Ipswich Property Market Update – Half Year Review

As unbelievable as it is, we’re already half the way through the year! New years resolutions maybe long forgotten but the housing market is still ticking along. With all of the talk about Brexit and it’s delay combined with the general political uncertainty, we thought now would be the perfect to see how the housing market is fairing in Ipswich.

 

At present the numbers in Ipswich read as follows;

Property’s Available: 1,097

Properties Sold Subject to contract: 927

Percentage of properties sold subject to contract: 54%

 

There’s been a notable surge since March (where Brexit was delayed) with new activity for homes to the market. In March there was peak of 886 of properties so we’re at over 200 more as we sit today. Certainly, from the client we speak to, there is very much a feeling of not being able to put life on hold and waiting another six months plus before moving. There was a peak last year of 1,216 houses available so the market is still somewhat subdued in terms of activity numbers however it will be interesting to see how the rest of the year pans out and if it reaches last years high.

 

We then started to look at the number of days properties are on the market.

Average number of days to sell 2019

As you can see, Ipswich property is taking on average 12% longer than last year. The reasons for this certainly isn’t down to more choice in the market as discovered previously. So does that mean there are less buyer and if so how is this affecting the average sales price.

So we then look at whether Ipswich house prices have been affected by the decreased stock levels or less buyers. We’ve looked at the numbers here;

Average price property type 2019

average price 2019 v2018

Interesting the average house price is now up 1.6% compared with the same time last year. A lower stock level with a similar demand will naturally raise the house prices as there is more competition. This you can really notice with semi and detached houses in particular having an increase of more than £5,000 and £8,000 respectively. Apartments on the other hand have seen a slight dip off £300 on average, which can be attributed to the quantity of flats now available in Ipswich compared with last year. What the data does show is that there is still plenty of demand for family houses in Ipswich and people will pay increased prices in a competitive market.

 

So the first six months of the year have been interesting. A decline in transaction levels with houses taking longer to sell but average house prices rising. The next six months are going to be interesting with many questions to be answered, will transaction levels continue to rise? Will Brexit affect the market? Will prices continue to rise? We will be monitoring the market with a keen eye at Beagle and will be advising our landlord’s and vendor’s on how best to navigate the market. If you would like any advice then please feel free to pop into our office for a chat.

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7.4% Fewer Properties Available in Ipswich with Houses Selling nearly Two Weeks Quicker than in 2018

KODAK Digital Still Camera

We were having a conversation with one of our landlords the other day and he happened to say “there seems like there’s less houses available now compared to last year”. This got us wondering whether or not this was actually the case with properties in Ipswich.

The number of homes available in Ipswich is a really good barometer for the local market and provides a lot more information as well, such as percentage of properties sold stc, number of properties on multi agencies and how long properties are taking to sell. A lot of this information you can find yourself on various websites such as Rightmove (we’re happy to show you how if you’re keen).

So in terms of Ipswich lets take a look at the number of properties for sale and how long they have been on the market compared to a year ago, then we can look at what this means for the Ipswich property market. So to start, let’s look at the number of properties for sale in Ipswich compared to a year ago.

Property Types Available

Now there are two things that are instantly very interesting when you look at this data. There are actually more apartments and bungalows available now compared with last year. The flats is not a surprise as there have been some new developments come available in the last year, both on the waterfront and with some office blocks in the town centre being converted. Bungalows there is only really a fractional difference in comparison. The big change is in houses with 330 fewer properties available. So lets see what is happening with the average number of days to sell.

Average number of days to sell

Again there’s a couple of interesting points to come out of this. With apartments, there’s that classic supply and demand issue here. More apartments available, taking on average an extra 21 days to sell meaning there are more available than buyers searching. With houses, it’s interesting to see that the time taking now is 12 days quicker. With less stock available but buyer level’s for houses in Ipswich still remaining very strong, competition is as strong as ever. It’s now even more important for a buyer to be in a position where they can move on a property immediately.

 

So why else are the apartments sticking on the market and why do some houses seem to stay on the market longer than others? There is an argument to suggest that property buyers see excessive days on the market as an indication that the seller is becoming desperate to sell because the property hasn’t sold. Buyers are also mindful to believe that there might be something wrong with the home, a defect that caused other buyers to pass it up. This can concern them when they view the property – if they view it at all, as that possible and perhaps made-up defect is on their minds, even if it is sub-consciously.

