The ‘Liquorice Allsorts’ Cambridge Property market

 

 

Despite the UK economy heading in the right direction with record low mortgage rates and unemployment  figures dropping,  the rate of property prices rising in Cambridge have tempered since the start of the year. This slow but sure downward trend in the rate of growth has been in evidence since mid-2014.  Property value increases continue to outpace the growth in salaries, however the gap is closing, helped by a lift in salaries over the last 6 months.  Property values in the East region as a whole are 8.8% higher than a year ago.  Compare this to the neighbouring regions of the East Midlands at 2.9% higher and the South East at 9.1%, the majority of the country continue to see annual house price gains - the exception being Wales which recorded a slight  decline of -0.6%.

Even with the tempering in house price inflation, it does not necessarily change my outlook that property prices are likely to be firmer over the second half of 2015 amid heightening activity in the Cambridge property market.  As stated in a previous article, there is a current shortage of properties on the market, restricting supply, which in turn will provide stability and support to Cambridge property prices. Therefore, my overall opinion is that Cambridge property prices will rise by 6% over 2015 and roughly the same in 2016.

Property investment is a long term business.  Buying the right sort of property is vital. I have recently been speaking with a number of Cambridge landlords about the importance of a balanced portfolio, when buying and renting out property. The balance between buying properties that offer good monthly returns (high yields) but quite often offer poor capital growth (i.e. they don't increase in value that much over the years compared with the average) verses properties that do go up in value quicker but often offer a lower yield.  So, what type of properties have performed best over the last few years in Cambridge, especially in terms of their capital growth?

When comparing  what the average price of detached, semi-detached, terraced and flats were selling for back at the start of the Millennium to the present.  The results are quite remarkably different, almost like a bag of Liquorice Allsorts, as the different types of property have performed poles apart over the last 15 years:

·         Detached Houses in 2000 were selling on average for £251,713 and so far in 2015, they have been selling on average in Cambridge for £605,845 a rise of 141%

     

·         Semi -Detached Houses in 2000 were selling on average for £158,849 and so far in 2015, they have been selling on average in Cambridge for £403,512 a rise of 154%

·         Terraced Houses in 2000 were selling on average for £133,451 and so far in 2015, they have been selling on average in Cambridge for £418,121 a rise of 213%

·         Flats and Apartments in 2000 were selling on average for £86,575 and so far in 2015, they have been selling on average in Cambridge for £308,147 a rise of 256%

Moving forward, what should new and existing buy to let landlords do with this information?  Well, the questions that I seem to be asked on an almost daily basis by landlords are:

·         “Should I sell my property in Cambridge?”

·         “Is the time right to buy another buy to let property in Cambridge and if not Cambridge, where?”

·         “Are there any property bargains out there in Cambridge to be had?”

Many other Cambridge landlords, who are with both us and other Cambridge letting agents, like to pop in for a coffee,  pick up the phone or email us to discuss the Cambridge property market, how Cambridge compares with its closest rivals (Bedford, Ely and Huntingdon), and hopefully answer the three questions above.  I don’t bite, I don’t do hard sell, I will just give you my honest and straight talking opinion and look forward to hearing from you.

 

 

2 bedroom apartment for sale offering an easy 5.0% Yield

This apartment is situated in the popular Rustat Avenue, off Rustat Road and forms part of a popular residential area just of the south of the City centre. Up for sale with Redmayne Arnold and Harris for offers in the region of £320,000 and close to excellent schools, the cinema, leisure facilities and restaurants on Hills Road. Within walking distance of Cambridge railway station, accessed from the Rustat Road cycle bridge, this apartment is convenient for Addenbrookes Hospital, the Boimedical campus and the University meaning that it is certain to capture you a great tenant. It is also within easy reach of schools in both the state and private sector including Hills Road Sixth Form College meaning that an achievable vent of £1350pcm could be obtained offering you a yield of 5%
Looking through the pictures this apartment appears to be ready to let so if your looking to invest and to start earning quickly then please follow the link below where you will find full details of this property and further pictures:

http://www.rightmove.co.uk/property-for-sale/property-53579303.html

Ideal Investment opportunity offerimg a tenent and a 5.2% yield

So today I have found for you this ideal investment opportunity which is up for sale with Belvior for £265,000. This two bed apartment is situated on the popular development of Orchard Park, convenient for Cambridge Science Park, A14 and the City Centre. This 1st floor apartment comprises 2 double bedrooms, large lounge/diner and fitted kitchen with built in appliances, gas central heating and boasts allocated Parking.
Not only do you get all of this for your money but this apartment is also being sold with tenants in Situ so you don't even need to look for them. A property like this would rent for around £1150pcm which in turn would make you a yield of 5.2%

For more pictures and information please see the link below:
http://www.rightmove.co.uk/property-for-sale/property-53589734.html

Are ‘would be’ Cambridge homeowners warming to the idea of renting?

