Well, what a weekend that was. Street parties, gatherings in the park, the purple bunting, egg and cress sandwiches, union jack flags, cheese and pineapple on cocktail sticks, and let’s not forget the trifle – the Platinum Jubilee Party. And no decent party is worth its salt without a game or a quiz.
So, if you have post-Jubilee blues, let me ask you, how much was the average Crediton house worth in 1952?
To start with, let me look at what a property is worth today in Crediton.
The average price paid for a property in the Crediton areain the last 12 months was £302,900.
Now, let’s go back to 1952. Sir Winston Churchill was the Prime Minister, Newcastle won the FA Cup, London was covered in the Great Smog, free prescriptions on the NHS ended (it cost 1 shilling or 5p in new money), and King George IV, at the age of 56 passed away on the 6th February, meaning Princess Elizabeth became the Queen – as for housing …
The average price of a Crediton home in 1952 was £2,473.
This means Crediton house prices are 121 times higher since 1952.
Yet over the last 70 years, the country has been subjected to 4.5% per annum inflation.
The 1952 Crediton home is equivalent to £47,562 todaywhen adjusted for inflation.
This means Crediton house prices have increased by 504.8% in real terms since 1952.
So, does that mean house prices are more expensive today compared to 1952?
In 1952, the average annual male wage was £452, 8 shillings and 1 pence, meaning the average Crediton house was 5.47 times the average value of a wage. Today the average home is 8.85 times the average wage.
Yet let us not forget the average mortgage payment in 1952 was £11 per month. The average Brit earned £34 per month, meaning 32.3% of the household income was going on mortgage payments, whilst nationally today, according to the Nationwide, it stands at 28%.
It’s cheaper, in real terms, to buy a property in 2022 than in 1952.
And that’s the point, something things in ‘real terms’ (real terms being true spending power of the money after taking into account wages, costs and inflation) were more expensive and some cheaper 70 years ago. For example, in 1952, petrol was equivalent (in today’s inflation-adjusted prices) to £1.02 per litre, a pint of beer £2, half a dozen eggs £2.20, cheddar cheese £2.40 per 500g, a basic radio £430, a Hoover £530 and a 12-inch TV £1,600.
So back to property, the Queen’s reign has seen some amazing house price rises in the UK, yet that growth hasn’t always been in a constant upward direction, as we have had a couple of dips along the way.
We had a house price crash in 1990, when the average value of a Crediton property dropped from £74,427 to £61,640 in 1996, only for them to start rising again.
Crediton saw another house price crash between 2008 and 2009, and the average house price dropped from £222,642 to £189,805 in a year.
So, what else has changed about property and housing since the Queen came onto the throne?
In 1952, only 32% of people owned their own home, whilst 50% of people rented from a private landlord and 18% rented a council house.
By the time of the Silver Jubilee in 1977, 56% of people owned their own home, with 12% of people privately renting and 32% rented from the council.
Come the Golden Jubilee in 2002, 70% of people owned their own home, with 11% of people privately renting and 19% rented from the council.
Today, 63% of people own their own home, 20% of peopleprivately rent and 17% rent from the council.
So to conclude, as we look forward into the 21st century, I am sure the property market will be totally different again in 70 years.
I hope you enjoyed reading this article and do share it with your friends if you find it interesting.
P.S. for all you Rightmove fans, the average Crediton terraced home in 1952 was worth £1,846, and a semi in Crediton could be bought for, on average, £2,145.
According to some newspapers and pundits, the property market boom could soon be over with the increasing interest rates and inflation.
In this article, I share: ▶The 3 fundamental economic reasons why things are different to the last property market crash ▶The insider’s way to find out if there will be a property crash ▶and 4 reasons why buy-to-let landlords are coming back into the Crediton rental market to protect their wealth and hedge against inflation.
With inflation and the cost-of-living crisis, some say this could cause property values to drop, by between 10% and 20% in the next 12 to 18 months.
There can be no doubt that the current Crediton property market is very interesting.
At the time of writing, there are only 26 properties for sale in Crediton (the long-term 15-year average is between 75 and 85), meaning house prices have gone up considerably.
According to the Land Registry…
Crediton property prices have increased by 16.6% (or £43,300) in the last 12 months
So, as Robert Kiyosaki says, ‘the best way to predict the future is to look to the past’. I need to look at what caused the last property crash in 2008 and how that compares to today.