 

Normally, both assumptions are wrong.  A property can loiter on the market for several reasons. The most common reason for a property sticking on the market is overvaluing or overpricing. In an effort to get the property on the market, some estate agents may have deluded the seller into believing the property was worth more than the property market will bear. There is a fine line between testing the market and completely barking up the wrong tree. Yet, if you aren’t getting a steady stream of viewers after a few weeks, then that testing can back fire. You see, by setting the asking price too high to see if they can find someone to pay that inflated price, then finding there is nobody in the market that will pay the price, here lies the biggest trap for house sellers on keeping the inflated asking prices for too long.

Sellers can also get stuck on an asking price and they are willing to wait out the market until it catches up to what they want for their property – yet we aren’t in that type of property market at the moment.  If you look at various surveys done by Zoopla, Savills & Which, having to reduce your price by 5% or more can add an extra 51 – 72 days on your sale time.

Also, I have seen countless times, house sellers insist on an inflated asking price because they’re not in a rush or haven’t found a new property. They the reduce 12 weeks later or when something suitable comes available but by now buyers think there is something wrong with it so the homeowner gets fed up and accepts a lower offer to get the property sold, whereas if the house seller had gone onto the market at the right asking price, they would get much nearer to what they deserve for their property.

 

So in conclusion. It probably does seem like there are less properties available than there actually is. Demand is for houses which there are fewer of and selling quicker meaning fewer available. If you’re in the market for apartment, particularly if you are an investment purchaser or Ipswich landlord, could be where there is a bargain to be had. There are more & more available (particularly with the Wine Rack nearing completion which will add yet more) and taking longer to sell. For advice on your next purchase, or to go ahead of the market and register with us for houses before they even hit the market, then please do contact our Ipswich office.

 

26.3% of all Ipswich Properties were Purchased Without a Mortgage in the Last 5 Years.

Ipswich street shot

For a lot of people in Ipswich purchasing with a mortgage is the only option. For some people however whom have paid off their mortgage or buy to let landlords, have the choice to pay exclusively with cash. So what we’re going to look at is whether you should use all your cash or whether purchasing with a mortgage is the sensible option.

In the last 5 years there have been 10,842 transactions in Ipswich. Of these, 2,854 were purchased without finance. Therefore 26.3% of all purchases were done without a mortgage. What is interesting is that nationally, 32% of all transactions were made without a mortgage. Over the past 5 years the spit between cash and mortgage has remained fairly consistent.

Cash v mortgage graph

If you’re going to go for a mortgage, the next question has to be whether you should go fix or variable rate. In the last Quarter, 90.57% of people that took out a mortgage had a fixed rate mortgage at an average interest rate of 2.27%. What is surprising though is that only 65.79% of the £1.429 trillion mortgages outstanding in the whole of the UK were on a fixed rate. The level of mortgage debt compared to the value of the home itself (referred to as the Loan to Value rate – LTV) is interesting as 61.9% of people with a mortgage have a LTV of less than 75%. Although, one number that did jump out at me was only 4.33% of mortgages are 90% and higher LTV – meaning if we do have another property slump, the number of people in negative equity should be relatively small.

So now for the question, to buy your Ipswich property cash or with mortgage, particularly if you’re a buy to let purchaser.

Taking a mortgage will help a landlord increase their investment across more properties to maximise the return, rather than putting everything into one buy to let property in Ipswich. This will help the landlord with any unforeseen void periods as the rise will be spread across other properties with income still coming in. The counter argument however is that there is still a mortgage to be paid regardless.

Despite the negative press. landlords can still set the mortgage interest against the rental income, although that will only be at the basic rate of tax by 2021 due the recent tax changes. Banks and Building Societies will characteristically want at least a 25% deposit (meaning Ipswich landlords can only borrow up to 75%) and will assess the borrowing level based on the rental income covering the mortgage interest by a definite margin of 125%.

A lot will depend on you. Are you happy with having a mortgage that must be paid every month? A recent survey by L & G found that void periods cost landlords £1000 a year. Another consideration is that interest rates could also increase, which would eat into your profit … although that can be balanced with fixing your interest rate (as discussed above).

Therefore, does it make sense to purchase rental properties. In our view, and somewhat unsurprisingly, yes! We help many new and existing Ipswich landlords work out their budgets, taking into account other costs such as agent’s fees, finance, maintenance and voids in tenancy. The UK is simply not building enough property meaning demand will always outstrip supply in the medium to long term which in turn means property values will keep rising in the medium to long term. I’m not saying that there won’t be short term market corrections e.g. the credit crunch, the recession of the 80’s etc but each and every time there has been a dip, prices have bounced back and often with a bang. Therefore, it makes sense to focus on getting the best property that will have continuing appeal and strong tenant demand and to conclude, buy to let should be tackled as a medium to long term investment.

