Clapham Property Market – Which Houses are Actually Selling?

Beast from the East, Russia, Facebook, Brexit, Trump, House prices up, House prices down ... the Press is full of column inches on Brit’s favourite subjects of politics, scandal, weather and not forgetting (and I appreciate the irony of this!) the property market. As an agent belonging a national group of letting and estate agents, talking to my fellow property professionals from around the UK, the one thing that is immediately apparent is the UK does not have one property market. It is a hodgepodge patchwork (almost like a fly’s eye) of lots of small property markets all performing in different ways.

… And that made me think … is there just one Clapham Property Market or many?

I like to keep an eye on the property market in Clapham on a daily basis because it enables me to give the best advice and opinion on what (or not) to buy in Clapham, be that a buy-to-let property for a Clapham landlord or an owner occupier house for a home owner. So, I thought, how could I scientifically split the Clapham housing market into segments, so I could see which part of the market was performing the best and the worst.

I decided the best way was to split the Clapham property market into four equal size price bands (into terms of households for sale). Each price band would have around 25% of the property in Clapham, from the lowest in value (the Lowest Quartile or 25%) all the way through to the highest 25% in terms of value, the Upper Quartile. Looking at the market, I have calculated that these are the price bands in Clapham are as follows:

• Lowest Quartile (lowest 25% in terms of value) … Up to £500,000
• Lower/Middle Quartile (25% to 50% Quartile in terms of value) ... £500,000 to £650,000
• Middle/Upper Quartile (50% to 75% Quartile in terms of value) ... £650,000 to £900,000
• Upper Quartile (highest 25% in terms of value) ... £900,000 Upwards

So, having split the Clapham Property Market approximately into four equal sizes, the results in terms what price band has sold (subject to contract or stc) the most is quite enlightening -

The best performing price range in Clapham is the lower market. Interestingly for Clapham landlords, the lower end of the middle market is also selling well, meaning there must be plenty of Clapham landlords buying properties to add to their buy to let portfolios. As I would expect, the two upper quartiles (the top 50%) is finding things a little tougher. Even though the number of first time buyers did increase in 2017, it was from a low base and the vast majority of 20 something’s cannot buy, so need a roof over their head (hence the need to rent somewhere).

It is a fact that British (and Clapham’s) housing markets have ridden the storms of Oil crisis in the 1970’s, the 1980’s depression, Black Monday in the 1990’s, and latterly the Credit Crunch together with the various house price crashes of 1973, 1987 and 2008. No matter what happens to us Brexit or anything else ... unless the Government starts to build hundreds of thousands extra houses each year, demand will always outstrip supply … so maybe a time for Clapham landlord investors to bag a bargain?

Want to know where those Clapham buy to let bargains are? Follow my Clapham Property Blog or drop me an email because irrespective of which agent you use, myself or any of the other excellent agents in Clapham, many local landlords ask me my thoughts, opinion and advice on what (and not) to buy locally … and I wouldn’t want you to miss out on those thoughts ... would you?

I hope you enjoyed reading. If you are keen to take things further, be it to start from scratch, or do something a bit more interesting with your current portfolio... Start the conversation on email. I'd love to meet you in person of course at this month's Clapham Property Meet, so do come along. Click here for tickets and more info.

8% More Clapham Home Owners Wanting to Move Than 12 Months Ago

As I have mentioned a number times in my local property market blog, with not enough new-build properties being built in Clapham and the surrounding area to keep up with demand for homes to live in (be that tenants or homebuyers), it’s good to know more Clapham home sellers are putting their properties on to the market than a year ago.

At the start of 2007 there were 1,098 properties for sale in Clapham but by March 2008, when the credit crunch was really beginning to bite, that number had risen to 2,138 properties on the market at a time when demand was at an all-time low, thus creating an imbalance in the local property market.