1. Increase in Interest Rates
One reason mentioned as a possible cause of a crash is the rise in the Bank of England interest rates affecting homeowners’ mortgages.
Higher mortgage rates mean homeowners will have to pay a lot more on their mortgage payments, leaving less for other household essentials. In 2007 (and the 1989 property crash), many Crediton people put their houses up for sale to downsize to try and reduce their mortgage payments.
Yet the newspapers fail to mention that 79% of British people with a mortgage have it on a fixed interest rate (at an average mortgage rate of 2.03%)
Also, just under 19 out of 20 (93.2%) of all UK house purchases in 2021 fixed their mortgage rate.
So, in the short to medium-term (two to five years), most homeowners won’t see a rise in mortgage payments for many years. Also, 27.8% of all UK house purchases were 100% cash (i.e. no mortgage).
Of the 932,577 house purchases registered since February 2021 in the UK, 259,205 were bought without a mortgage.
Yet some people say this will be a problem when all these homeowners come off their fixed rate. The mortgage lending rules changed in 2014, and every person taking out a mortgage would have been assessed at application as to whether they could afford their mortgage payments at mortgage rates of 5% to 6% rates, not the 2% to 3% they may well be paying now.
No pundit says the Bank of England interest rates will go above 2% with a worst-case scenario of 3%. If the Bank of England did raise interest rates to 3%, homeowners would only be paying 4.5% to 5.5% on their mortgages and thus well within the stress test range made at the time of their mortgage application.
This means the probability of a mass sell-off of Crediton properties or repossessions because of interest rate rises (both of which cause house prices to drop) is much lower.
2. House Price / Salary Ratio
Another reason being bandied about by some people for another house price crash is the ratio of average house prices compared to average wages.
The higher the ratio, the less affordable property is. In 2000, the UK average house price to average salary ratio was 5.30 (i.e. the average UK house was 5.3 times more than the average UK salary). At its peak just before the last property crash in 2008, the ratio reached 8.64.
The ratio now is 8.85, so some commentators are beginning to think we’re in line for another house price crash. However, I must disagree with them because mortgage rates are much lower today than in 2007. For example…
The average 5-year fixed-rate mortgage in 2007 was 6.19% (just before the property crash), yet today it’s only 1.79%.
So, whilst the house price/salary ratio is the same as the last property crash in 2008, mortgages today are proportionally 71.1% cheaper.
3. Banks Reckless Lending
Another reason for a property crash in 2008 was the reckless lending practices in the run-up to that crash.
The first example of reckless lending was self-certified mortgages. A self-certified mortgage is when the lender doesn’t require proof of income.
In 2007, 24.6% of new mortgages were self-certified mortgages
So, when the economy got a little sticky in 2008, the people that didn’t have the income they said they had to pay for their mortgages (because they were self-certified) promptly put their properties on the market.
The banks’ second aspect of reckless lending was how much they lent buyers to buy their homes. Today, banks want first-time buyers to have at least a 10% deposit and ideally more. There are 95% mortgages available now (meaning the first-time buyer only requires a 5% deposit), yet they are pretty challenging to obtain.
Back in 2005/6/7, Northern Rock was allowing first-time buyers to borrow 125% of the value of their home. Yes, first-time buyers got 25% cashback on their mortgage!
In 2007, 9.5% of all mortgages were 95%, and 6.1% of mortgages were 100% to 125%.
Meaning that nearly 1 in 6 mortgages (15.6%) taken out in 2007 had a 95% to 125% mortgage
When the value of a property goes below what is owed on the mortgage, this is called negative equity. A lot of Crediton homeowners with negative equity (or who were getting close to negative equity) in 2008 panicked because of the Credit Crunch and put their houses up for sale.
To give you an idea of what happened last year (2021) regarding mortgage lending, only 2.4% of mortgages were 95%, and 0.2% of mortgages were 100%. This is because the mortgage lending rules were tightened in 2014.
So why did Crediton house prices drop in 2008?
Well, in a nutshell, a lot more Crediton properties came onto the market at the same time in 2008, flooding the Crediton property market with properties to sell.
Meanwhile, mortgages became a lot harder to obtain (because it was the Credit Crunch), so we had reduced demand for Crediton property.
Prices will drop when we have an oversupply and reduced demand for something. Crediton property prices fell by between 16% and 19% (depending on the property type) between January 2008 and May 2008.
