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Property Market Update

Winter 2015

Property Market Update

The property market has always generated a lot of interest from all quarters, not least because it affects so many of us in a whole raft of different ways. Personally I have always felt that the strength and weakness of our economy is built on the back of the property market. Property, as with most markets, is affected by sentiment and how people are feeling will be largely affected by whether the value of their home is going up or down. Strong markets breed a strong sense of optimism, which in turn breeds consumer confidence to go out and spend. It’s therefore hardly surprising that in a year where we have seen the largest percentage growth in house prices, the sale of new cars hit an all-time high.

The property market is always eventful and 2014 certainly delivered. We saw an unprecedented resurgence of buyers into the market, largely fuelled by the governments Help to Buy scheme being widened to the whole of market up to £600,000. Supply remained about the same with enquiries from buyers up 220% and 300% with tenants -all in all the perfect storm to stir house price growth.

Just as things were reaching boiling point the Mortgage Market Review was introduced making it harder than ever for borrowers to secure loans based on a series of affordability measures and stress testing. Inevitably this impacted on the market and we saw a cooling off over the summer. However, prices re-mained strong and nationally homes achieved on average 95.8% of their asking price. At Intercounty we performed ahead of the market achieving on average 98.8% of asking price for our clients.

I am the first to criticise the government when it comes to decisions that affect the property market as during my 32 year career every time they seem to get involved it has a negative effect. We were all surprised however to see them change the rules around stamp duty, which has made buying a home cheaper or no different for everyone buying below £937,500.

Whether you agree or not with the new structure I must applaud the govern-ment for making the changes over night. Historically they would have set a date in the future for changes to take affect, which would have caused a surge of buyers to the market stimulating a further boom in prices only to be followed by a bust.

Welcome to the Property Market Update

Greg YoungManaging Director

Introduction of Mortgage Market Review in April 2014 added caution and preparation time to lending

Agents using new portal are reducing their clients home exposure by half, check your agent is using Rightmove and Zoopla

Stamp duty change in December 2014 makes buying cheaper for any house under £937,500

Help to Buy now available to everyone buying a home under £600,000

Housing Experts predict that UK house prices expected to grow by an average of 4% in 2015

First Time buyers up 22% in 2014 to the highest level in 7 years

Did you know ?

Legislation changes in pension funds taking effect in April 2015 could influence the investment and lettings market

Sales

SAFFRONWALDEN

GREATDUNMOW

STANSTEDMOUNTFITCHET

BRAINTREE

M11

A120

A130

StanstedAirport

BISHOP’SSTORTFORD

CHELMSFORD

SAWBRIDGEWORTH

OLD HARLOW

ROYSTON

9.7%

Annual Property Value Increase

Information collected on Zoopla Zed Index value change between January 2015 and 1 year ago.

9.6% 4.1%

7.6%

7.2%

8.6%

11.5%

8.8%

8.3%

Thinking of selling your home?As we know House prices rocketed in the first half of last year as cheap mortgage deals plus a larger number of loans for borrowers with a small deposit encouraged more buyers into the market. London and the South East recorded double digit annual price rises in July – 10% according to the Halifax and all regions across the UK experienced a rate of growth not seen since before the financial crisis. The price rises slowed in the second half of the year, but what does this mean for 2015?

We still don’t know all the final figures for 2014, but they will certainly be well ahead of all the predictions from this time last year. However, most of the experts are taking a far more modest view for 2015. RICS, The Royal Institute of Chartered Surveyors expect to see modest price rises around an average of 3%. Economists have indicated that they feel supply and demand will be broadly in balance so price rises are expected to drift backwards over the coming months. Any price rises will be driven by: the recent reforms to stamp duty which will cut the tax for the majority of buyers, high and rising employment as well as low mortgage rates.

House prices will be kept in check by stretched house-prices-to-earnings ratios, strict lending criteria imposed on borrowers and the prospect that interest rates will eventually start to rise in 2015. This is a view shared by the lenders Halifax who predict 3-5% price rises and add “the prospect of higher interest rates at some point in the year and reduced affordability are expected to be key factors curbing housing demand. A looming general election next May could also raise uncertainty, resulting in a lull in activity in the early months of the year.”So we believe the number of house moving transactions are likely to be the same as 2014 and house prices may shift a little this year, but the longer term view still looks very promising over the next 5 years.

