What’s Next for the Runcorn Property Market?
Mon 27 Jul 2020
There is no doubt that coronavirus will affect the Runcorn property market, but how?
The ensuing economic challenges are going to impact the Runcorn (and UK) property market, but no one knows the real answer. The newspapers eulogise different opinions, but that’s all they are – opinions, and everybody’s got a different view. The truth of the matter is we don’t know and won’t know for another few months at least, if not more.
There have been some outstanding government support measures for tenants, landlords, home buyers and sellers (including a pause on evictions for tenants, and for landlords and homeowners, mortgage payment deferments and stamp duty reductions to make buying a home cheaper). While these are only temporary, they have done their job, meaning there is a good level of activity in the Runcorn property market.
A lot of that is pent-up demand from a couple of years of uncertainty because of Brexit. We also had the general election in late 2019, so there have been many reasons for people to sit on their hands. At the beginning of 2020, it was like a water hose ready to burst with the Boris Bounce in January and February. Then, just as things were beginning to get going in the Runcorn property market, we had everything freeze up for months during lockdown. So, since lockdown has lifted …
The Runcorn property market is open once again for business and there is unquestionably some impressive activity both in the sales and rental market
So, back to the original question and where are we going? I think what we will see is a subtle change to where people want to live because of the pandemic. People working from home has shown that the need to be in the big cities has reduced and as employees have realised, they can work very efficiently from home, plus they are happier and have a better work/life balance. Their employers are also happy as they get more work out of their staff and can reduce their costly office footprint in the cities. The same goes for Runcorn tenants as they want more from their rental homes. Three trends we have noticed is there is greater demand for properties with gardens, greater demand for Runcorn landlords who will accept pets (as they now can have them as they work from home) and finally, tenants’ willingness to pay top dollar for top-of-the-range properties. Meanwhile, more basic and uncared for properties without all the ‘bells and whistles’ need to go for a discount. There certainly has been a flight to quality.
What worries me is the fundamental future uncertainty in 2021 and beyond. What will things look like say in spring 2021 when the Stamp Duty reductions are phased out? Any property sold needs to have completed by the end of March 2021 to take advantage of the tax holiday, meaning you need to have sold your Runcorn property by November 2020 at the very latest to ensure your property purchase and sale deal goes through in time (as it is taking on average up to 17 weeks between sale agreed and completion). This is where the difference between a great solicitor, brilliant estate agent and awesome mortgage broker compared to average ones will show. Good ones, when all three are working together for you, can get the sale through in 6 to 8 weeks, not the national average of 17 weeks, meaning if you are cutting it fine, you might not be able to take advantage of the tax savings in the Spring. Give me a call if you want to know who the best of the best in Runcorn is to ensure you don’t lose out on those tax savings.
The value of the average Runcorn home currently stands at £145,800
So, what is going to happen to the Runcorn property market? It really depends on the economy as a whole, and of course, the property market is a large part of that. I know one thing that buy to let landlords and homebuyers don’t like is ambiguity, and the British housing market has always lived and breathed on emotion and sentiment. People will only buy and sell property (and borrow the money to make those transactions happen) when they feel good. Are all these things like Stamp Duty holidays just putting off the inevitable? Are we heading for the mother of all property crashes?
Well, let me put sentiment and opinion aside for a second and look at the simple facts.
We have an increasing population, yet we don’t build enough houses
Since 1995, we have built on average 150,200 properties per year. The Barker Report (2004) said the country needed 240,000 per year to satisfy annual demand for new homes and while the number of new homes built in the UK last year rose 1% to a 13-year high, only 161,000 homes were built. That means over the last 25 years, with the difference between actual homes built and the targets set out in the Barker Report, we have an inbuilt shortage of 2,245,000 fewer homes, meaning…
Since the millennium, property values in Runcorn have increased by 149.8%
Other factors have contributed to that. The average age of a person leaving their parents’ home in the UK is 24.4 years, and that has been dropping for a few years meaning more homes are required. People are also living longer (in 2000 the average person lived until 77.7 years, and now it’s 81.1 years – doesn’t sound a lot until one considers for each additional year the average person lives in the UK, we need an additional 356,500 homes). Finally, we have got immigration. In the year ending March 2019, 612,000 people moved to the UK (immigration), and 385,000 people left the UK (emigration) – meaning a net increase of 227,000 people (or a requirement of c.100,000 homes to house them in one year alone). All those factors in themselves mean…
We have more demand for Runcorn property than we have supply and that’s not going to change any time soon.
Property markets are driven (like all markets) by supply and demand, so I believe Runcorn property values can only rise in the long term. The question is whether the people of Runcorn will have the sentiment and confidence to borrow money on a mortgage and invest in Runcorn property. At the moment with ultra-low interest rates, borrowing money to buy a home has never been so cheap, and if you are in it for the long-term (which you should be with property), then I think it’s good news.
One piece of good news is that mortgage lenders are willing to lend up to 90% loan to value mortgages for first-time buyers (and in some rare cases 95%), albeit with a lot of strings attached. This is a good sign as the banks and building societies wouldn’t be lending at these levels if they were too scared.
Investing in property, be it for yourself to live in or buy to let is a long-term game. We might see an uplift in prices in the short term because of the demand mentioned above, then again, we might see a dip in 2021… yet again for the reasons mentioned above. Until we start to build new homes to the scale of 300,000+ a year (something that has never been achieved since 1969), the long-term picture appears to be good. Be you a Runcorn landlord, house seller or buyer; you have to be a lot more strategic and thoughtful about what you are going to do. If you would like to pick my brains, drop me a message or pick up the phone.
So those are my thoughts, tell me your thoughts for the future of the Runcorn property market?