According to the last census, the most common type of property in The Heatons is a three bedroom house, which accounts for 43.4% of the total. This is 8.9% lower than the regional average and 3.1% lower than the national average. The next most common type of property is a four bedroom or more house (41.3%) followed by a two bedroom house (10.4%).
The volume of sales in a given area is a powerful measure of the vitality of local housing markets. In the last three years there have been 2,023 sales in The Heatons. Semis accounted for the largest number of sales (751), followed by terraces (620), then flats (364) and detached properties accounted for the fewest sales (288).
As I’m sure you’ve noticed, things have changed a lot for first-time buyers recently. Government schemes and mortgage requirements seem to change every week, so would-be homeowners have got to keep up. However, for those in the know, there are a lot more options in The Heatons than there used to be.
The first challenge awaiting would-be home-owners these days is the deposit for the mortgage. The bigger the deposit, the better the chances of getting a great deal. The minimum required deposit is around 5%, so with an average home in The Heatons valued at £237,600 locals will require a deposit of at least £11,900. That’s quite a lot of saving up, given that average annual salaries in the region are £25,700.
The Government has stepped-up to help make saving easier. The newly introduced ‘Help To Buy ISA’ will hopefully make saving for a first home quicker and less painful. Save £200 and the Government will contribute £50 each time.
The Government has also made it easier for first-time buyers to purchase new-build properties. With the ‘Help To Buy’ scheme, they still need a deposit of around 5%, but then the Government loan a further 20% interest free for the first five years, meaning they only need a mortgage for 75% of the property price. In London the loan is up to 40%. After year five they have to pay interest at 1.75% of the shared equity loan at the time they purchased the property, rising each year after that by the Retail Prices Index (RPI) plus 1%. Sell up or pay the mortgage back and they’ll be asked to repay the Government’s share of the loan, along with a share of any increase in the home’s value.
Interestingly, of the 146,500 people who took advantage of the ‘Help To Buy’ scheme between the 1st of April 2013 and the 31st of December 2015, only 21 of them were in The Heatons. Low figures are usually down to either low house building rates or local prices being above the £600k ceiling for ‘Help To Buy’.
Another option for buying a first home in The Heatons is shared ownership, which allows a would-be homeowner to part-buy part-rent their property. Back in 2011, there were 55 shared ownership properties in The Heatons and given the national growth rate there should be around 65 now.
Under this scheme, owners start off with buying anything from 25% to 75% of their home, usually with a mortgage, and paying a monthly rent to a housing association, who will usually give the occupier the chance to increase their ownership share, known as ‘staircasing’.
In The Heatons, the majority of households own one car (44.0% of all households). This is 1.5% higher then the average in the North West. The next most common category of car ownership in The Heatons is two cars (27.1% of all households), which is 3.6% higher than the average in the North West.
An analysis of commuting preferences in The Heatons shows that the majority of people use a car to get to work (67%). This is followed by bus (10.4%), and then on foot (7.1%). It will be interesting to monitor how this pattern changes over time given the trend in The Heatons and everywhere else to more flexible working, i.e. working from home.
As I type this article at 5.50am, David Dimbleby has just announced the UK will be leaving the EU as the final votes are counted. As most of the polls suggested a remain vote, it came as a surprise to most, including the city. The pound has dropped by 6% this morning after the city whiz kids got their predictions wrong and MP’s from the remain camp are using phrases like “challenging times ahead”.
.. and now the vote has been made, what next for the 10,881 Heatons homeowners?
The Heatons Property Values
Since the last In/Out EU Referendum in June 1975, property values in The Heatons have risen by 1567.1% (That isn’t a typo)
The Chancellor in the campaign suggested property prices would drop and whilst property prices did drop nationally by 18.7% between the peak of 2007 and bottom of the market in 2009, when one compares property values today in the country, compared to that all-time high of 2007, (the period before the financial crisis of the Credit Crunch of 2008/9) .. they are still up 10.14% higher.
Another Credit Crunch?
