Month: October 2018

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

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