I was reading a report the other day produced by the Halifax, about the UK property market and why more and more of the younger generation seem to be renting rather than buying. I find it fascinating that over the last ten years, the British obsession of buying a house almost as soon as you left school, and the fact that if you rented you were seen as a second class citizen, has turned on its head to a point where the hopes and dreams to own a nice home will be replaced by the ambition simply to live in one.

In the latter half of the 20th Century, you left school, got a job, bought a small house and kept buying and selling property, constantly upgrading until eventually they carried you out in a box. However, the perceived shame and stigma of renting is no longer the case, as it seems that the British are now beginning to accept a lifetime of renting. This is a very important consideration for both Cambridge homeowners and Cambridge landlords as it will transform the way the Cambridge property ladder looks in the future and I might ask whether or not it will exist at all for some people? The make up of households is one important factor, especially in the Cambridge property market. The normal stereotypical married couple, two kids and dog of the 1970’s and 80’s has changed. More and more we have the need for larger houses where two families come together after divorces (+ kids) and need a property to house everyone through to an increase in the number of one person households.

Looking at the data for Cambridge, of the 11,170 private rental properties in the Cambridge City Council area, 27,61% of those rented properties are one person households (3,084 properties). However, when we compare the number of one person Cambridge households who have bought their own property with a mortgage (ie therefore they are still in work), of the 22,171 owner occupied households in the area, only 2,221 of those properties are a one person household (ie 10%). Compared to a decade ago, this explosion in demand for decent high quality rental properties that one person households require has not been met with an increase in supply of such properties.  More and more I believe Cambridge landlords need to consider this change in the make up of Cambridge households, as I believe this could be an opportunity. As an aside, another interesting stat that raised an eyebrow was that 15.69% of those 11,170 rental properties (280 properties) are lone parents households as well. Again, another possible opportunity that Cambridge landlords might want to consider in their future investment plans.

It is true that the Governments introduction in 2013 of the Help to Buy scheme, where first time buyers only needed a 5% deposit, changed the perception of peoples’ ability to buy without having to save ten’s of thousands of pounds for a deposit. However, it might surprise you, 95% mortgages were re-introduced within six months of the Credit Crunch in late 2009, so again it comes down to people’s own perception. Many youngsters think they won’t get a mortgage, so don’t even bother trying.

Coming back to the deposit, it’s still a fact that once you start renting it becomes that much harder to save for a deposit, regardless of the size. Interestingly, 7 out of 8 renters polled by the Halifax (86% to be exact) refuse to sacrifice the quality of accommodation they currently live in to reduce the amount of rent they pay in order to save for a deposit.  This is the crux and the real reason why people aren’t buying but renting... and why demand for renting will continue to grow in the future (ie good news for landlords). Cambridge tenants can upgrade the quality and size of the property they live in for a minimal rent increase. The average rent of a two bed property in Cambridge is £1,301pm, a three bed is £286pm more at £1,587pm, whilst the average four bed rent is £1,869pm. If you had to make that jump when buying, the monthly mortgage payments would be stratospherically more than that!  Without any social pressure and better quality rental properties compared to a decade ago, we will become a nation of renters within the next generation, as the UK is becoming more like Europe, where renting is ‘the norm’. Who is going to supply all these properties to rent? Landlords! Whether you are an existing landlord looking to grow your portfolio or looking to become a ‘first time landlord’, my thoughts are take advice from as many people as possible. However, as the majority of landlords buy their buy to let properties in the same town they live, you will need specific advice about Cambridge itself. One place for such advice and opinion is the Cambridge Property Blog http://cambridgeproperty.blogspot.co.uk/

 

 

An excellent investment opportunity with a minimum yield of 5.1%

An excellent opportunity to purchase a good size three bedroom semi detached city home with a good size garden offering scope for extension. This property is up for sale with Tylers for offers in the region of £310,000 but is in need of some updating and improvements.
Worst case scenario if you purchased the property at the full asking price ("which if I'm honest it is worth that") and then done a quick refurbishment saying a spend £3000 making your total spend £313,000 you could then instantly let the property for around £1350pcm offering you a yield of 5.1%
The property will certainly increase in value, it boasts a great location and has room to extend making this an investment where you could start small and increase your portfolio without having to buy more properties just yet, as you earn from this property you could extend slowly growing your investment at your own pace.

