Those three words that everyone working in the property industry will hear frequently but struggle to answer with any conviction. This question is as common to an estate agent as ‘been busy mate?’ is to a taxi driver, making it the perfect title to a new article, ‘How’s the Market?’ – a monthly article written to inform local people of the peaks and troughs of the residential sales and lettings market in Portsmouth and Southsea. Whether you’re a landlord, tenant, curious buyer or you’re simply interested in the factors that determine the current market value of your home, there will be something of relevance in each instalment.
Let’s get the obvious out of the way. Brexit. The impact has been massive, and without wanting to focus this too heavily on politics, we aren’t looking any closer to a conclusion. Whilst we’re yet to see a direct effect on property values and interest rates, indirectly the market is swaying as heavily towards being a buyer’s market as we’ve seen for many years.
The volume of available properties to purchase is growing substantially faster than the list of potential purchasers, seemingly as a result of the uncertainty in the air. Selling a property in the current climate can be tough – buyers can afford to be as fussy as possible when viewing, knowing that there’s likely to be three of four similar properties available to view on the same day. As I’m writing this, I just searched on RightMove for one bedroom properties for sale in Portsmouth and noted 183 properties for sale, 460 two beds and 480 three beds. It’s very important in market conditions like these, that your home stands out above all others – professional photography, maximal exposure and a little bit of patience should ensure that you aren’t drastically affected by the dreaded B word that has surrounded us for the past two years.
Whilst the residential sales market may be struggling slightly, surprisingly, one area that I was expecting to collapse is still going strong. The house of multiple occupancy (HMO) market appears to be solid. I recently marketed two properties for sale within a week of each other. The first, a beautiful three bedroom family home in a highly sought after location. The second, a sub-standard student HMO returning a 6.2% net yield, both marketed for £265,000. The latter I was concerned about not finding the target audience for, but within three days I had seven viewings and three offers whilst the former managed just three in-bound enquiries in the first fortnight before eventually agreeing a sale slightly below the asking price.
Whilst these viewings numbers may have been an anomaly, it was both noticeable and reassuring that there is still a market for potential landlords despite the financial pressure currently being applied to them. With the second home stamp duty and the sharp increase in taxable rental income, it’s refreshing that clients still focus on the positive results of investing their money and labour into the property market, even more impressive given the disruption caused by the multiple brand new student housing blocks built in Portsmouth Town Centre.
This disruption has caused wide effects through the Portsmouth student property market. Whilst it’s very rare that students paying £350pcm for a room in a house share will upgrade to premium student living more than double the price, it’s had a domino effect on the market, leaving behind the previously decrepit properties.
Landlords have been given three choices.
1) Sell and withdraw from the HMO market.
2) Invest capital and provide quality accommodation.
3) Be left with an empty property come September (or get lucky.)
Luck aside, for landlords and letting agents, the disruption has caused some tough financial decisions to be made. Fortunately, I don’t know many landlords who have been left with empty properties, but it is noticeably more difficult to secure a group of students as there is now more than enough student accommodation to house the still-increasing number of students securing places at Portsmouth University.
This is a very expansive topic, one that will come with many variables (size of house, distance from university, quality of furnishings, bills included, asking rent.) I would invite anybody with further questions about buying/selling to contact me directly to discuss, as the points above are very inclusive and generalised to accommodate the overall HMO market.
For tenants, this has eradicated the last minute panic of securing sub-standard accommodation and this along with The Homes (Fitness for Human Habitation) Act 2018 and the tenant fee ban, it looks like they’ve never had it better. BUT. With landlords spending heavily on providing better quality houses and likely being charged increased fees as agents look to recuperate a loss of income, is this simply going to cause a dramatic rise in the cost of renting? It’s too early to see right now but statistics from the next few months regarding average rental figures will be an interesting point to follow, and certainly feature in future editions of How’s the Market?
Reading back through, this first edition has been more of a summary of the Portsmouth and Southsea marketplace in general rather than an update for April. I’ve noted my own written tone of negativity which I’m confident will change as 2019 continues and we get closer to a conclusion on the unknown surrounding the country.
The next edition of How’s the Market? will be published on the 1st May and will include many more statistics regarding the local area. I will also answer some more intricate questions, which I invite anyone to send to me by Friday 26th April to be included in May’s article. Please feel free to contact me using any of the contact details below or on Facebook or LinkedIn if you prefer to use social media.
Until then, whatever your property ventures be, I wish you the best of success for the coming month.
Please visit the website, www.howsthemarket.co.uk, subscribe to the page or like the Facebook page, https://www.facebook.com/howsthemarketPortsmouth/ for immediate updates.
15 Hampshire Terrace, PO1 2QF.