Bungalow - Cheltenham Great rental property

I've just spotted this 2 bed bungalow for sale with Mack Residential. Its on the market for £165,000 and should let for around £ 725 . That's a yield of  5.2 % . Not great I hear you say. Well not bad I say. Bungalows come up for rent very rarely and let very quickly, There are 7 availble to rent in Cheltenham as I type and all are on the market for more than £725

                            http://www.zoopla.co.uk/for-sale/details/37227405

If you want a relative safe rental, then this could be the one for you. Contact Mack Residential for a viewing. If you would like any advice regarding the buy to let market in Cheltenham or Gloucester, please get in touch . neil.west@belvoir.co.uk 

Cheltenham Property Market – Post Election Blues?

With the election now over, average wages are beginning to grow faster than inflation. This is good news for the Cheltenham housing market, as some buyers may be willing or able to pay higher prices given the more certain political outlook and attractive inexpensive mortgage rates. However, sellers who think they have the upper hand due to the lack of property for sale should be aware that we should start to see an increase in the number of people putting their properties on to the market in Cheltenham giving buyers some extra negotiating power. 

At the last election in May 2010, there were 1,108 properties for sale in Cheltenham and by October 2010, this had risen to 1,377, an impressive rise of 24% in five months. An increase in the supply of properties coming on to the market could tip the balance in the demand and supply economics seesaw, thus potentially denting prices. However, as most sellers are buyers and confidence is high, this means there will be good levels of property and buyers, well into the summer, as demand will continue to slightly outstrip supply.

Just before we leave the election, it is important to consider what the uncertainty in April did to the Cheltenham property market. I mentioned a few weeks ago that property values (ie what properties were actually selling for) had remained static in March 2015. Now new data has been released from Rightmove about April’s asking prices of property in Cheltenham. It shows that pre-election nerves finally came home to roost in the final weeks of electioneering, with the average price of property coming to market only increasing by a very modest 1% (April is normally one of the best months of the year for house price growth). 

I am sure our local MP, Alex Chalk, would agree that the biggest issue is the lack of new properties being built in Cheltenham. The Conservative manifesto pledged to build 200,000 discounted starter homes for first-time buyers in the next five years. For Cheltenham to gets its share, that would mean around 100 such properties being built in Cheltenham each year for the next five years, not much when you consider there are 50,929 properties in Cheltenham.

Housing is not a big issue for Conservative voters and because London is an increasingly Labour city where the biggest housing issues are found by a country mile, it remain on the ‘to do list’ but won’t get the recognition it deserves. Until another political party gets back into power, nothing will seismically change in the property market, thus demand for housing will continue to outstrip supply, meaning property values will increase (good news for landlords). However, as rents tend to go up and down with tenant wages, in the long term, rents are still only 1.56% higher than they were in 2008 (good news for tenants)... with renting everyone wins! 

Is the Gloucester Property Market in crisis?

Since the 1960’s more people have owned their own home than rented but for many young Gloucester people, the dream of buying their own home is dying...or is it? Since the turn of the Millennium, in Gloucester (as in the rest of the country) there has been a significant change in the proportion of people who own their own home in Gloucester. In 2001, 74.6% of homes in Gloucester were owner occupied, today the figure is 67.2%, a significant decline in such a short time. Buy to let landlords can find tenants because young people say they cannot afford a deposit to buy unless they inherit money or are given a loan from their relatives.

In Gloucester, only 46.5% of 25 to 34 year olds have a mortgage. When you compare Gloucester against the national average of 35.93%, it just shows how different parts of the country have different housing markets. However, the really interesting fact is this ...Roll the clock back to 1991 and nationally, 67% of 25 to 34 year olds had a mortgage. After WW2, the supply of properties being built kept up with demand as millions of council homes were built (the most being built in 1950s, surprisingly under Tory Governments!). Also private house building increased in the 1950’s, but especially in the 1960’s and 1970’s, and as the country got more prosperous it meant that by 1971, there were more home owners than renters.

However, since the 1970’s, the population has grown but the number of new properties being built hasn’t kept up at the same rate, the result is that there have been huge rises of property prices in the early ‘70s, the late 80s and more recently between 1999 and 2004. Interestingly, since the early 1970’s, out of the 34 richest countries in the world, the UK has seen highest property prices rises.

95% mortgages have been available to first time buyers since late 2009, but with property prices rising by 199.36% since the early Spring of 1995 in Gloucester, as property prices have been rising and first time buyers have been saving, the amount they have to save is continually rising at the same time. The stress on saving even for that kind of deposit, coupled with the new stricter mortgage rules introduced in 2014, means that most 20/30 something’s in Gloucester are renting instead of buying.

The issue quite simply comes back down to a lack of new homes being built. In Gloucester, only 459 properties a year are being built whilst the population is rising by 1,176 a year. The supply of new homes has been limited by planning laws, local councils not having the money to build council houses, hard hitting green belt limitations, and our old friend NIMBY’ism. With a rising population and net migration, especially from the EU, the mismatch between demand and supply is why we have the problem. Until politicians have the backbone to realise that the country needs a lot more decent homes built, the problem will just get worse. In the meantime, demand for rental property will continue to grow because people need a roof over their head at the end of the day.