This property is great for the first time investor.

For further detail please see the link below:
http://www.rightmove.co.uk/property-for-sale/property-35411271.html

Cambridge Property Market Update

The Land Registry have just released their latest set of figures for the Cambridge Property market. It makes interesting reading, as average property values in Cambridge remained static in May. This leaves average property values 7.2% higher than 12 months ago, meaning the annual rate of growth in the City fell to its lowest level since April 2014. When we compare Cambridge against the regional picture, East of England property values rose by 1.6%, leaving them 8.8% higher than a year ago.

Obviously this is a far cry from the price rises we were experiencing in Cambridge throughout 2014. At one point (November 2014 to be exact) property values were rising by 11.4% a year. All the same, even with the tempering of the Cambridge property values in 2015, property values are still higher. This is good news for local homeowners who had been affected by the downturn after 2007 and still find themselves in negative equity.

However, the thing that concerns me is that the average number of properties changing hands (i.e. selling) has dropped substantially over the last 12 months in the City. In March 2014, 190 properties sold in Cambridge but in March 2015, that figure dropped to 126.  I have been in the Cambridge property market for quite a while now and the one thing I have noticed over the last few years has been the subtle change in the traditional seasonality of the Cambridge property market. It has been particularly noticeable this year in that the normal post Easter flood of properties coming onto the market was not seen. This has made an imbalance between supply and demand, with less houses coming onto the market there is simply not as much choice of properties to buy in Cambridge and with the population of Cambridge ever increasing, this will generally strengthen house price growth for the foreseeable future.

 

So what does all this mean for Cambridge landlords or those considering dipping their toe into the buy to let market for the first time? For many people, buy to let looks a good investment, providing landlords with a decent income at a time of low interest rates and stock market unpredictability.

However, if you are thinking of investing in bricks and mortar in Cambridge, it is important to do things correctly. As an investment to provide you with income, for those with enough savings to raise a big deposit, buy to let looks particularly good, especially compared to low savings rates and stock market yo-yo’s. I must also remind readers, landlords have two opportunities to make money from property, not only is there the rent (income), but with the property market bouncing back over the last few years, property value increases has spurred on more investors to buy property in the hope of its value continuing to rise.

Savvy landlords with decent deposits can fix their mortgages at just over 3% for five years, making many deals stack up. Nevertheless, low rates cannot stay low forever, because one day they must rise and you need to know your property can stand that test. I saw some Cambridge landlords struggling in the mid naughties, when interest rates rose from 3.5% in July 2003 to 5.75% in July 2007. That might not sound a lot, but that was the difference of making a £100 a month profit in 2003 to having to make up a shortfall in the mortgage payments of £100 per month in 2007.

Its true many landlords were thrown a life raft when the base rate dropped to 0.5% in March 2009. Whilst interest rates have remained there since, mark my words, they will rise again in the future. However, even with the potential for costs to rise, demand for decent rental properties remains high as there are ever more tenants in the market, driving up demand and thus rents. The British love of bricks and mortar plus improving mortgage deals also add up to fuel the buoyant Cambridge property market.

If you are planning on investing in the Cambridge property market, or just want to know more, things to consider for a successful buy to let investment, one source of information is the Cambridge Property Blog http://cambridgeproperty.blogspot.co.uk/

Semi-detached house currently let as 4 rooms and communal areas

After trawling through Rightmove and Zoopla and not actually finding many great investments over the last couple of weeks I have finally come across this great investment opportunity and potential gold mine. This semi-detached house in Darwin Drive is up for sale with Bush for offers in the region of £345,000.
This particular property is an established 1930's semi detached house that is currently laid out as a house of multi occupancy, with 4 letting rooms, It benefits from double glazed windows and gas fired central heating and comprises entrance hall, bedroom, sitting room 16'5 x 11'5, kitchen, rear hall, cloakroom, first floor landing, three bedrooms and a bathroom, all of this and off street parking to the front of the property & side pedestrian access to a good size garden in excess of 80' in depth making this the perfect student let at the moment.

Now as there are no other pictures available I will take an educated guess that the inside isn't that great? so based upon that assumption I would estimate that the rooms would be letting currently for around £450pcm each giving you a rental value of £1800pcm and on that basis alone a yield of 5.2% - not bad for instant investment but what if you use your head a little?

