Warrington House Prices to Drop 18% After Brexit?

54.3% of Warrington Voters voted to leave the EU – What now for the 57112 Warrington Landlords and Homeowners? 

It’s 5.50am as I start to type this article and 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 people, including the City. The Pound has dropped 6% this morning after the City Whiz kids got their predictions wrong and MP’s from the Remain camp are using words like “challenging times ahead”.

.. and now the vote has been made .. what next for the 48923 Warrington homeowners especially the 27731 of those Warrington homeowners with a mortgage?

The Chancellor in the campaign suggested property prices would drop by 18%. Using Treasury estimates, their method of calculating this was tenuous at best, but focused around the abrupt and hasty increase in UK interest rates, which in turn would raise the cost of mortgages, and therefore lower demand for property, causing a drop in property prices.… and I would say, yes .. that will probably happen.

Warrington Property Values

Warringtonproperty values will probably drop in the coming 12 to 18 months – but by 18% - I am sorry I find that a little pessimistic and believe that figure was rhetoric to get homeowners and landlords to vote in a particular way. But the UK property market is quite a monster.

Since the last In/Out EU Referendum in June 1975,

property values in Warrington have risen by 1545.1%

(That isn’t a typo) 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.

However, 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 pricer .. it will make British export cheaper! Which is great for the economy.

Interest rates

… and what of interest rates? Since 2009, interest rates have been at 0.5% and lots of people have become accustomed to those sorts of levels. So what if interest rates rise .. end of the world? Interest rates in the 1986/88 property boom were on average 9.25%, the 1990’s they were on average around 6.5% and uber-boom years (when UK property values were rising by 20% a year for three or four straight years across the UK) .. 4.5%. Many of you reading this who are in their 50’s and older will remember interest rates at 15%.

But I suspect interest rates won’t rise that much anyway, as Matt Carney (Chief of the Bank Of England) knows, raising interest rates causes deflation – which is the last thing the British economy needs at the moment. In fact they have been printing money (aka Quantitative Easing) for the last few years (which causes inflation) to the tune of £375bn a month. A bit of inflation because the pound has slipped on the money markets (not too much mind you) might be a good thing?

.. because whilst property values might drop in the country, they will bounce back. It’s only a paper loss.. because it only becomes real if you sell. And if you have to sell, again as most people move up market when they sell, whilst your property might have dropped by 5% or 10%, the one you want to buy would have dropped by the same 5% to 10% .. and here is the best part – (and work your sums out) you would actually be better off because the more expensive property you would be purchasing would have come down in value (in actual pound notes) than the one you are selling.

The Warrington landlords of the 4,701 Warrington buy to let landlords have nothing to fear neither, nor do the 11,612 tenants living in their properties.

Buy to let is a long term investment. I think there might even be some buy to let bargains in the coming months as some people, irrespective of evidence, panic.  Even if we pull up the drawbridge at Dover and immigration stopped today, the British population will still increase at a rate that will exceed the current property building level. Britain is building 139,600 properties a year, but needs according to the eminent ‘Barker Review of Housing Supply Report’, the country needs to build about 250,000 properties a year to even stand still, and as the the birth rate is increasing, the population is living longer and just under a quarter of all UK households now are occupied by a single person demand is only going up whilst supply is stifled. Greater demand than supply equals higher prices. That is definitely a fact.

So, what will happen next?

Well, there are many challenges ahead. The country has spoken and we are now in unchartered territory – but we have been through a couple of World Wars, an Oil Crisis, Black Monday, Black Wednesday, 15% interest rates and a Credit Crunch … and we survived!

And the value of your Warrington property? It might have a short term wobble… but in the long term -it’s safe as houses regardless.

As always, if you would like to talk about this particular article or anything property related then feel free to drop me an email on manoj@hamletwarrington.co.uk or call on 01925 235 338. If you are in the area then feel free to pop in and meet the team at 6 Bankside Crosfield St, WA1 1UP. We are right opposite Bank Park.

Don't forget to visit the links below to view back dated deals and Warrington Property News.

Facebook, https://www.facebook.com/hamlethomeswarrington

Twitter, https://twitter.com/HHWarrington

Website, http://www.hamlethomeswarrington.co.uk/

Ex-council Properties in Warrington: Are they good buy-to-let investments?

Over the last few weeks I have had phone calls from southern investors who found my blog through the power of social media.

One of the investors actually started to ask me about the ‘deal of the day’s as he noted that I don’t post about them as much as I used to. He also noticed a lot of the high yielding property I talk about on the blog tend to be ex council houses. This does not mean that the only high yield in Warrington are ex-council houses.