So, what were the numbers of properties for sale in Crediton during the last housing market crash?
There were 69 properties for sale on the market in Crediton in the summer of 2007 (just before the crash), whilst a year later, when the Credit Crunch hit, that had jumped to 212.
This vast jump in supply and the reduction in demand caused Crediton house prices to drop in 2008.
Compared with today, there are only 26 properties for sale in Crediton, whilst the long term 15-year average is between 75 and 85 properties for sale.
So, what is going to happen to the property market?
The Crediton house price explosion since we came out of Lockdown 1 has been caused by a shortage of Crediton homes for sale (as mentioned above) and increased demand from buyers (the opposite of 2008).
However, there are early signs the discrepancy of supply and demand for Crediton properties is starting to ease, yet this takes a while before it has any effect on the property market, so it will be some time before it takes effect.
This will mean buyer demand will ease off whilst the number of properties to buy (i.e. supply) increases. This should gradually bring the Crediton property market back in line with long-term levels, rather than the housing market crash.
My advice is to keep an eye on the number of properties for sale in Crediton at any one time and only start to worry if it goes beyond the long-term average mentioned above.
But before I go, I need to chat about what inflation and the cost of living will do to the Crediton property market.
How will inflation and cost of living affect the Crediton property market?
There is no doubt that cost-of-living increases will have a dampening effect on buyer demand. If people have less money, they won’t be able to afford such high mortgages. This will slow Crediton house price growth, especially with Crediton first-time buyers.
Yet, the reduction in first-time buyers is being balanced out by an increase in landlord’s buying, especially at the lower end of the market.
This, in turn, will stabilise the middle to upper Crediton property market. This means the values of such properties (mainly owner-occupiers) will see greater stability and a buyer for their home, should they wish to take the next step on the property ladder.
So why are more Crediton landlords looking to extend their buy-to-let portfolios, even in these economic circumstances?
I see new and existing buy-to-let Crediton landlords come back into the market to add rental properties to their portfolios. As the competition with first-time buyers is not so great, they’re not being outbid as much.
Yet, more importantly, residential property is a good hedge against inflation.
Firstly, in the medium term, property values tend to keep up with inflation.
Secondly, inflation benefits both landlords and existing homeowners, with the effect of inflation on mortgage debt. As Crediton house prices rise over time, it reduces the loan to value percentage of your mortgage debt and increases your equity. When the landlord/homeowner comes to re-mortgage in the future, they will receive a lower interest rate.
Thirdly, as the equity in your Crediton property increases, your fixed-rate mortgage payments stay the same.
Finally, inflation also helps Crediton buy-to-let landlords. This is because rents tend to increase with inflation. So as rents go up, your fixed-rate buy-to-let mortgage payments stay the same, creating the prospect of more significant profit from your buy-to-let investment.
The terraced house is one of the most familiar styles of home in Crediton (and the UK as a whole).
23.8% of Crediton people live in a terraced home, interestingwhen compared with the national average of 22.7%.
So, what is it about the humble terraced/townhouse us Brits love so much? In this article, I look at the history of the terraced house, how it relates to Crediton and what the future holds for terraced homes.
A terraced house is a property built as part of a continuous row of three (or more) properties in a similar and uniform style.
The reason the British call them ‘terraced houses’ and not ‘row houses’ came about because 18th century British architects borrowed the phrase ‘terrace’ from ‘terraced gardens’. Terraced gardens were known for their uniform nature (in looks, style and height etc.), so the architects decided to name them the same way as opposed to a ‘row house’. In fact, in most countries, they are called ‘row houses’.
The terraced house originated in the Low Countriesof Europe in the late 1500s.
Terraced houses were first built en-masse in the UK after the Great Fire of 1666 with the rebuilding of London.
They became fashionable for the landed gentry in the early Georgian era with chic and stylish terraces appearing in London’s Mayfair and Bath with its Queen Square (the forerunner of the famous Royal Crescent) and were sometimes built around a garden square.
However, it wasn’t until the early 1800s that the terraced house turned out to be the solution to the increasing population of the towns as more and more people were attracted to towns and cities for work.
The terraced house fell out of favour with the upper-middle classes in the late Victorian age (1870s onwards) as they wanted more privacy and space. They moved to live in detached houses or semi-detached villas, as the terrace house had started to become associated with the lower-middle and working classes.
