Bourne Property Market – The 17.2% ‘New Build Premium’

Bourne Property Market – The 17.2% ‘New Build Premium’

According to the National House Building Council (NHBC), more than 14,400 new homes were registered to be built in the East Midlands last year, an increase of 18.7% on 2016 levels of 12,200 dwellings.

Great news when you consider it is one of the highest number of new builds in the region since the pre-recession levels of the Credit Crunch and the uncertainty of Brexit and the General Election.

So, when a landlord recently asked me why the brand-new property she was considering buying was a lot more expensive compared to a second-hand/existing property of similar type, accommodation, location and structure I thought this would make a fascinating topic to do some homework on … homework I want to share with the homeowners and landlords of Bourne.

You might believe that the difference between purchasing a new build home against purchasing a second-hand/existing home is just individual preference. Some buyers/tenants like the ostentatious trendy modern feel of a new home, whilst others like a home that has stood the test of time.

So, what is the right answer? Well, I am going to be looking at some statistics that shows there is a real difference in the Bourne and South Kesteven District Council area’s property market when in to comes to new vs existing homes and the price paid. Looking at the average price paid for existing (second-hand) versus a brand new home since 1996, one can see from the graph it makes interesting reading.

bourne205graph1

On this second graph, one can see the percentage difference in average price paid between new and existing…

bourne205graph2

Yet possibly nothing is ever that easy, as there are issues with these statistics.
The overall average for the whole South Kesteven District Council area for the ‘new build premium’ (new build premium being the additional price a buyer pays for buying a new property compared to a second-hand one) over the last 21 years has been 17.2%. These statistics actually show that it is problematic to compare like with like because it is impossible to completely separate all the different factors of type, accommodation, location and structure etc.

One would have to have a mirror image second-hand Bourne home and a duplicate new build right next door to each other, then calculate out which Bourne house buyers or Bourne buy to let landlords would pay more for? Perhaps if everything was the same (all things being equal), there might not be any difference in what buyers would be prepared to pay… but then again, it’s like new cars versus cars that have a few hundred miles on the clock … there is always a difference on the forecourt … because things are never wholly equal.

What I do know is that my statistics of the Bourne property market show that new build Bourne apartments are worth more to people than their second-hand equivalents, whilst the difference is negligible between new build Bourne detached houses and second-hand Bourne detached houses.

However, I believe the really important lesson in all these statistics is the fact that ‘new build premium’ for new-build versus buying a second-hand property increases in a buoyant market and reduces in a tougher market. So, if you want to buy new and the only consideration is money … try buying in a tougher challenging property market.

If you’d like to know how we can help with no obligation, get in touch at the branch today on the details below.

new lewis
Lewis Thorogood, Branch Manager, Bourne

Call: 01778 300 069
Email: bournesales@hillclark.co.uk

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An Extension Could Add £44,625 to the Value of Your Bourne Home

An Extension Could Add £44,625 to the Value of Your Bourne Home

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 £551.47 per week) many families are bringing two households into one larger one.

So, should you move somewhere larger, or extend your Bourne 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 Bourne 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.

206 Graph (1)

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 Bourne 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 Bourne 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 £44,625 to the value of a property in Bourne

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 Bourne 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 Bourne 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 Bourne 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.

If you’d like to know how we can help with no obligation, get in touch at the branch today on the details below.

new lewis
Lewis Thorogood, Branch Manager, Bourne

Call: 01778 300 069
Email: bournesales@hillclark.co.uk

Homeownership Amongst Bourne’s  Young Adults Slumps to 61.46%

Homeownership Amongst Bourne’s Young Adults Slumps to 61.46%

The degree to which young Bourne people are locked out of the Bourne housing market has been revealed in new statistics.

A Bourne landlord was asking me the other week to what effect homeownership rates in Bourne in the early to middle aged adult age range had affected the demand for rental property in Bourne since the Millennium. I knew anecdotally that it affected the Bourne rental market, but I wanted some cold hard numbers to back it up. As you know, I like a challenge when it comes to the stats.. so this is what I found out for the landlord, and I’d like to share them with you as well.

As anyone in Bourne, and most would say those born more recently, are drastically less likely to own their own home at a given age than those born a decade earlier, let’s roll the clock back to the Millennium and compare the figures from then to today.