And so, notwithstanding the credit crunch, the worst global economic outlook since the 1930s and the recession it brought us, a matter of a few years later, the Government were panicking in 2012/3/4 that the housing market was a runaway train.
Now the same credit crunch doom-mongers and sooth-sayers that predicted soup kitchens in 2008/9 are predicting Brexit meltdown. Bad news sells newspapers. Stock markets may rise, stock markets may fall, yet the British public continued to buy property in 2009/10 and beyond. Aspiring first time buyers and buy-to-let landlords dusted themselves down, took a deep breath and carried on buying… because us Brit’s love our bricks and mortar .. we need a roof over our head.
As mentioned previously, if the value of the pound drops, in the past UK interest rates have risen to reverse that drop. However, whilst a cheaper pound will make your pint of Sangria a little more expensive on your Spanish holiday this year and make your brand new BMW pricier .. it will make British export cheaper! Which is great for the economy.
In the last 12 months, semis have accounted for 37.1% of all transactions making this the most common type of property on the market in SK4 (636 in total). Over the same period terraces accounted for 31.4%, flats accounted for 16.2% and detached properties provided 13.4% of transactions.
A standard measure of a full working week is about 48 hours. That is what the EU uses in it’s ‘Working Time Directive’ to ensure employees are not being over-stretched. In The Heatons, 87.7% of full- or part-time workers work those hours or fewer. That means 12.3% work more than that, a total of 2,200 people. Many of our clients fit into this category, and if you are one of them we are ready to work around your busy schedule.
A quarterly analysis of the last four years achieved sales prices from the Land Registry show some interesting patterns in The Heatons. Achieved sales prices of flats have increased by 0.7% per quarter since 2012. This compares with 0.3% for terraces, 1.4% for semis and 2.2% for detached properties. In total, it is detached properties which have increased the most with prices now 18.1% higher than in 2012.
At the time of writing, a £10 bet on the good people of the UK voting to leave the EU would yield a profit of £22.50, whereas the same bet on staying-in would return just £3.30. For those of you who don’t regularly have a flutter, that means the likelihood of Brexit is very slim. But then again that’s what the pollsters and bookies said about a Tory majority at the last election.
So if we believe the bookies, it seems the most likely impact of this referendum on the Heatons property market will be fairly negligible. There could be some mild economic uncertainty followed by a return to business as usual following a vote to stay in. In fact, even this mild uncertainty will come to be seen as nothing compared with the rush to snap up buy-to-let properties before the April 2016 stamp duty hike and subsequent flood of properties onto the rental market.
But what would an ‘out’ vote mean for the 10,900 homeowners of The Heatons or even the landlords of the 2,442 private rented properties? Well we think it all comes down to how reliant each local market is on buyers who work in the financial services industry. Some commentators claim that in the event of Brexit, the large global banks could pull out of the UK and relocate to somewhere within the EU, most likely Frankfurt. That would result in an exodus of relatively high income workers from the market, and it is these people who have been instrumental in putting upward pressure on house prices since the 1980’s.
As we all know, people working in financial services are mainly concentrated in South East England, within commuting distance to the City of London and Canary Wharf. However, there are also provincial outposts in the north of England, particularly in Leeds.
In The Heatons, there are 853 people working in financial services, equal to 4.8% of all jobs. In the context of the national picture, that puts it in the top half of all areas in terms of the concentration of financial services jobs. So the bottom line is that in relative terms, The Heatons is fairly reliant on the financial services industry. Consequently, The Heatons’ property market would be moderately exposed in the event of Brexit. However, there is a broader economic consequence of Brexit which would pose a menace to the SK4 and UK housing markets – interest rate rises. Theoretically, this could see the cost of mortgages grow swiftly, pricing many out of the market and generally making life difficult for buyers. However most buyers take fixed rate mortgages and two-thirds of landlords buy without a mortgage, so this woulddampen the effects in the short-term. It’s also conceivable that inflation would ramp up substantially if the price of imports went up, and if the Bank of England responded by increasing interest rates we might get into the situation we were in in the late 1980’s when mortgages were sky high, but inflation was eroding the debt.