With all these terraced houses being built, their quality of construction and design dropped as builders tried to squeeze more profit. The biggest issue was that most of the terraced houses built in the early to mid-Victorian age (1840s to 1870s) were made back-to-back with no rear garden, causing unsanitary conditions. Therefore, the Public Health Act of 1875 was introduced to regulate the building of terraced houses with design and standards.
These new building standards in the Act improved the terraced house’s ventilation and, more importantly, required the house to have a toilet (frequently built outside). To meet these new building standards, the designs of these new houses created the well-known landscape of ‘grid’ streets lined with two-storey terraces serviced by a pedestrian path between them, the name of which is a hotly debated topic. The various names for the pathway include alleyway/jitty/cut/ginnel/snicket/passageway/ten foot/five foot/witchel/lonnin/vennel.
As a Crediton resident, why not say what you call them in the comments?
As we entered the 20th century, the terrace house continued to be popular, albeit with some new architectural additions.
The advent of Arts and Craft architecture with stain glass windows, Tudor style cladding, ornate porches, and elaborate chimney stacks.
After the First World War and the introduction of the Housing and Town Planning Act 1919 (which made local councils build council houses), the Victorian terraced rapidly became associated with overcrowding and slums (especially those back-to-back terraced houses built before 1875). Many of the back-to-back terraced houses were knocked down between 1930 and 1960 in what is known as the slum clearances.
Private builders started building the iconic suburban semi-detached houses with more extensive gardens, and local authorities decided to build high-rise blocks after World War II. Yet after the partial collapse of Ronan Point in 1968, the popularity of high-rise tower blocks waned.
Since the early 1990s though, the terraced house has steadily come back into favour as building land prices have increased by 322%in the last 30 years.
Many private builders have started to build modern three-storey townhouses in rows of five to seven. This terraced ‘townhouse-style’ allows three and four bedrooms on a land footprint that would have usually only accommodated a smaller two-bed property.
So, let’s look at some interesting stats on Crediton terraced houses:
There are 831 terraced houses in Crediton (broken down as 570 privately owned terraced houses, 102 terraced council houses and 159 in the private rented sector).
19.1% of terraced houses in Crediton are in the private rented sector, which is equal to the national average of 19.1%.
The most expensive terraced house in Crediton ever sold was on Union Terrace, Crediton for £532,000 in 2016.
The cheapest Crediton terraced house sold in the last two years was on Kirton Drive, for £85,000.
Terraced houses in Crediton sell for an average of £196 per square foot.
I hope you found that thought-provoking?
So, why is the terraced house, be it a red brick Victorian house or a more modern three-storey townhouse, still popular today in Crediton?
They are typically well built, cheaper to maintain (especially the older terraced houses), comparatively spacious, and are in good locations. Many terraced houses have been improved and extended through the inventive use of rear gardens/yards and converted roof spaces; their unpretentious design remains adaptable enough for 21st century living; what isn’t there to like about them?
These are my thoughts; tell me your thoughts about the humble yet versatile Crediton terraced house.
In 1981, 26.1% of properties in Crediton (and the Mid Devon District as a whole) were council houses. Today, that figure stands at 8.7%, a proportional drop of 67%.
Why has the number of council houses dropped so much in those 40 years?
How has that changed the dynamics of the Crediton property market in those 40 years?
The ability of local authorities to build council houses came into law in July 1919 with the 1919 housing and Town Planning Act. It was one of the most important pieces of domestic legislature passed after WW1 and was the first time in the UK that a nationally public funded system of providing homes was made for the masses. It was paid for mostly by central government and provided by local authorities (councils) and public utility societies (which in later years became today’s housing associations).
Between 1919 and 1979, 6.94 million council houses were built.
Just over 1 million council houses were built between 1920 and 1939, whilst 5,804,150 council houses were built between 1946 and 1979. This is compared to 4,533,440 private homes and 260,910 housing association properties in the same time frame (’46 to ’79).
So, between 1946 and 1979, the council house was the dominate force of British housing. But that all changed in 1979!
Many people believe it was Margaret Thatcher who was the architect of allowing the sitting tenant of a council house to buy their home. Interestingly, council house tenants have been able to buy their council house from as early as the mid 1930s, albeit with little or no discount. Also, as late as 1977, the Labour Housing Minster published a Green Paper extolling the virtues of homeownership and council tenants being able to buy their home at a discount.