Ok so now we look at the location - Darwin Drive is located off of Histon Road, providing convenient access to the A14, M11, and Cambridge Science Park meaning that you could also capture the interest of a group of working professionals and this is where things could become a lot more interesting; now say you offer £335,000 and it gets excepted, you then bang in a new kitchen and bathroom and give the entire property a face lift - I have seen properties like this turned round on 15K and that's providing a good quality kitchen, bathroom & decent bedroom furniture to each room too.
So now your property has cost you £350.000 but equally now you are marketing your rooms at £575 per room giving you a monthly income of £2300 increasing your yield to 7.88% and that's without considering that I mentioned earlier "the 80' Garden to the rear" - perhaps a future rear extension and a potential 3 bedrooms and a second bathroom could be considered?

What are you waiting for? check this property out here: http://www.rightmove.co.uk/property-for-sale/property-53173829.html

Why are less Cambridge people moving house?

 

During my school years, my parents seemed to move every other year (or it seemed that way). In reality, looking back at the house moves, we actually moved four times before I left home. However, whilst my parents kept the removal companies in business whilst I was at school, from research I have carried out it shows things have changed considerably in Cambridge over the last few decades, and interestingly, the trend is getting worse ... for the removal people at any rate!

In Cambridge, there are 55,453 properties. However, after we remove the 12,271 council houses, 13,862 privately rented houses and 835 houses where the occupants live rent free, that leaves us with 28,485 owned properties (be that 100% outright, with a mortgage or shared ownership). This means 51.4% of the properties in Cambridge are occupied by the owner (the national average is interestingly 64.2%) but the number of people who have sold and moved house in Cambridge, over the last 12 months, has only been 3,612. This means on these figures, the homeowners of Cambridge are only moving on average every 7.88 years.

These are the reasons. Firstly, the cost of moving house has risen over the last twenty years. Secondly, with many re-mortgaging their properties in the mid 2000’s before the price crash of 2008, there is a reluctance or inability in a small minority of homeowners to finance a home sale/purchase, due to lack of equity. These are both factors driving fewer moves by existing homeowners.

However, the big effect has been the change in house price inflation. Back in the 1970’s and 1980’s, house prices were doubling every 5 to 7 years. Even in Greater London, with its stratospheric property price increases over the last few years, it has taken 13 years (August 2002 to be exact) for property values to double to today’s levels.

This change to a relatively low inflation Cambridge property market (i.e. Cambridge property values not rising quickly) is significant because the long term consequences of sustained low house price growth is that it eats into mortgage debt more slowly than when property price inflation is higher. Cambridge homeowners cannot rely on inflation to shrink their debt in real terms as much as they did in say the 1970’s and 1980’s.

So what does this all mean for Cambridge buy to let landlords? Well for the same reasons existing Cambridge homeowners aren’t moving, less ‘twenty something’s’ are buying their first home as well. Cambridge youngsters may aspire to own their own home, but without the social pressure from their peers and parents to buy their first property as soon people reach their early 20’s, the memory of the 2008 housing crisis and the belief the hard times either aren't over or the worst is yet to come, current and would-be homeowners are warming to the idea of renting. I also believe UK society has changed, with the youngster’s wanting prosperity and happiness; but wanting it all now... instantly... today... without the sacrifice, work and patience that these things take. As a society, we expect things instantly, and if it doesn’t come easy, doesn’t come quick, some youngsters ask if it is really worth the effort to save for the deposit? Why go without holidays, the newest iPhone, socialising four times a week and the fancy satellite package for a couple of years, to save for that 5% deposit if there is no longer a social stigma in renting or pressure to buy as there was... say... a generation ago?

Even though, in real terms, property prices are 5% cheaper than they were ten years ago (when adjusted by inflation), 25% of Cambridge properties are privately rented (nearly double it was twenty years ago). As a result, the demand for rental properties continues to grow from tenants, meaning those wishing to invest in the buy to let market, over the long term, might be on to a good thing? For advice and opinion on the Cambridge Buy To let property market, one source of information is The Cambridge Property Blog http://cambridgeproperty.blogspot.co.uk/

Three bed do-er upper in Cambridge with a 4.6% return.

 

This do-er upper is on the market with Vincent Shaw who have pleasure in offering for sale this semi detached home which situated in a traffic free position within a popular housing estate. This property is on the market for £299,950 and is situated convenient for the City and Addenbrookes hospital with a wide range of local amenities nearby making this great for a professional family.
The living accommodation is well proportioned and comprises three bedrooms, first floor bathroom, entrance hall, lounge and kitchen/diner, front and rear gardens and a garage.
This property would let for £1,150 after a quick revamp earning you a 4.6% yield and giving you an investment as the property is sure to increase in value.

