A few weeks ago, I suggested property values in Hayes would be between -0.2% and 0.8% different by the end of the year. It might surprise some people that Brexit hasn’t had the effect on the Hayes property market that most feared at the start of 2018.

The basis of this point of view can clearly be seen in the number of property transactions (i.e. the number of property sold) that have taken place locally since 2008. The most recent property recession was the Credit Crunch years of 2008/2009/2010.

In property recessions, the headline most people look at is the average value of property. Yet, as most people that sell also go on to buy, for most home movers, if your property has gone down in value, the one you want to buy has also gone down in value so you are no better or worse off. If you are moving up market – which most people do when they move home – in a repressed market, the gap between what yours is worth and what you will buy gets lower … meaning you will be better off.

Yet, most property commentators, including myself, suggest (and I have mentioned this before in some of my other blog articles) a better measure of the health of the property market is the transaction numbers (i.e. the number of people selling and buying). So, I decided to look at the 2018 statistics, and compare them with the Credit Crunch years (2008 to 2010) and the boom years (2014 to 2017). The results can be seen in the table below.

The Average Number of Properties Sold Per Month Over the Last 10 Years in Hayes and Hillingdon
	2008 to 2010	2014 to 2017	2018
Jan	201	267	222
Feb	213	273	235
March	231	360	247
April	241	235	237
May	239	274	191
June	273	295	218
July	268	323	225
Aug	239	352	284
Sept	233	307	226
Oct	268	310	236
Nov	233	310	248
Dec	258	298	255

Then, I looked at the average quarterly figures for those chosen date ranges … and created this graph …

In that 2008 to 2010 property Credit Crunch recession, the average number of properties sold in the Hayes and Hillingdon area were 241 per month. Interesting when we compare that to the boom years of 2014 to 2017, when an average of 300 properties changed hands monthly … yet in the ‘supposed’ doom laden year of 2018, an impressive average of 235 properties changed hands monthly … meaning 2018 compared to the boom years of 2014 to 2017 saw a drop of 21.6% – and only 2.5% lower than the Credit Crunch years of 2008 to 2010.

The simple fact is, the fundamental problems of the Hayes property market are that there haven’t been enough new homes being built since the 1980’s (and I don’t say that lightly with all the new homes sites dotted around the locality). Also, the cost of buying your first home remaining relatively high compared to wages and to add insult to injury, all those issues are armor-plated by the tougher mortgage rules which were introduced in 2014 and the current mortgage market conditions.

It is these issues which will ultimately determine and form the rather unexciting, yet still vital, long term outlook for the Hayes (and national) housing market, as I feel the Brexit issue over the last few years has been the ‘current passing diversion’ for us to worry about. Assuming something can be sorted with Brexit, in the long term property values in Hayes will be constrained by earnings increases with long term house price rises of no more than 2.5% to 4% a year.

 

Fundamentally, the question I am asked by many Hayes buy to let landlords and Hayes homebuyers is … “should I wait to buy or not?”

As a Hayes homebuyer, one shouldn’t be thinking of what is happening in Westminster, Brussels, Irish Backstop, China or Trump and more of your own personal circumstances. Do you want to move to get your child in ‘that’ school or do you need an extra bedroom for your third child? For lots of people, the response is a resounding yes – and in fact, I feel many people have held back, so once we know what is finally happening with Brexit and the future of it, there could a be a release of that pent-up demand to move home as people humbly just want to get on with their lives.

There is little to be lost in postponing a house purchase until there is better clarity on the situation. If it isn’t Brexit it will something else – so just get on with your lives and start living. We got through the global financial crisis/Credit Crunch in ‘08/’09, Black Wednesday in ’92 where mortgage interest rates went from 8.5% to 15% in one day, we got through the worst stock market crash with Black Monday in ’87, hyperinflation, power shortages, petrol quadrupling in price in less than a year and a 3 day week in the ‘70’s … need I go on?

Hayes Landlords? Well, where else are you going to invest your money? Like I said earlier in the article, we aren’t building enough homes to keep up with demand … so as demand outstrips supply, house values will continue to grow. Putting the money in the building society will only get you 1% to 2% if you are lucky. In the short term though, there could be some bargains to be had from shortsighted panicking sellers and in the long term … well, the same reasons I gave to homeowners also apply to you. ?

 

Over the last 5 years, we have seen some interesting subtle changes to the Hayes property market as buying patterns of landlords have changed ever so slightly.

The background to this story was the recently published set of buy-to-let (BTL) lending statistics. Roll the clock back 12 months and 6,700 BTL mortgages were granted (in the same month) for £900m, meaning the average BTL mortgage was £134,200. Looking at last month’s figures, and as one might expect with the Brexit issue overhanging the property market, the lending figures were down, yet not by the amount I originally thought. Last month, just over 6,100 new buy-to-let mortgages were granted for a total sum of £800m (meaning the average landlord mortgage was a respectable £131,100). Yet, when I looked back to the boom year of the 2014 property market, in the corresponding same month, only £1,030 million was borrowed on 8,300 buy-to-let properties (meaning the average buy-to-let mortgage was £124,100). It seems Brexit is having no effect on landlords buying habits.