But after the General Election of 1979, the new Tory government drafted the Housing Act 1980, which gave the Right to Buy, which became law in the autumn of 1980. Then things really took off!
This new law established a right for most council tenants who had been in their home for three years or more to a discount. The discount started at 33% and increased by 1% for each extra year, up to a maximum of 50%. If the tenant sold the house within the first five years of ownership, a prorated repayment of their discount was required.
Between 1980 and 1989, 970,558 council housesnationally were sold at a discount.
Yet the issue was, when a council house was sold, it took that house out of the council’s portfolio for future generations. From the start, there were limitations on local authorities’ use of monies from the council house sales as most of it had to be given to central government in London, meaning only 390,560 new council houses were built between 1980 and 1989. Looking at the numbers locally …
in 1981, there were 5,449 council housesin Mid Devon, today it’s 2,843.
No wonder the country has a housing crisis … yet as my regular readers know – the devil is in the detail … and that devil is the humble housing association.
The Tory General Election Manifesto in 1979 had proposed the rights for both council house and housing association tenants to buy their own house under the Right to Buy scheme. The Conservatives argued housing associations, who obtained government funding, should be subject to the same Right to Buy proposals as councils. The Government won the vote in the Commons, yet lost the vote in the Lords, meaning housing association tenants could not buy their homes at a large discount.
At the time, there were only 400,000 housing association properties in the country, so the Government were not that worried. But the significance of housing associations developed in the 1980s and beyond as they were allowed to borrow money from the private sector.
Between 1949 and 1979, the average number of housing association properties built annually was 8,524. Since 1979 to today, it has been 25,062 per year (and 31,606 per year in the 2010s).
Also, the Government encouraged councils to transfer their remaining council houses to housing association schemes from 1986. The advantage to these ‘stock transfers’ was the Government allowed housing associations to access private funding to improve their existing properties and buy new ones (good news for existing tenants complaining that the local authority never upgraded their homes).
Moreover, the Tory Government liked stock transfers, as it allowed them to dismantle council housing from the inside. Interestingly, Labour expanded the ‘Stock Transfer’ process in 1997 and further reduced the eligibility for council tenants’ Right to Buy, meaning the number of council tenants exercising their Right to Buy declined considerably.
Meaning today, even though the provision of council housing has dropped like the proverbial
the number of housing association properties in Mid Devonhas increased from 362 in 1981 to 1,292.
So, how has this changed the dynamic of the Crediton property market in the last 40 years?
Would it surprise you to learn that the number of people who own their own Crediton home today is very similar to what it was 20 years ago before the property boom started? It’s just that even though we’ve had a large drop in the number of council houses and an increase in the number of housing association properties, the number of people owning their own home has remained relatively the same (in some areas of Crediton this has actually increased), the significant issue is the growth of the private rented sector.
It’s almost as if people who used to rent from the councilnow rent from a private landlord.
The question is, is it right for private individuals to make money from tenants who rent from them as opposed to the local authority? Or are private landlords providing better types, choices and quality of accommodation for these tenants, albeit at a higher rental rate than if they rented a council house?
I really do believe if it wasn’t for the growth of the buy-to-let landlord, which began in the early 2000s, we would have an even bigger housing crisis on our hands than the one we have currently.
Both local and central government have had their hands tied behind their backs since 2008 with a lack of funding, and it’s the humble private landlord who has stepped up and supplied in excess of 2.3million additional rental properties since 2001, housing nearly 5,520,000 Brits. These landlords have saved the day since the big council house sell off in the 1980s!
208 properties have sold in the Crediton area in the last 12 months.
It only takes 42 days to sell a Crediton home, so why does it take 107 days from the sold board going up to the buyer getting the keys?
With a shortage of solicitors and a sub-standard conveyancing system, this article discusses what Crediton house sellers (and buyers) can do to speed up the house buying process.
Nationally, the average length of time it takes from agreeing the sale of a property to the keys being handed over is 111 days (down from 117 days last year), yet in Crediton, we are below the national average at 107 days.
So why does it take just over 15 weeks, when all that is required is the lawyers to look at some paperwork and get a mortgage? Also, what can Crediton homebuyers and sellers do to speed this up?
The legal process to buy and sell a UK property is called conveyancing. The conveyancing system itself hasn’t really changed in hundreds of years. After the housing market was reopened after the first lockdown in the spring of 2020, the property market returned with a bang, helped on with the stamp duty holiday.