Basic economics dictates that if there is too much supply of something and demand is poor (which it was in the Credit Crunch years of 2008/9) … prices will drop. In fact, house prices dropped between 15% and 20% depending on the type of Clapham property between the end of 2007 and Spring 2009.

However, over the last five years, we have seen a steady decrease in supply of properties coming onto the market for sale and steady demand, meaning Clapham property prices have remained robust. A stable housing market is one of the foundations of a successful British economy, as it’s all about getting the healthy balance of buyer demand with a good supply of properties. Nevertheless, if you had asked me a couple of years ago, I would have said we were beginning to see there was in fact NOT enough properties coming on to the market for sale … meaning in certain sectors of the Clapham property market, house prices were overheating because of this lack of supply.

So, it is pleasing to note, looking at the recent numbers …

There are 8% more properties for sale in Clapham today than a year ago

There were 812 properties for sale 12 months ago, and today that stands at 878. It doesn’t sound a lot, yet this is a small step in the right direction to a more stable property market.

Even better news, since the Chancellor announced the stamp duty rule changes for first time buyers (FTB), my fellow agents in Clapham say that the number of FTB’s registering on the majority of agent’s books has increased year on year. That has still to follow through into more FTB’s buying their first home, however, with the heightened levels of confidence being demonstrated by both Clapham house sellers and potential house buyers, I do foresee the Clapham Property Market will show steady yet sustained improvement during the first half of 2018.

What does this mean for Clapham landlords or those considering dipping their toe into the buy to let market for the first time? Landlords will need to keep improving their properties to ensure they get the best tenants. It is true that demand amongst FTB’s is increasing, albeit from a low base. Even with the new landlord tax rules, buy to let in Clapham still looks a good investment, providing Clapham landlords with a good income at a time of low interest rates and a roller coaster stock market.

If you are thinking of investing in bricks and mortar in Clapham, it is important to do things correctly as making money won’t be as easy as it has been over the last twenty years. With a greater number of properties on the market .. comes greater choice. Don’t buy the first thing you see, buy with your head as well as your heart … and don’t forget the first rule of Buy To Let Investment …

I will tell you that 1st rule in a couple of weeks!

I hope you enjoyed reading. If you are keen to take things further, be it to start from scratch, or do something a bit more interesting with your current portfolio... Start the conversation on email. I'd love to meet you in person of course at this month's Clapham Property Meet, so do come along. Click here for tickets and more info.

Clapham Property Market Worth More Than Derwent London

The value of all the homes in Clapham (or SW4 to be precise) has risen by more than 324% in the past two decades, to £3.391bn, meaning its worth more than the stock listed company Derwent London, which is worth £3.306bn.

Those Clapham homeowners and Buy-to-Let landlords who bought their homes twenty or more years ago have come out on top, adding thousands and thousands of pounds to the value of their own Clapham homes as the younger generation in Clapham continue to be priced out of the market. This is even more remarkable because, in those twenty years, we had the years of 2008 and 2009 following the global financial crisis, where we saw a short term drop in Clapham house prices of between 15% and 20% (depending on the type of property). And although there have been a number of consecutive years of growth in property values recently in Clapham it hasn’t been anywhere near the levels seen in the early 2000’s.

Twenty years ago, the total value of Clapham property was worth £799.2m. Over those twenty years, total property values have increased by £2.592bn, meaning today, the total value of all the properties in Clapham is worth £3.391bn. Even more remarkable, when you consider the FTSE100 has only risen by 40.84% in the same time frame. Also, when I compared it with inflation, i.e. the UK Retail Price Index, inflation had risen by 72.2% during the same twenty years.

So, what does this all mean for Clapham? Well as we enter the unchartered waters of 2018 and beyond, even though property values are already declining in certain parts of the previously over cooked central London property market, the outlook in Clapham remains relatively good as over the last five years, the local property market has been a lot more sensible than central London’s.

