problem.
Yet in the short term, all this means is demand for rental properties will continue to grow, keeping Maidstone house prices high and Maidstone rents high.
If you are in Maidstone feel free to pop in to our office which is right at the bottom of the High Street (right next to river—don’t ask me what happened Christmas Day 2013!)
View the link below to view back dated edition of the Maidstone Property News!
Seekers are a family owned Estate and Letting agency established in 1982.
- Hits: 458
As our families grow bigger the need for more space, be that bedrooms or reception rooms, has grown with it. Also, as our older generation lives longer and nursing home bills continue to rise quicker than a rocket on the 5th of November (the average nursing home bill in the area being £706 per week) many families are bringing two households into one larger one.
So, should you move somewhere larger, or extend your Maidstone property to make it large enough for you and your family? In some circumstances the choice has been made for you. If you live in an apartment with no garden, there isn’t much of an opportunity of making it larger. But if you have a house with a garden or an attic with sufficient headroom, extending your home becomes a real prospect.
Even if it makes more sense to extend or move, the choice hangs on a number of different dynamics – your future plans, money (both saved and access to finance), in what way you are emotionally attached to your home, the particular area of Maidstone you live in and finally, the type/style of house you prefer.
Interestingly, the average British home is 968 sq.ft, which as you can see from the table, is in the middle of developed nations when it comes to the size of a property. Of the 1.11m homes sold in 2016 in England and Wales, the average floor area of the houses was 1,119 sq.ft – that’s about an eighth the size of an Olympic sized swimming pool. Apartments averaged 530 sq.ft that’s just over ten times bigger than an average garden shed. Looking at apartments and houses together, the average size of properties sold in England and Wales 968 sq.ft – are slightly smaller than the European average, and much smaller than households in the US.
So back to the question in hand.. extending does mean you will have a lot of inconvenience whilst the work is being carried out. The location of your Maidstone property, the quality of construction, what type of room(s) you want to add, your plot, neighbouring building lines, planning regulations and the overall demand for your type of Maidstone home, will make a vast difference to the financial repercussions of extending versus moving.
A medium-sized 270 sq.ft single storey extension (say around 17ft x 16ft) will add on average £73,525 to the value of a property in Maidstone
It’s important to note the end result of the extension needs to be a sensible and realistic home. A two bed semi-detached house extended to a four bedrooms with no lawn or driveway, or a home with outsized reception rooms downstairs and miniscule bedrooms upstairs, could be problematic if and when you come to sell your home in the future. Irrespective of whether your strategy is to live in your extended home for a long time, you will want to side-step outlaying a lot of money on costly building work that will make it tougher to sell.
In terms of what it would cost to build an extension, you can expect to pay on average between £140 to £200 per sq.ft, depending whether the extension is a single or double storey extension and other factors including finish and type of extension (note – I have seen it cost a lot more than these figures – so please speak with a builder) … So taking a mid line figure, that same 270 sq.ft extension on your Maidstone home would cost on average £55,080.
However, moving means there are substantial costs incurred - Estate Agency fees, Removal Van, Survey Fees, Legal fees and Stamp Duty on the property you are buying. Neither option is the obvious choice and comparing the costs of extending your Maidstone home to that of moving is not a stress-free undertaking.
How realistic each option is will probably come down to one thing .. your mortgage provider. You will need a considerable sum of equity in your Maidstone home before you can think of increasing your mortgage more, because most lenders will require you to have at least 10% to 20% equity left in your property after the extension or move has been done.
The best advice I can give .. don’t assume anything …. get advice and opinion from builders, mortgage brokers, architects, mortgage people and of course… an agent. Look at your options and make an educated decision with all the superficial and objective facts in front of you.
- Hits: 1042
Looking at the newspapers between Christmas and New Year, it seemed that this year’s sport in the column inches was to predict the future of the British housing market. So to go along with that these are my thoughts on the Maidstone property market.
With the average 5-year fixed rate mortgage at 1.98% (down from 3.47% in 2014) and 2-year fixed rate at 1.47% (down from 2.37% in 2014), mortgage interest rates offered by lenders are at an all-time low (even with the slight increase on the Bank of England base rate a few months ago). Added to this, there has been a low unemployment rate of 4% in Maidstone, which has contributed to maintain a decent level demand for property in Maidstone in 2017 (interestingly – an impressive 2,204 Maidstone properties were sold in last 12 months), whilst finally, the number of properties for sale in the town has remained limited, thus providing support for Maidstone house prices, meaning ….
Maidstone Property Values are 5.9% higher than a year ago
However, moving into 2018, there will be greater pressures on people’s incomes as inflation starts to eat into real wage packet growth, which will wield a snowballing strain on consumer confidence. Interestingly though, information from the website Rightmove suggested over a third of property it had on its books in October and November had their asking prices reduced, the highest percentage of asking price reductions in the same time frame, over five years. Still, a lot of that could have been house-sellers being overly optimistic with their initial pricing.
In terms of what will happen to Maidstone property values in the next 12 months, a lot will be contingent on the type of Brexit we have and the impact on the whole of the UK economy. A lot of people will talk about the Central London property market in the coming year, and if the banking and finance sectors are negatively affected with a poor Brexit deal, then the London market is likely to see more of an impact.