In 2021, the number of properties selling in Crediton in some months went up massively, e.g. by 96% in June 2021 and by 65% in March 2021. Many conveyancers and solicitors had to sort the legal paperwork out for upwards of 120 to 150 properties each at any one time.
This glut of sold properties caused by the pandemic that neededlegal work to be sorted exacerbated a problem already presentin the conveyancing industry.
For years, conveyancers have complained of overwork and underpay. Conveyancing is seen as the Cinderella of the legal profession. This workload was the straw that broke the camel’s back, making many conveyancers leave the profession and go into better paid legal work like corporate work.
Also, the legal process of conveyancing has built-in inefficiencies, and the conveyancing profession has been relatively slow to innovate. However, there are some excellent tech solutions that are being slowly rolled out across the industry to make the process more efficient and effective.
What can Crediton home buyers and sellers doto speed up their property sale?
If you are buying or selling your Crediton property as we speak, you won’t be able to wait for the conveyancing profession to be revamped, yet you can be as pre-emptive as possible to get your Crediton house sale through earlier.
In a nutshell, make sure you have all the paperwork sorted on your Crediton home before you put your home on the market. Next, get the ball rolling on your mortgage. If you receive some paperwork, read it, check it, sign it and send it back in a day, do not leave it a week; finally, always communicate frequently with your estate agent and conveyancer.
When you instruct a solicitor, most will request money to start the ball rolling for searches and disbursements. They won’t lift a finger until that is paid.
You will have to prove who you are in the conveyancing process, so your conveyancer will ask you to show them proof of ID and address. If you are buying, they will need to prove you have the funds/deposit to buy the home (and if your deposit is coming from family/friends, then they are required to write a letter to that effect).
How can the house buying and selling process be improved?
A couple of years ago, the Government set up the Home Buying and Selling Group to find the answer to this problem. Chaired by the well-known property guru Kate Faulkner, it is looking at an amalgamated Seller’s Information Pack (SIPs) and an IT-based single platform to share and communicate that SIP between buyers, sellers, their conveyancers, the estate agent, mortgage providers and brokers and finally surveyors.
The advantage of the SIP is that it can be created before the buyer has been found, meaning property buyers would be more knowledgeable when making an offer. Also, once the sale has been agreed upon, the SIP could be sent straightaway electronically to the buyers’ legal team (from the seller’s legal team) to start the procedure of asking for searches and raising inquiries.
The bottom line is the conveyancing process is not fit for purposein the 21st century and change is on the horizon.
So, before the SIP becomes mandatory, there are things everyone can do to ensure they get the home of their dreams quicker.
At my agency, I recommend the seller, us as the agent and the conveyancer start to liaise with each other to get the key information on the property being sold as quickly as possible. Then once a buyer is found, I believe it is vital we, as the agent, regularly communicate with all the stakeholders in the chain to ensure everyone is playing their part to expedite the sale.
In the future, utilising technology and every agent/conveyancer preparing information upfront with the SIP will drastically reduce the time it takes between agreeing a sale and the keys/monies handed over.
The conveyancing process will have to change to meet the needs of the 21st century, but how long that will take is the big question.
If you would like to chat with me about how we do things differently to ensure your property not only gets the best price and how we do all we can, as agents, to expedite a smooth sale for your Crediton property, do not hesitate to pick up the phone to me or drop me a line at the office.
The average time to find a buyer for a Crediton property reduced from 89 days in 2020 to 42 days in 2021.
Yet still, just under 1 in 6 Crediton homeowners are on the market after 12 weeks.
Why are so many Crediton homes still on the market after all that time, and what does it mean for the Crediton property market?
You would have needed to have been living in a cave since the end of Lockdown No.1, not to realise the property market has been on fire in Crediton (and the UK as a whole) for the last 18/20 months.
It has been very much a seller’s market, especially in 2021. Yet as we enter the second quarter of 2022, I have noticed a slight rebalancing of the Crediton property market, more towards buyers, something that is good news for everyone (sellers and buyers) locally.
In 2020, it took on average 89 days from the average Crediton property appearing on the property portals (i.e. Rightmove, Zoopla etc.) to the property going sold (STC).
Interesting when compared to the national average of 72 days in 2020. Yet, last year, this was reduced to 42 days in Crediton (51 days nationally).