Clapham house values will remain resilient for several reasons. Firstly, demand for rental property remains strong with persistent immigration and population growth. Secondly, with 0.25% interest rates, borrowing has never been so cheap and finally, the simple lack of new house building in Clapham. Not even keeping up with current demand, let alone eating into years and years of under investment mean only one thing – yes it might be a bumpy ride over the next 12 to 24 months but, in the medium term, property ownership and property investment in Clapham has and always will, out ride out the storm.

In the coming weeks, I will look in greater detail at my thoughts for the 2018 Clapham Property Market. As always, all my articles can be found at the Clapham Property Market Blog

I hope you enjoyed reading. If you are keen to take things further, be it to start from scratch, or do something a bit more interesting with your current portfolio... Start the conversation on email. I'd love to meet you in person of course at this month's Clapham Property Meet, so do come along. Click here for tickets and more info.

Clapham Council Tax Payers Hit by 10.9% above Inflation Rise

Buying and selling a home in Clapham isn’t the easiest or cheapest thing you will ever do. Estate Agent fees, Solicitors fees, Survey fees, Mortgage fees, Removal Van … the costs just mount up throughout every step of the move. Last week, a Clapham landlord asked me whether the Council Tax Band made a difference to a property’s appeal, be it tenanted or to owner occupiers, when it comes to being sold on the open market and whether extensions or improvements made a difference to the tax banding?

Well, like I said, the first point you should always be aware of is what Council Tax Band your new house or apartment will fall under. Being aware of this before you buy/move will help when planning month by month for life in your home (or investment). But what exactly are Council Tax Bands, and how do they affect landlords/tenants/homebuyers?

How much Council Tax you pay depends on two variables. The first is which Council Tax Band your property is in. A property is placed into a specific band depending upon what the value of the property was in April 1991 – the date when the tax band system was applied. In a nutshell, what your property is worth today has no relevance whatsoever to your banding.

Council Tax Bands have a letter of the alphabet and range from bands A-H.

The Council Tax Band values are:
Band A – up to £40,000
Band B – £40,001 to £52,000
Band C – £52,001 to £68,000
Band D – £68,001 to £88,000
Band E – £88,001 to £120,000
Band F – £120,001 to £160,000
Band G – £160,001 to £320,000
Band H – more than £320,000

So, for example, if a property sold for £110,000 in April 1991 but is now worth £350,000 it will remain in Band E – NOT Band H), as this was the value when the bands were set in 1991. For new homes, the same thing applies: they are valued based on the 1991 market value. This safeguards that all homes and all buyers are treated equally and consistently. The second factor that determines how much Council Tax you pay is what each individual local authority decides each band will pay in Council Tax. (So for example, a householder/tenant in Leeds in a Band E property will pay a different amount in Council Tax each year to someone in Swindon or North London in Band E).

Interestingly, the average current level of Council tax paid by Clapham people stands at £997 per annum, up from £473 in 1993 (although if it had risen by inflation in those 25 years .. today that should only be £899) … meaning Council Tax has outstripped inflation by 10.9%. So unless the local authority changes its majority political party, the only way you can change the amount you pay in Council Tax is your banding i.e. you physically move to a higher or lower band.

Contrary to what most people think, extensions and improvements do not change the Council Tax Band and existing householders/tenants only have to pay the same Council Tax as they would have without any extensions and improvements. However, the Valuation Office (The Government’s Property Valuers) do reserve the right to re-value the extended property if the property gets sold. If you are a potential buyer, you should be aware of this review as it could change the amount of Council Tax you pay after the purchase. If a higher band is necessary, the new band will be based on what the extended property would have been expected to sell for in 1991. However, this does not necessarily mean that the banding will jump one band, as this is contingent on the extent of the changes and whether the property falls towards the top or bottom of its existing band. More often than not – it isn’t an issue and the banding stays the same.