Percentage Increase Property Value

Detached

Current Average vs Average Last 12 Months

Bishops Stortford

Braintree Chelmsford Great Dunmow Harlow Royston Saffron Walden

Sawbridgeworth Stansted Mountfitchet

3%

6%

9%

12%

15%

18%

21% +

Semi detached

Bishops Stortford

Braintree Chelmsford Great Dunmow Harlow Royston Saffron Walden

Sawbridgeworth Stansted Mountfitchet

3%

6%

9%

12%

15%

18%

21% +

Flats

Bishops Stortford

Braintree Chelmsford Great Dunmow Harlow Royston Saffron Walden

Sawbridgeworth Stansted Mountfitchet

3%

6%

9%

12%

15%

18%

21% +

1.0%Others

84.8%Employed

12.3%Self employed

0.1%Maternity

Average wage of tenants

£35,261

£34,161

Saffronwalden

Bishops Stortford

£33,818Royston

£33,323Sawbridgeworth

£27,783

£25,252

£30,340 Stansted

Chelmsford

Harlow

£30,410 Great Dunmow

Based on the available tenant reference information collected in January 2015.

1.8%Retired

Tenant Demographics

Lettings

Facts up front

To keep this low we:Have strict referencing processContinually monitorPrioritise good tenant managementUnderstand and comply with all legal obligations

Void periods can wipe out profitTo keep these low we:Prioritise accurate and effective property MarketingAttract the right tenantsSustain timely notice serving

This is a great indication of the quality of our customer serviceWe achieve this by:Treating our customers investments as if they are our ownTeam of specialist Property Managers who carePrioritise Tenant care and retention

Richard DurrantLettings Director

Rent Arrears Void Periods

Landlords staying past their initial fixed term

Figures based on available system information collected in January 2015

Percentage of asking price achieved

99% 98%

A clear indication of our market understandingEnsures minimum void periods maximising investment profit potential

As I look back at 2014 it really did turn out to be a year of 2 halves in the lettings industry. The first 6 months saw an exit of the “accidental” landlord, with sales prices increasing and aggressive media coverage of the spike in the market lots of landlords decided to take advantage of favourable conditions and sell up. With many tenants priced out of buying and therefore staying in rented accommodation, combined with a reduction of rental properties due to landlords selling has led to a severe lack of rental stock forcing the rental prices up. With the sales market seemingly cooling by the mid part of the year and the introduction of the Mortgage Market Review, coupled with increased rental values, many landlords decided to expand their portfolio and re-enter the market due to investment properties which are seeing some fantastic returns. Whilst more one and two bedroom properties have become available, the family market still suffers from a significant shortage of three and four bedroom properties. So what will 2015 bring? I imagine that tenant demand will remain consistently strong as the gap between house prices and earnings continues to widen, which in turn will force tenants to rent for longer creating a bigger shortage of available stock for “first time “ renters. With the legislation changes in pension funds taking effect from April 2015, I predict a proportion of these will invest in property and become new landlords taking advantage of better returns than other forms of investment may currently be producing. To conclude therefore I would stick my neck out slightly and suggest we will see an increase of rent between 4-6% in 2015.

Lettings Market

12 3

12 3 SOLD

12 3

12 3 SOLD

20152015

1.2 6.6Intercounty National Average

4.6 Days per year

Royston17 Melbourn Street Royston Hertfordshire SG8 7BPSales & Lettings: 01763 242528

BraintreeMarket House Braintree Essex CM7 3HGSales & Lettings: 01376 328288

Great DunmowBarclay House 1 - 3 High Street Great Dunmow Essex CM6 1UUSales: 01371 878322 Lettings: 01371 874005

Old HarlowThe George Old Harlow Essex CM17 0ANSales & Lettings: 01279 639666

Sawbridgeworth1 Bell Street Sawbridgeworth Hertfordshire CM21 9ARSales & Lettings: 01279 600333

Saffron Walden57 High Street Saffron Walden Essex CB10 1AASales: 01799 522641 Lettings: 01799 513224

Stansted8 Cambridge Road Stansted Essex CM24 8BZSales & Lettings: 01279 814400

Bishop’s Stortford21 North Street Bishops Stortford Hertfordshire CM23 2LDSales: 01279 757250 Lettings: 01279 504079

Chelmsford6 Duke Street Chelmsford Essex CM1 1HLSales: 01245 251442 Lettings: 01245 347040

Branch Network

IF YOU HAVE ANOTHER AGENT INSTRUCTED ON A SOLE AGENCY AND/OR SOLE SELLING RIGHTS BASIS, THE TERMS OF THOSE INSTRUCTIONS MUST BE CONSIDERED TO AVOID A POSSI-BLE LIABILITY TO PAY TWO COMMISSIONS.