If you are thinking of selling you’re a property in Ipswich or If you are a landlord or thinking of becoming one for the first time, you can check out other Ipswich property articles or speak to me or one of my team who will be more than happy to assist.

Ipswich v London: How is the property market fairing?

christchurch park

 

London, London, London….if you look at the national news, the last few years in particular, house price news as been very capital centric. In fact, over the last 5 years, the London property market has really manipulated the UK on averages to such an extent that many leading lenders like the Halifax and Nationwide publish two indices, a national one without London and one with.

As has been well documented, the London market is suffering at the moment, particularly the upmarket areas of Mayfair and Kensington where Land Registry have reported values are 11.3% lower than a year ago. However, the UK as a whole they are 1.3% higher. If we look around the different areas and regions of the UK and Northern Ireland, property values are up 5.8% year on year, whilst over the same time frame, Suffolk in particular has risen 2.1%. So, it leads to the question, what is happening in Ipswich and how does this affect Ipswich landlords and homeowners?

We’re big believers in having a long term perspective on property. There are natural fluctuations in the market but is wisest to look at the outlook over a longer period.

So lets see how Ipswich has performed over a longer period, particularly when compared to London and the UK as a whole. We’ll compare like for like and look at average house prices and percentage increase changes for the last 40 years;

 

London v Ipswich

Anyone else wish they had invested in London 40 years ago? Aside from that we see how the growth of was roughly similar between 1979 and 2007 on all three strands of the graph. Then the credit crunch hit us and we see a drop between late 2007 and 2009. This is when we really notice the different paths and in  2009 London went on a different trajectory to the rest of the UK. Whilst Ipswich & England were generally quite subdued between 2009 and 2012, London kicked on significantly. All areas of the country had a temporary blip in 2012, yet whilst Ipswich and the UK went up a gear again 2013, London went on a phenomenal turn and shot up to a degree never seen before!

As previously mentioned and demonstrated here, you can see London has dipped slightly in the last year, so the hot & natural question for everyone is – “Will price falls spread to Ipswich as they did in previous dips/recessions”. The Bank of England’s opinion is that a London house price drop is unlikely to be the beginning of a countrywide trend. Looking at the graph again, it can be seen London has been in decline for 2 years, whilst the rest of the country has been moving forward.

So taking this into account – what does that mean to Ipswich homeowners and landlords?

Well what happens in London does have an impact, but there are other issues that will have a bigger impact on the local property market. The simple fact is over the last 40 years, we have had 392.9% inflation, yet when we look at an average Ipswich terraced house;

An Ipswich terraced house has jumped in value from an average of £10,521 to £170,828 since 1979 – a rise of 1,524%

This again demonstrates that property has in the long term a sound investment. There are always up’s & downs however if you’re in property for the long term (not necessarily 40 years!) you will be a winner. So are we concerned about market factors going forward? No. Brexit and/or a general election will tamper with the market I suspect but no more than that when you take natural inflation into account. We have two big concerns in Ipswich as I see it – lack of new build housing & house prices far, far outstripping increase in salaries. This combination for me will only see house prices continuing to rise and less disposable income which could then affect other areas spending and the economy. However, time will tell!

Ipswich Pensioners own £2bn worth of property

ipswich shot

 

The over 60’s in Ipswich own a staggering amount of property in Ipswich. There are 8,080 households owned by pensioners in Ipswich and this combined with the average house price means £1,781,640,000 in equity. That’s a GDP bigger than Belize! This is however a symptomatic problem for Ipswich residents.

 

We often hear about first time buyers struggling to get onto the housing market, however Ipswich pensioners face a problem in not being able to move into suitable accommodation. Bungalows can claim a 20% in price per square foot and in 2015 new build bungalows accounted for just 1% of the total of new builds. In 1996 this figure was 7%, an alarming drop.

 

A recent YouGov poll found that 39% of people aged over 65 are looking to downsize and move into a smaller or more manageable property. The rub here is that the government is focusing it’s priorities on first time buyers – help to buy mortgages, ISA’s & starter homes are all schemes to help people get out of generation rent. It’s easy to see why pensioners are feeling more and more neglected when it comes to housing. When you then consider Ipswich’s current housing supply and the rapid increase in the age of the population it makes for some potentially bleak reading. There’s every chance we could see a new generation – generation stuck.

 

When we look at the next age bracket down, 50 – 59 year olds, homeownership is also high at 73.9% in Ipswich. This combined with the government predication of the number of over 65’s to reach 24.3%, this means we can all ready foresee the Ipswich property market becoming further under strain.

Homeowners by percentage

 

Without meaning to sound like broken record, the property market is in desperate of new properties. With the increase in migration and an ageing and growing population we need around 240,000 properties to be built just to stand still. Since the recession of 2008/9 the number of homes built has only been between 130,000 – 145,000.