In the year 2000, 62.3% of Bourne 28-year olds (born in 1972) owned their own home, whilst a 28 year old today born in 1990) would have a 33.2% chance of owning their own home. Next, let’s look at someone born ten years before that. So, going back to the Millennium, a 38 year Bourne person (therefore born in 1962) would have a 91.9% chance of owning his or her own home and a 38 year today in Bourne (born in 1980) would only have a 71.6% chance of owning their own home.

Since the Millennium, overall general homeownership in the 25 to 44 year old age range in Bourne has reduced from 61.46% to 85.00%

If you look at the graph below, split into the four age ranges of 25 year olds (yo) to 29yo, 30yo to 34yo, 35yo to 39yo and finally 40yo to 44 yo, you will quite clearly see the changes since the Millennium in Bourne. The fact is the figures in Bourne show the homeownership rate has proportionally fallen the most for the youngest (25yo to 29yo) age range compared to the other age ranges.

bourne208graph

The landlord suggested this deterioration in homeownership in Bourne across the age groups could be down to the fact that more of those born in the 1980’s and 1990’s (over those born in the 60’s and 70’) are going to University and hence entering the job market at an older age or those young adults are living with their parents longer.

I read some national homeownership statistics of different age groups with the same number of years after they left education (rather than at the same age) and that gave an identical dip to the graph above. Neither are these drops in homeownership related with a significant increase in the number of young adults living with their parents. Again, nationally, that has hardly changed over the last 20 years as the percentage of 30-year-olds living with Mum and Dad only increased from 22% of those born in the early ‘70s to 23% of those born in the early ‘80s.

So, what does this mean for the rental market in Bourne?

Only one thing .. with the local authority not building Council houses, Housing Associations strapped for cash to build new properties and the younger generation not buying, there is only one way these youngsters can obtain a roof over their head and have a home of their own .. through the private landlord sector. Now with the new tax rules and up and coming licensing rules, Bourne landlords will have to work smarter to ensure they make the investment returns they have in the past. If you ever want to pick my brains on the future direction of the Bourne rental market .. drop me line or pop in next time you are passing my office.

If you’d like to know how we can help with no obligation, get in touch at the branch today on the details below.

new lewis
Lewis Thorogood, Branch Manager, Bourne

Call: 01778 300 069
Email: bournesales@hillclark.co.uk

 

More Than Three Babies Born for Every New Home Built in the Past Five Years in South Kesteven

More Than Three Babies Born for Every New Home Built in the Past Five Years in South Kesteven

More than 3 babies have been born for every new home that has been built in South Kesteven since 2012, deepening the Bourne housing shortage.

This discovery is an important foundation for my concerns about the future of the Bourne property market – when you consider the battle that todays twenty and thirty somethings face in order to buy their first home and get on the Bourne property ladder. This is particularly ironic as these Bourne youngsters’ are being born in an age when the number of new babies born to new homes was far lower.

This will mean the babies being born now, who will become the next generation’s first-time buyers will come up against even bigger competition from a greater number of their peers unless we move to long term fixes to the housing market, instead of the short term fixes that successive Governments have done since the 1980’s.

Looking at the most up to date data for the area covered by South Kesteven Council, the numbers of properties-built versus the number of babies born together with the corresponding ratio of the two metrics …

bourne 219 graph1

bourne219 graph1

It can be seen that in 2016, 4.02 babies had been born in South Kesteven for every home that had been built in the five years to the end of 2016 (the most up to date data). Interestingly, that ratio nationally was 2.9 babies to every home built in the ‘50s and 2.4 in the ‘70s. I have seen the unaudited 2017 statistics and the picture isn’t any better! (I will share those when they are released later in the year).

Our children, and their children, will be placed in an unprecedented and unbelievably difficult position when wanting to buy their first home unless decisive action is taken. You see it doesn’t help that with life expectancy growing year on year, this too is also placing excessive pressure on homes to live in availability, with normal population growth nationally (the number of babies born less the number of people passing away) accumulative by two people for every one home that was built since the start of this decade.

Owning one’s home is a measure many Brits to aspire to. The only long-term measure that will help is the building of more new homes on a scale not seen since the 50’s and 60’s, which means we would need to aim to at least double the number of homes we build annually.

In the meantime, what does this mean for Bourne landlords and homeowners? Well the demand for rental properties in Bourne in the short term will remain high and until the rate of building grows substantially, this means rents will remain strong and correspondingly, property values will remain robust.