Now if you was to apply for planning permission and it was granted and you spent say £40,000 converting this into high end flats (I would suggest a one bedroom and a two bedroom) then your combined rental income would increase to around £1799pcm for both flats as in this area a high standard one bed would rent for £800+pcm and a 2 bed for £999+pcm meaning that your yield would now leap from 4.6% to a minimum yield of 6.4%.

Certainly food for thought this one.
Please see the link below for further details:
http://www.rightmove.co.uk/property-for-sale/property-50763478.html

Affordability of housing in Cambridge

 

Talking to an elderly relative recently, he reminded me that in his day, you could have bought a property for the same price of what a decent second hand car would sell for today and that his father was buying property for the same price as a decent 50 inch LCD TV!  Now of course, these are only headline prices and we have had wage growth and inflation.  Interestingly, since the Second World War, property values in Cambridge doubled in 1961, 1971, 1975, 1980, 1988, 2000 and 2006.

Looking at more recent times, since the start of the Millennium, these increases in property values have generated large increases in equity for many homeowners but on the other side of the coin also making housing unaffordable for other people.  It might interest readers to note that most of Europe experienced sharp increases in property values in the early years of 2000’s, with only Spain beating  us (although we know what has happened to the Spanish property market over the last few years!).  In the 2000’s, the British situation was different in two regards.  First the property value boom started earlier and saw more sustained increases, second, the regional pattern was fairly uniform.

However, since 2010, the regional pattern has been completely different in the UK.  Compared with  2007 (the last property boom), average property values today in England and Wales are 1.2% higher, whilst in Greater London, they are 35.7% higher, whereas in Cambridge they are 8.72 % higher. The London property market has been like a different country.  Looking specifically at Cambridge though, it has continued to be difficult for first time buyers to get on the housing ladder.  The best measure of the affordability of housing is the ratio of Cambridge Property Prices to Cambridge Average Wages, (the higher the ratio, the less affordable properties are).  
 

·         1997       4.35 to 1   (i.e. the average value of a Cambridge property was 4.35 times higher than the average annual wage in Cambridge)

·         2000       6.01 to 1
·         2002       7.43 to 1
·         2003       8.04 to 1
·         2007       9.93 to 1
·         2009       8.22 to 1
·         2012       8.66 to 1
·         Today    9.67 to 1

You  can see quite clearly, even though we had an improvement just after the 2007 property crash (i.e. the ratio dropped), in following subsequent years with Cambridge house price’s rising but wages not keeping up with them,  the ratio started rise.  This has meant there has been a deterioration in affordability of property in Cambridge over the last couple of years.  This is one of the (many) reasons why the younger generation is deciding more and more to rent instead of buy their own house.  The local Council sold off council houses in the Thatcher years and for many on low incomes or with little capital, owning a home has simply never been an option.

With fewer people able to save up the deposit required by mortgage lenders, more and more people are looking to rent, this has also resulted in a change in attitudes towards renting over the last decade.  This delay in moving up the property ladder has driven rents up in Cambridge over the last few years, as more people are seeking properties to rent.  All these things have combined to make the demand for rental property in Cambridge rise.  If you are an existing landlord or someone thinking of become a first time landlord looking for advice and opinion and what (or not to buy in Cambridge), one source of information is the Cambridge Property Blog http://cambridgeproperty.blogspot.co.uk/

Seems to be the week for Apartments? Here's another great investment.

Thornton Court is situated in Thornton Road which is located just over the Cambridge City boundary off Huntingdon Road and about 2.5 miles north west of the City centre. Thornton Road itself has a selection of local shops and Primary schooling is also available in Girton village.
With Cambridge's City centre being only 2.5 miles away and the main Railway Station being 3.5 miles away offering access to London's Liverpool Street within 70 minutes, Kings Cross within 43 minutes and Stansted Airport within 30 minutes Girton is fast becoming the investors preferential place to buy to let. 
This 3 bedroom property is on the market with Redmayne Arnold and Harris for offers in the region of £275,000 and is decorated to a high standard meaning that it is ready to let straight away. I would expect this property to let for around the £1600pcm mark meaning a yield of almost 7% and again that's if you go in and pay the asking price?
For more pictures and full details please see the link below:
http://www.rightmove.co.uk/property-for-sale/property-52072304.html