As we go full steam ahead into 2019, it’s certain that
the Loughborough housing market in 2018 was a little more restrained than 2016
and 2017. My belief is that this will continue into 2019. Property ownership is a
medium to long term investment so looking at the long-term, the average Loughborough
homeowner, having owned their property since the Millennium, has seen its value
rise by more than 196%.
This is important, as house prices are a national
obsession and tied into the health of the UK economy as a whole. The preponderance
of that historical gain in Loughborough property values has come from the
growth in property values in Loughborough, while some of it will have been enhanced
by extending, modernising or developing their home.
Taking a look at the different property types in Loughborough,
and the profit made by each type, makes interesting reading as the table below illustrates. All of the figures in this table relate to Loughborough.
Average Price
Paid in 2000
|
Average Price
Paid in 2018
|
Average Total Profit in 20 years
|
Average Householder Profit per Year
|
Average Annual % Increase
|
|
Detached
|
£113,433
|
£271,685
|
£158,252
|
£8,792
|
7.7%
|
Semi
|
£61,068
|
£196,707
|
£135,639
|
£7,536
|
12.4%
|
Terraced
|
£51,345
|
£165,751
|
£114,406
|
£6,356
|
12.4%
|
Apartments
|
£60,440
|
£135,561
|
£75,121
|
£4,173
|
7.0%
|
OVERALL
AVERAGE
|
£68,745
|
£200,137
|
£131,392
|
£7,300
|
10.9%
|
However, we can’t forget there has been just over 60%
inflation over those 18 years, which eats into the ‘real’ value (or true
spending power of that profit), so if we take into account inflation since
2000, the true spending power of that profit has been lower.
Total
'REAL' Profit
After Inflation in Loughborough |
‘Real'
Annual
Profit in Loughborough |
|
Detached
|
£96,613
|
£5,367
|
Semi
|
£82,808
|
£4,600
|
Terraced
|
£69,845
|
£3,880
|
Apartments
|
£45,861
|
£2,548
|
OVERALL
AVERAGE
|
£80,215
|
£4,456
|
So the ‘real’
value of the profit, after inflation, in Loughborough has been £4,456 per year.. Still nothing to sniff at really.
I wanted to show you that even though we had the
2008/09 Credit Crunch property market crash where, depending on the type of property, Loughborough property values dropped between 15% and 20% in 18 months… Loughborough
homeowners over the long term are still better off than those renting.
Moving forward, the question I get asked time and
again is what will happen in the future to the Loughborough Property market? Irrespective
of what is happening in the World, Europe or even Central London, the biggest
factor over the medium to long term to ensure that this level
of house price growth is maintained in Loughborough is the
building of new homes both locally and in the country as a whole. Whilst we
haven’t had the 2018 stats yet, Government sources suggest this will be nearer
180,000 to 190,000 - a decrease from the 2017 figure of 217,350 new households
being created. When you consider that we need to build 240,000 households to
equal demand from immigration; people living longer,;higher divorce rates and
people co-habiting later in life and so on, demand will outstrip supply and unless
the Government start to spend billions building council houses then this trend
will continue for years and decades to come.
Another factor to consider is that whilst Loughborough landlords have been hit
with higher taxes to enable them to actually be a landlord, in every
national survey, most still intend to increase their portfolio in the medium to
long term. The youngsters of Loughborough see renting as a choice, giving them
flexibility and options that being tied to a home cannot give thus meaning
demand will continue to grow and landlords will be able to enjoy increased
rents and capital growth, although those very same Loughborough buy to let
landlords will have to work smarter in the future to continue to make decent
returns (profits) from their buy to let investments. Even with the tempering of house price inflation in Loughborough
in 2018, most Loughborough buy to let landlords (and homeowners) are still
sitting on a copious amount of growth from previous years.
The question is, how do you, as a Loughborough buy
to let landlord, ensure that continues?
Since the 1990’s, making money from investing in buy
to let property was as easy as falling off a log. Looking forward though, with
all the changes in the tax regime and balance of power, making those similar
levels of return in the future won’t be so easy. Over the last ten years, I
have seen the role of the forward thinking agents evolve from a person
collecting the rent to a more all-inclusive role; I call it, ‘strategic portfolio
leadership’. Thankfully, along with myself, there are a handful of agents in Loughborough
whom I would consider exemplary at this landlord portfolio strategy where they
can give you a balanced structured overview of your short, medium and long-term
goals, in relation to your required return on investment, yield and capital
growth requirements. If you would like such advice, speak with your current agent
– whether you are a landlord of ours or not – without any cost or commitment,
feel free to call me on 01509 260777 or email me.
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