The Numbers

One thing I can honestly tell you is that ex-council properties can achieve annual yields of around 7-9% in Warrington. However, their average value tends to stay quite stable when we compare this to the average capital growth on the more modern estates of Chapleford Village and Kingswood (Westbrook), which have had a more significant rise.

Nevertheless, a three bedroom, semi-detached property on Gerrard Ave sold for £72,500 in 2015. It was sold again earlier this year for £81,000, which is a return of 11.7% in less than 11 months.

 

Another example of good capital growth from an ex-council property is a three bedroom terrace on Lostock Ave which was sold in January of last year for £84,000. It has had an increase in value of around 15% in just over a year – that’s to say, it’s now worth £96,500.

The best performing property for capital growth in 2016 so far was bought in September 2013 for £152,500 and sold recently for £185,000 (Feb 2016). This is a significant return of 21.31%! However, this was not an ex-council property; it was a 4 bedroom semi in Penketh.

If you would like some advice about buying to let, please come and see us at our offices.

If you are interested in seeing these high yielding deals, I am now mostly putting these together in private emails to a list of investors who have asked me to create a list. This list is open to anyone who would like to join and you will receive weekly deals in the Warrington Property Market. If you have already opted in to the list then please email me again as the old list is mixed in with my monthly newsletter list so I would need to identify you and put you in my New Premier Investor List.

You can email me on manoj@hamletwarrington.co.uk as always, our doors are always open. Feel free to pop in to our office at 6 Bankside, Crosfield St. There is plenty of parking available and the kettle is always on. 

3 bed semi Vs 2 bed semi in Warrington 2016

I hope you are enjoying the lovely weather as I have a strange feeling by the time I finishing writing this, the thunder clouds will be over the skies of Warrington and we will have an evening of rain!

Last weekend my family and I took a trip to Southport. It’s been a long time since we have all been to Southport beach. The tide was in and about 2,000 people were attempting to sunbathe on a metre of sand.

I was on bag watching duty, while my wife and kids decided to queue for a ride, when I noticed a couple staring at me. Eventually, the chap walked over and asked me if I write the articles on property in the Warrington Guardian Newspaper.

One of the things that stands out about what Darren asked me is: Which size property is in most demand in Warrington? Is it the 3 bedroom or 2 bedroom house?

Changes in the Warrington Property Market

It’s been almost two years since I started the Warrington Property Blog, so the property market in this short time has changed.

However, if you can cast your mind back to my first Newsletter, I only had 2 very small articles on it. One of the articles was ‘3 Bed Vs 2 Bed in Warrington’. Almost 2 years on I thought I would write this article again and compare the 2014 numbers to today’s – to see exactly how much the property market has changed.

So the first question to ask yourself is: What are you looking from your investment? Capital growth or great yields?

The numbers now

Answering this question will help you figure out which properties you should buy.

The average asking price of a 3 bed semi in Warrington is £160,000 today compared with £134,950 for a 2 bed semi. The 3 bed semi achieves an average rental price of £675 per month compared with £600 per month for a 2 bed semi. That’s a yield of 5.3% for the 2 bed against 5% for the 3 bed.

So surely, the 2 bed semi is the better bet? While it does offer a better rate of return, the 3 bed semi is slightly easier to rent out (less void periods) and will be easier to sell in the future.

Now looking back in 2014 this is how the numbers stacked up: (click here to see article)

3 bed semi = £157,950 with average rent of £650pcm = 4.9% yield

2 bed semi = £125,000 with average rent of £550pcm = 5.3% yield

So as we can see the average property price for a 2 bed semi has gone up nearly 10k in value… However not much has changed for the 3 bed semi. The numbers also show that the 2 bed semi in 2016 has a much more increased rent value than the 3 bed semi. But, the yields remain pretty much the same.

These are average figures used from one of the biggest property portals (RightMove). However, property investment deals can be found in Warrington that reach larger yields such as 8% – 10%. The key is knowing where and when to look.  This is something we do for all our investors at Hamlet Homes. We are a team of landlords ourselves so we know exactly what to look for when investing your money – whether that is capital growth, high yields or a bit of both.

As always, if you would like to send any deals you have seen online over to me or you would like to pop in and have a chat, then you can either email me on manoj@hamletwarrington.co.uk or call on 01925 235 338. Our address is 6 Bankside, Crosfield Street (opposite Iceland and Aldi – so plenty of parking available). The kettle is always on and we will even pull out the posh biscuits!