So, what’s the issue with the Crediton property market being on fire?
Well, that was last year, and things have changed slightly since.
Of the properties for sale in Crediton (EX17), 15.5% of houses have been on the market for more than 12 weeks.
That doesn’t sound a lot, yet that is an eternity in this market!
So, why are there so many properties on the market in Crediton still for sale after all this time … it usually comes down to one thing … the practice of ‘overvaluing’.
So before I explain what overvaluing is, let me give you some background.
Many agents (not just ourselves), in 2021, were achieving top prices for Crediton property with multiple offers becoming the standard. The property they were selling was only available to buy for days before the owner obtained multiple offers that were not only at a satisfactory level, yet more than they ever dreamed likely.
Although this was great news for Crediton homeowners, this caused fewer homes to come on to the market in the last six months in Crediton, as people were afraid to put their home on the market without having a property to buy.
With fewer properties coming onto the market, some estate agents have become more and more desperate to get a larger slice of this smaller property market. It has seen an unwelcome side of the estate agency profession, the estate agency practice of ‘overvaluing’.
While ‘overvaluing’ is nothing new, the custom has been generally limited to a small number of estate agents. Yet now, it’s become more prevalent and creates uncountable distress and pressure for some Crediton homeowners.
Many Crediton homeowners want to sell quickly to get the property of their dreams. Yet, in many cases, when they do put their property on to the market, they don’t sell quickly enough because of this ‘overvaluing’ (even with the fantastic current property market conditions).
To give you an idea of the issue …
69% of Crediton homes put on the marketin the last 30 days have not sold.
There are hundreds of Crediton families having their dreams dashed by ‘overvaluing.’
Therefore, let me look at exactly what overvaluing is, why it’s on the rise and most importantly, the harm overvaluing causes to homeowners like yourself.
You would think the most important thing in estate agency is all about finding the best buyer for your home, at the best price, who can make the move with the least amount of hassle.
To us it is, and to many other Crediton estate agents, it is as well. Yet, to some agents, sales aren’t the essential objective. Instead, it is having a vigorous catalogue of properties to sell to generate more future leads.
Deprived of an endless number of new properties for sale, the enquiries estate agents receive will significantly drop, leaving them high and dry without any buyer (or seller) leads, the lifeblood of estate agents.
Therefore, some (not all), but some estate agents will feed on a homeowner’s appetite to get the highest possible price for their Crediton home by giving them an over-inflated suggested asking price to market their property at (i.e. ‘overvaluing’).
If one estate agent can get you an extra £30,000 for yourCrediton home, you will take it, won’t you?
The suggestion of pushing the asking price of your Crediton home for 10%, 15% even 20% could be seen by many as a temptation too good to miss. Yet once you are on the market, the agent is trained to slowly get you to reduce your asking price over a lengthy sole agency agreement.
The problem is that the home of your dreams might have sold by the time you reduced your price in 3 months. Also, Which reports in 2017 and 2019 proved you ended up getting less for your home when it did eventually sell (which means you lose money) and finally, the agents know homeowners perceive it’s a hassle to swap agents (which it isn’t).
But estate agents only get paid when they sell the house;why do they overvalue?
Would it surprise you that some estate agency chains pay their staff a commission when they put the property on to the market, not when it sells? So, their team overinflate their suggested asking prices to get that commission.
Over the last 18 months, with the rising property market, there has undoubtedly been a valid reason for pushing the envelope on the asking price. Yet, if every house like yours is on the market or sold subject to contract at £300,000 to £320,000, yours isn’t going to achieve £355,000, let alone £375,000 – even in this market.
With 69% of Crediton homes still for sale after a month, the market is starting to level out and if you are keen to sell, then let me give you some advice.
Research has shown that if the asking price is initially set too high, it will be ignored by people surfing Rightmove and Zoopla.
(Come on, be honest – you have done that yourself haven’t you?)
When the property is eventually reduced because it has the stigma of being on the property market too long (begging the question from potential buyers that there may be a problem with the property itself hence no interest?), often when it does eventually sell, it will sell for less than what it would have done if it were priced correctly from day one (as per the two reports from Which in 2017 and 2019).
Of course, on the other hand, setting the asking price below its market value means potentially leaving money on the table needlessly – hence the need for a good agent.
Putting your Crediton home or buy-to-let investment up for sale at the right price from the beginning is the key to selling within the best time frame and for the best price to a serious and motivated buyer.