If you’d like to know how we can help with no obligation, get in touch at the branch today on the details below.

new lewis
Lewis Thorogood, Branch Manager, Bourne

Call: 01778 300 069
Email: bournesales@hillclark.co.uk

 

 

Bourne Property Market Worth  More Than Virgin Money Holdings UK

Bourne Property Market Worth More Than Virgin Money Holdings UK

The value of all the homes in Bourne has risen by more than 248% in the past two decades, to £1.268bn, meaning its worth more than the stock listed company Virgin Money Holdings UK, which is worth £1.243bn.

Those Bourne homeowners and Buy-to-Let landlords who bought their homes twenty or more years ago have come out on top, adding thousands and thousands of pounds to the value of their own Bourne homes as the younger generation in Bourne continue to be priced out of the market. This is even more remarkable because, in those twenty years, we had the years of 2008 and 2009 following the global financial crisis, where we saw a short term drop in Bourne house prices of between 15% and 20% (depending on the type of property). And although there have been a number of consecutive years of growth in property values recently in Bourne it hasn’t been anywhere near the levels seen in the early 2000’s.

Twenty years ago, the total value of Bourne property was worth £364.3m. Over those twenty years, total property values have increased by £904.4m, meaning today, the total value of all the properties in Bourne is worth £1.268bn. Even more remarkable, when you consider the FTSE100 has only risen by 40.84% in the same time frame. Also, when I compared it with inflation, i.e. the UK Retail Price Index, inflation had risen by 72.2% during the same twenty years.

So, what does this all mean for Bourne? Well as we enter the unchartered waters of 2018 and beyond, even though property values are already declining in certain parts of the previously over cooked central London property market, the outlook in Bourne remains relatively good as over the last five years, the local property market has been a lot more sensible than central London’s.

Bourne house values will remain resilient for several reasons. Firstly, demand for rental property remains strong with persistent immigration and population growth. Secondly, with 0.25% interest rates, borrowing has never been so cheap and finally, the simple lack of new house building in Bourne. Not even keeping up with current demand, let alone eating into years and years of under investment mean only one thing – yes it might be a bumpy ride over the next 12 to 24 months but, in the medium term, property ownership and property investment in Bourne has and always will, out ride out the storm.

In the coming weeks, I will look in greater detail at my thoughts for the 2018 Bourne Property Market.

If you’d like to know how we can help with no obligation, get in touch at the branch today on the details below.

new lewis
Lewis Thorogood, Branch Manager, Bourne

Call: 01778 300 069
Email: bournesales@hillclark.co.uk

15% More Bourne Home Owners Wanting to Move Than 12 Months Ago

15% More Bourne Home Owners Wanting to Move Than 12 Months Ago

As I have mentioned a number times in my local property market blog, with not enough new-build properties being built in Bourne and the surrounding area to keep up with demand for homes to live in (be that tenants or homebuyers), it’s good to know more Bourne home sellers are putting their properties on to the market than a year ago.

At the start of 2007 there were 239 properties for sale in Bourne but by February 2008, when the credit crunch was really beginning to bite, that number had risen to 441 properties on the market at a time when demand was at an all-time low, thus creating an imbalance in the local property market.

Basic economics dictates that if there is too much supply of something and demand is poor (which it was in the Credit Crunch years of 2008/9) … prices will drop. In fact, house prices dropped between 15% and 20% depending on the type of Bourne property between the end of 2007 and Spring 2009.

However, over the last five years, we have seen a steady decrease in supply of properties coming onto the market for sale and steady demand, meaning Bourne property prices have remained robust. A stable housing market is one of the foundations of a successful British economy, as it’s all about getting the healthy balance of buyer demand with a good supply of properties. Nevertheless, if you had asked me a couple of years ago, I would have said we were beginning to see there was in fact NOT enough properties coming on to the market for sale … meaning in certain sectors of the Bourne property market, house prices were overheating because of this lack of supply.

So, it is pleasing to note, looking at the recent numbers …

There are 15% more properties for sale in Bourne today than a year ago

There were 123 properties for sale 12 months ago, and today that stands at 142. It doesn’t sound a lot, yet this is a small step in the right direction to a more stable property market.

Even better news, since the Chancellor announced the stamp duty rule changes for first time buyers (FTB), my fellow agents in Bourne say that the number of FTB’s registering on the majority of agent’s books has increased year on year. That has still to follow through into more FTB’s buying their first home, however, with the heightened levels of confidence being demonstrated by both Bourne house sellers and potential house buyers, I do foresee the Bourne Property Market will show steady yet sustained improvement during the first half of 2018.