In terms of which band the property is in, this can be challenged. In my experience in the Clapham property market the only issue is one where there is an anomaly with the banding, when one property is in a different band to all the others in the street. This is much rarer than it used to be, as most such anomalies have been found and rectified. Anyone can check the banding of any property by going to Google and typing in “Check My Council Tax Banding”. I do need to mention a thoughtful warning though. Challenging your Council Tax Band is not something to do on a whim for one simple fact - you cannot request your band to be lowered, only 'reassessed', which means your band could be moved up as well as down. I have even heard of neighbouring properties band’s being increased by someone appealing, although this is the exception. If you have any questions don’t hesitate to drop me a line.

I hope you enjoyed reading. If you are keen to take things further, be it to start from scratch, or do something a bit more interesting with your current portfolio... Start the conversation on email. I'd love to meet you in person of course at this month's Clapham Property Meet, so do come along. Click here for tickets and more info.

Homeownership Amongst Clapham’s Young Adults Slumps to 28.92%

The degree to which young Clapham people are locked out of the Clapham housing market has been revealed in new statistics.

A Clapham landlord was asking me the other week to what effect homeownership rates in Clapham in the early to middle aged adult age range had affected the demand for rental property in Clapham since the Millennium. I knew anecdotally that it affected the Clapham rental market, but I wanted some cold hard numbers to back it up. As you know, I like a challenge when it comes to the stats.. so this is what I found out for the landlord, and I’d like to share them with you as well.

As anyone in Clapham, and most would say those born more recently, are drastically less likely to own their own home at a given age than those born a decade earlier, let’s roll the clock back to the Millennium and compare the figures from then to today.

In the year 2000, 29.3% of Clapham 28-year olds (born in 1972) owned their own home, whilst a 28 year old today born in 1990) would have a 15.6% chance of owning their own home. Next, let’s look at someone born ten years before that. So, going back to the Millennium, a 38 year Clapham person (therefore born in 1962) would have a 43.2% chance of owning his or her own home and a 38 year today in Clapham (born in 1980) would only have a 33.7% chance of owning their own home.

Since the Millennium, overall general homeownership in the 25 to 44 year old age range in Clapham has reduced from 40.0% to 28.92%

If you look at the graph below, split into the four age ranges of 25 year olds (yo) to 29yo, 30yo to 34yo, 35yo to 39yo and finally 40yo to 44 yo, you will quite clearly see the changes since the Millennium in Clapham. The fact is the figures in Clapham show the homeownership rate has proportionally fallen the most for the youngest (25yo to 29yo) age range compared to the other age ranges.
 

The landlord suggested this deterioration in homeownership in Clapham across the age groups could be down to the fact that more of those born in the 1980’s and 1990’s (over those born in the 60’s and 70’) are going to University and hence entering the job market at an older age or those young adults are living with their parents longer.

I read some national homeownership statistics of different age groups with the same number of years after they left education (rather than at the same age) and that gave an identical dip to the graph above. Neither are these drops in homeownership related with a significant increase in the number of young adults living with their parents. Again, nationally, that has hardly changed over the last 20 years as the percentage of 30-year-olds living with Mum and Dad only increased from 22% of those born in the early ‘70s to 23% of those born in the early ‘80s.

So, what does this mean for the rental market in Clapham?

Only one thing .. with the local authority not building Council houses, Housing Associations strapped for cash to build new properties and the younger generation not buying, there is only one way these youngsters can obtain a roof over their head and have a home of their own .. through the private landlord sector. Now with the new tax rules and up and coming licensing rules, Clapham landlords will have to work smarter to ensure they make the investment returns they have in the past. If you ever want to pick my brains on the future direction of the Clapham rental market .. drop me line or pop in next time you are passing my office.

I hope you enjoyed reading. If you are keen to take things further, be it to start from scratch, or do something a bit more interesting with your current portfolio... Start the conversation on email. I'd love to meet you in person of course at this month's Clapham Property Meet, so do come along. Click here for tickets and more info.