Nevertheless, the bottom line is Maidstone homeowners and Maidstone landlords should be aware of what happens in the rollercoaster housing market of Central London, but not panic if prices do drop suddenly there in 2018. Over the
last 8 years, the Central London property market has been in a world of its own (Central London house prices have grown by 89.6% in those last 8 years, whilst in Maidstone, they have only risen by 48.1%). So we might see a heavy correction in the Capital, whilst more locally, something a little more subdued.
Hindsight is always better than foresight and predicting anything economic is all well and good when you know what is around the corner. At least we have the Brexit divorce settlement sorted and, as the UK economy and the UK housing market are intertwined, it all depends on how we deal as a Country with the Brexit issue. However, we have been through the global financial crisis reasonably intact ... I am sure we can get through this together as well?
Oh, and house prices in Maidstone over the next 12 months? I believe they will end up between 0.2% lower and 1.5% higher, although it will probably be a bumpy ride to get to those sorts of figures.
If you would like to read more articles on my thoughts on the Maidstone property Market – please visit the Maidstone Property Market Blog http://maidstonepropertyblog.blogspot.co.uk
- Hits: 506
- Hits: 519
My research shows that certain types of Maidstone property are more affordable today than before the 2007 credit crunch.
Roll the clock back to 2007 just before the credit crunch hit which saw Maidstone property values plummet like a lead balloon and the Maidstone property market had reached a peak with the prices for Maidstone property hitting the highest level they had ever reached. Between 2008 and 2010, Maidstone property values lay in the doldrums and only started to rise in 2011, albeit quite slowly to begin with.
Nevertheless, even though property values have now passed those 2007 peaks, my research indicates that Maidstone property, especially flats/apartments, are now more affordable than they were before the 2008 credit crunch.
Back in 2007, the average value of a Maidstone flat/apartment stood at £164,258 and today, it stands at £193,036, a rise of £28,778 or 17.5%.
However, between 2007 and today, we have experienced inflation (as measured by the Government’s Consumer Price Index) of 25.97% meaning that in real spending power terms Maidstone apartments are 8.5% more affordable than in 2007. Looking at it another way, if the average Maidstone apartment (valued at £164,258 in 2007) had risen by 25.97% inflation over those 10 years, today it would be worth £206,916 (instead of the current £193,036).
The point I’m trying to get across is that Maidstone property is more affordable than many people think. Maidstone first time buyers can get on the ladder as 95% mortgages have been readily available to first-time buyers since 2010.
It really comes down to a choice and if Maidstone first-time buyers can get over the hurdle of saving the 5% deposit for the mortgage on the property – they will be on to a winner, especially with these ultralow mortgage interest rates, a mortgage can be between 10% and 30% cheaper per month than the rental payments on the same house.
So why aren’t Maidstone 20 somethings buying their own home?
Back in the 1960’s and 1970’s, renting was considered the poor man’s choice in Maidstone (and the rest of the Country) a huge stigma was attached to renting. However, over the last 10 years as a country, we have done a complete U-turn in our attitude towards renting - meaning that many people find renting a better option and a lifestyle choice.
Saving the 5% deposit means going without many luxuries in life (such as holidays, every satellite movie and sports channel, socialising or the latest mobile phone – even if only in the short term) therefore instead of saving every last pound to put towards a mortgage deposit Maidstone 20 somethings choose to rent.
There is no denying the simple fact that over the next 10 to 15 years, the people who choose to rent instead of buy in Maidstone will continue to rise.
Therefore, everyone in Maidstone has a responsibility to ensure that an adequate number of quality Maidstone rental properties are safeguarded to meet those future demands. Interestingly, what I have noticed though over the last few years are the expectations of Maidstone tenants on the finish and specification of their Maidstone rental property.
I have perceived that in the past, what a tenant wanted from their Maidstone rental property was moderately unassuming because renting a property was only a short-term choice to fill the gap before jumping on the property ladder. Before the millennium, wood chip wall paper and twenty-year-old kitchen and bathroom suites were considered the norm.
However, Maidstone tenants’ expectations are becoming more discerning as each year goes by. I have also noticed the length of time a tenant remains in their Maidstone property is becoming longer (and this was backed up recently by stats from a Government Report), although I have noticed a tendency for many Maidstone landlords not to keep the rental payments at the going market rates - maybe a topic for a future article for my blog?
The bottom line is this … Maidstone landlords will need to be more conscious of tenants needs and wants and consider their financial planning for future enhancements to their Maidstone rental properties over the next five, ten and twenty years - e.g. decorating, kitchen and bathroom suites etc etc ..
The present-day and future situation of the Maidstone private rental property market is important, and I frequently liaise with Maidstone buy-to-let investors looking to spread their Maidstone rental-portfolios. I also enjoy meeting and working alongside Maidstone first time landlords, to ensure they can navigate through the minefield of rental voids, the important balance of capital growth and yield and ensuring the property is returned back to you in the future in the best possible condition.