What does this mean for Bourne landlords or those considering dipping their toe into the buy to let market for the first time? Landlords will need to keep improving their properties to ensure they get the best tenants. It is true that demand amongst FTB’s is increasing, albeit from a low base. Even with the new landlord tax rules, buy to let in Bourne still looks a good investment, providing Bourne landlords with a good income at a time of low interest rates and a roller coaster stock market.

If you are thinking of investing in bricks and mortar in Bourne, it is important to do things correctly as making money won’t be as easy as it has been over the last twenty years. With a greater number of properties on the market .. comes greater choice. Don’t buy the first thing you see, buy with your head as well as your heart … and don’t forget the first rule of Buy To Let Investment …..

I will tell you that 1st rule in a couple of weeks!

If you’d like to know how we can help with no obligation, get in touch at the branch today on the details below.

new lewis
Lewis Thorogood, Branch Manager, Bourne

Call: 01778 300 069
Email: bournesales@hillclark.co.uk

 

Bourne Property Market – Which Houses are Actually Selling?

Beast from the East, Russia, Facebook, Brexit, Trump, House prices up, House prices down …

The Press is full of column niches on Brit’s favourite subjects of politics, scandal, weather and not forgetting (and I appreciate the irony of this!) the property market. As an agent belonging a national group of letting and estate agents, talking to my fellow property professionals from around the UK, the one thing that is immediately apparent is the UK does not have one property market. It is a hodgepodge patchwork (almost like a fly’s eye) of lots of small property markets all performing in different ways.

… And that made me think … is there just one Bourne Property Market or many?
I like to keep an eye on the property market in Bourne on a daily basis because it enables me to give the best advice and opinion on what (or not) to buy in Bourne, be that a buy-to-let property for a Bourne landlord or an owner-occupier house for a homeowner. So, I thought, how could I scientifically split the Bourne housing market into segments, so I could see which part of the market was performing the best and the worst.

I decided the best way was to split the Bourne property market into four equal size price bands (into terms of households for sale). Each price band would have around 25% of the property in Bourne, from the lowest in value (the Lowest Quartile or 25%) all the way through to the highest 25% in terms of value, the Upper Quartile. Looking at the market, I have calculated that these are the price bands in Bourne are as follows:

• Lowest Quartile (lowest 25% in terms of value) … Up to £150,000
• Lower/Middle Quartile (25% to 50% Quartile in terms of value) … £150,000 to £190,000
• Middle/Upper Quartile (50% to 75% Quartile in terms of value) … £190,000 to £250,000
• Upper Quartile (highest 25% in terms of value) … £250,000 Upwards

So, having split the Bourne Property Market approximately into four equal sizes, the results in terms what price band has sold (subject to contract or stc) the most is quite enlightening –

Bourne Available Sold STC % Sold
Up to £150,000 33 36 52.2%
£150,000 to £190,000 34 32 48.5%
£190,000 to 250,000 40 28 41.2%
£250,000 Upwards 48 35 42.2%

The best performing price range in Bourne is the lower market. As I would expect, the upper half (the top 50%) is finding things toughest. Interestingly for Bourne landlords, the lower end of the middle market isn’t selling as well as other sectors, so maybe there could be some bargains out there for buy to let investment? Even though the number of first time buyers did increase in 2017, it was from a low base and the vast majority of 20 something’s cannot buy, so need a roof over their head (hence the need to rent somewhere).

bourne212 graph

It is a fact that British (and Bourne’s) housing markets have ridden the storms of Oil crisis in the 1970’s, the 1980’s depression, Black Monday in the 1990’s, and latterly the Credit Crunch together with the various house price crashes of 1973, 1987 and 2008. No matter what happens to us Brexit or anything else … unless the Government starts to build hundreds of thousands extra houses each year, demand will always outstrip supply … so maybe a time for Bourne landlord investors to bag a bargain?

Want to know where those Bourne buy to let bargains are? Follow my Bourne Property Blog or drop me an email because irrespective of which agent you use, myself or any of the other excellent agents in Bourne, many local landlords ask me my thoughts, opinion and advice on what (and not) to buy locally … and I wouldn’t want you to miss out on those thoughts … would you?

If you’d like to know how we can help with no obligation, get in touch at the branch today on the details below.

new lewis
Lewis Thorogood, Branch Manager, Bourne

Call: 01778 300 069
Email: bournesales@hillclark.co.uk