Looking closer to home in Hayes, throughout 2018, I have been regularly chatting to more and more landlords, be they seasoned professional Hayes BTL landlords or FTL’s (first time landlords) and their attitude is mostly positive. Instead of reading the scare-papers (oops sorry newspapers), those Hayes landlords that look with their eyes, will see the Hayes property market is doing reasonably well, with medium term rents and property values rising; as quite obviously from the mortgage figures .. landlords are still buying.

The question I get asked all the time is .. “What type of buy-to-let property should I buy?  You can make money from property through both the rent (expressed as a yield when compared to the value of the property) and how the actual value of the home itself changes.

Since 2014, property values in Hayes have risen by 39.0%.

We have records of what each type of property (i.e. Detached/Semi/Terraced/Apartments) has achieved per square metre going back 20 years … and looking back over the last 5 years, these are the numbers ..

 

	2014 Hayes Average Value £/Sq.M	Current Hayes Average Value £/Sq.M
Detached	£3,212	£4,410
Semi Detached	£3,197	£4,492
Terraced	£3,497	£4,909
Apartments	£3,413	£4,637

 

 

 

 

They all look to have similar percentage uplifts, however as you can see from the table there is in fact some variation throughout and although only slight this can equate to thousands of pounds in monetary terms.

Price Changes in Hayes in Last 5 years by Type
Detached	37.3%
Semi Detached	40.5%
Terraced	40.4%
Apartments	35.8%
Overall Average	39.0%

 

This has proved that semis and terraced houses have performed the best .. although like the £/Sq.M figures, these are just averages. When investing, whilst Hayes apartments haven’t been the best performers in terms of capital growth, they do tend to generate a slightly better yield than houses, probably because several sharers can afford to pay more than a single family. But houses tend to appreciate in value more rapidly and may well be easier to sell, simply because there are fewer being built.

Now these are of course averages, but it gives you a good place to start from. The bigger picture here though is this – irrespective of what is happening in the world, be it Brexit/no Brexit, China, Trump, whatever, Hayes people still need a roof over their heads and we as a Country haven’t built enough homes to keep up with the demand since the late 1980’s. This means even if we have a short term wobble in 2019 when it comes to property values ..in the medium term, demand will always outstrip supply and prices and rents will increase – because, I doubt the local authority, let alone Westminster, have the billions of pounds required to build the one hundred thousand Council houses per year nationally for the next decade to fix this issue – meaning as the population increases, the only people who can fulfil the demand for accommodation in the medium term is the private BTL landlord.

Before I go …on average, housing associations and local authorities have built around 26,500 houses each year since 2010. The Labour government had a lower average, building about 19,000 homes per year, yet in the 1960’s, under both administrations, 180,000 councils were built per year!

Hayes property values are currently 0.5% higher than at the end of 2017, notwithstanding the uncertainty and threats over the potential impact of Brexit in 2019. This has exceeded all the predictions (aka guesses) of all the City of London economists, in an astonishing sign of strength for the local Hayes and wider national economy.

 

Nevertheless, the statistics from the Land Registry come after a lethargic year for the number of properties in Hayes compared to the actual prices achieved for those properties.  All this against a framework of amplified political ambiguity and ensuing years of rising Hayes property values that have reduced the affordability of homes in the locality.

 

The average value of a Hayes property today

currently stands at £368,800

 

Looking in finer detail, it isn’t a surprise that 486 property sales in Hayes over the last 12 months is somewhat lower than the long-term average over the last 20 years of 1,088 property sales per year in Hayes as the long-term trend of people moving less has meant a decline in the number of property transactions.

 

I believe locally, Hayes property value growth will be more reserved in 2019 after two decades of weaker wage rises. One of main drivers in the demand (and thus the price people are prepared to pay for a home) is the growth of peoples wage packets. Interestingly, wage inflation over the last six months has risen from 2.4% in the late summer to its current level of 3.3% (which is higher than the average since the Millennium, which has been a modest 2.1%). One of the reasons why wages are growing in the short term is the unemployment rate in the country currently only stands at 4.1%, continuing to stay close to its lowest level since the 1970’s.

 

However, even though Hayes salaries and wages are rising comparatively higher than they were last year, looking over the long term, Hayes property values are 167.56% higher than they were in January 2002, yet average salaries are only 76.1% higher over the same time frame. This means over the last few years, with average property values so high comparative to salary/wages, many Hayes potential buyers have been priced out of being able to purchase their first home.

 

At first glance, these stats are actually rather positive during this reported time of political uncertainty and the height of Brexit commotion … because I genuinely believe that to be the case. The press have always looked for the bad news (well they do say it is that that sells newspapers), and whilst I am not entering into the pros and cons of Brexit itself, the numbers do stack up quite well since the Brexit vote took place nearly 3 years ago.

 

Moving forward, when taken with the recent reduction in short to medium term number of property transactions (i.e. the number of Hayes properties sold), it should be noted that a lot of the this buoyant house price increase has a lot more to do with a shortage of properties on the market rather than an uplift in the Hayes housing market generally.

And we can’t forget that Hayes isn’t in its own little bubble, as there are noteworthy differences across the UK in property value inflation. House prices in London and the South East have hardly risen or even fallen in some places, whilst in the Midlands, North and other parts of the country they have generally increased. 

 

Looking forward, I would say to the homeowners and buy to let landlords of the locality that I expect Hayes house price growth to remain stable between -0.2% and 0.8% by the end of this year (although they could dip slightly during the summer) … as long as nothing unexpected happens in the world economically or politically of course.