 

So as well as focusing on first time buyers, the solution to this particular issue is releasing more land/properties for bungalows and sheltered accommodation as well as the focus for first time buyers. This also brings up investment opportunities for landlords with bungalows attracting an older, more stable & reliable tenant and do attract a bigger resale premium. For our thoughts on this, please feel free to contact us.

An extension to your house in Ipswich could add £48,500 to the value of your property

extension

An extension to your house in Ipswich could add £48,500 to the value of your property.

We can’t tell you how many times of over the years we’ve had conversations with Ipswich homeowners between extending and staying put in their current property or moving up the next rung of the ladder. A large factor on the decision tends to be whether or not the cost of the extension will be reflected in any potential resale value when the time arises. So how can we work this out?
The average property price per square meter in Ipswich works out to £1,940. This means that for;

Size of extension Potential Value Added
15 m2 £29,100
25m2 £48,500
35m2 £67,900

The cost & final finish will obviously alter these figures but it makes for interesting reading when trying to work out if that extension or conversion is worth the initial outlay.
This then got me thinking about how much extra would it cost to upsize. As we see a lot of families in the Ipswich move from the much loved 3 bedroom semi (we’ve spoken about these quantities in previous blogs) to a four bedroom, and this is in most cases where we see the extension vs selling question arise, I thought we would look at this for comparison.
According to current figures the average price for these properties in Ipswich is as follows;

Number of Bedrooms Average Price
1 £117,714
2 £178,115
3 £253,400
4 £347,498
5 £483,867

So by going by these calculations we can say that moving from an average 3 bedroom property to a 4 bedroom property will cost you £45,598 more than a 25m2 extension.
Is this then worth the move? Again, this depends on the execution of potential extension, area moving from/to and also what the property market is doing in your area. It’s still very advisable to speak to an expert local agent regarding the second points to ensure you minimise any risk. For advise like this or anything with the purchasing, selling, letting or renting of property in Ipswich then feel free to contact us.

Figures from ONS, home.co.uk & Zoopla

Population in the Ipswich area set to rise to 162,000 by 2026

Ipswich

 

We’ve spoken about this before but Ipswich is facing a predicament. The population is growing and the provision of new housing isn’t keeping up (check out our previous article https://beaglepropertyblog.wordpress.com/2019/03/07/new-build-housing-in-ipswich-only-equates-to-4-2-of-properties-sold-in-2017-2018/)    With the average age of a Ipswich person being 38.0 years (compared to the East of England average of 40.2 years old and the national average of 39.4 years of age), the population of Ipswich is growing at an alarming rate. This is due to a combination of longer life expectancy, a fairly high birth rate (compared to previous decades) and high net immigration, all of which contribute to housing shortages and raising house prices.

Looking closely at some statistics, specifically for the Ipswich Borough Council area, the population projections make some startling reading…
For the Ipswich Borough Council area … these are the statistics and future forecasts

2001 population           127,790
2011 population           144,957
2018 population           150,334
2021 population           153,654
2026 population           162,351
Ipswich Population
The normal ratio of people to property is 2 to 1 in the UK, which therefore means…

We need just under 10,000 additional new properties to be built
in the Ipswich Borough Council area over the next 20 years.

Whilst focusing on population growth does not tackle the housing crisis in the short term in Ipswich, it does have a role to play in the overall strategy and development of the future of our town. The rise of Ipswich property values in the last five years (and the seemingly reduced impact that was expected with Brexit), are primarily a result of a lack of properties coming onto the market, a lack of new properties being built in the town and rising demand (especially from landlords looking to buy property to rent them out to the growing number of people wanting to live in Ipswich but can’t buy or rent from the Council).

I’ve frequently talked about the need to improve supply, the issue of rising demand from population growth is often overlooked. Nationally, the proportion of 25-34 year olds who own their own home has dropped dramatically from 66.7% in 1987 to 41.8% in 2018, whilst 78.2% of over 65s own their own home. Longer life expectancies mean houses remain in the same hands for longer.

In the short to medium term, demand for a property will continue to grow in Ipswich (and the country as a whole). In the short term, that demand can only be met from the private rental sector (which is good news for homeowners and landlords alike as that keeps house prices higher).

With regards to the long term future it’s simple. Local & national government need to act on the reports they run and the alarming statistics in front of them. Over the next 20+ years we need to house the increasing number of people in our country. We need sustainable, environmentally friendly building that will benefit our community in Ipswich and across the country.

Figures from Rightmove, ONS, Citypopulation & Ipswich borough council