Ask a handful of estate agents to value your home, ask them to back up any valuation of your Crediton home with cold hard comparables of similar properties to yours.
Find your comparables by searching ALL the property portals (i.e. Rightmove, Zoopla, Boomin, OnTheMarket).
If you only take away one thing from this article, when you search the portals for comparables, make sure you include under offer/sold STC properties, as that will triple the comparable evidence.
Thus, by doing your homework and then working with a dependable, trustworthy and experienced Crediton estate agent, who will help to ensure that your Crediton property is put on the market to get you, the homeowner, the best price from day one without over cooking it so you don’t lose out, you will be just fine.
These are my thoughts, let me know if you have any yourself.
The UK is currently experiencing its highest inflation rate since the early 1990s. This increase in prices has primarily come about by the combination of an increase in demand for goods and services from consumers following lockdown last year together with global supply chain disruptions.
Most economists weren’t too concerned about this increase in the inflation rate as the very same thing happened in the early 1990s following the Credit Crunch with a similar rise in demand and supply chain issues. Thankfully, back in the early 1990s, inflation returned to lower levels quite quickly. However, the situation in Eastern Europe now could change matters.
So, let me look at all the factors and what it means for the Crediton property market.
The crisis in Eastern Europe has sparked even further rises in crude oil (which diesel and petrol are made from), gas and grain prices as pressure on supply chains around the world increases.
In my previous articles, I suggested UK inflation would rise to around 7% in the spring and drop back to 5% in the autumn and as we entered 2023, be approximately 3% to 4%.
Yet, with these issues, inflation could rise to 8% to 9% by late spring and still be around 6% to 7% in autumn, well above the Bank of England’s target of 2%.
With Crediton wages rising at only 3% to 4% and inflation at 7%+,Crediton household incomes, in real terms, will fall.
This is because ‘real’ UK household incomes characteristically have been the most consistent lead indicator of growth (or a drop) in house prices. This is because growing inflation erodes the value of money you earn, which reduces its buying power. When the cash in your pocket has a lower spending power, people tend to spend less when they buy (and rent) a home (and vice versa).
Next month, Income Tax thresholds will be frozen, and National Insurance contributions are increasing. Collectively, all these issues will create a drop of around 2% to 2.5% in the real disposable income of Britain’s households in 2022 (real disposable income – somebody’s take-home wages after tax and then the effects of inflation are considered).
Will Crediton people be more anxious to spend their money?
With less money in people’s pockets, people’s inclination to spend the money they do have could also be curtailed. People’s savings are at an all-time high, yet many will decide to sit on the cash, instead of spending it, especially as consumer confidence has dropped to minus 26 on the GfK index (whatever that means – but in all seriousness though – more on that below).
All this can only mean there is going to be a house price crash.
It’s all doom and gloom! …Or is it?
My heart goes out to people caught up in the awful humanitarian crisis in Eastern Europe. Yet, I respectfully need to put that to one side for just a moment for the purpose of this article.
This blog is about the Crediton property market, and Crediton people want to know what will happen to the Crediton property market.
In the first half of the article, I looked at the impending fall in real disposable incomes of 2% to 2.5% in 2022. I appreciate it’s going to be tough for many families in Crediton. Yet, it is always important to consider what has happened in previous times.
1982 – a drop of 2.3% in real disposable income
1992 – a drop of 3.7% in real disposable income
2008 – a drop of 5.8% in real disposable income
Yes, it’s going to be tough, yet we got through 1982, 1992 and 2008 – and so we shall in 2022/23.
Next, the price of petrol is very high compared to a year ago.
The average price of unleaded petrol is £1.51/litre today, quite a jump from the £1.21/litre a year ago. But here is an interesting fact, petrol was a lot more expensive (in real terms) in 2011 than today. In TODAY’s money, a litre of unleaded petrol in 2011 would be the equivalent of £1.79/litre. We have some way to go before we get to those levels – and again, the Crediton economy (and property market) kicked on quite nicely after 2011.
What are Crediton people spendingon their rent and mortgages?
Housing costs – owner occupiers were spending on average 17.3% of their household income on mortgages in 2015, yet in 2021 this had risen, albeit to 17.7% – not a huge increase.
Council house (social) tenants have seen a drop in their rent from 29.2% in 2015 to 26.7% in 2021, whilst private tenants from 36.4% in 2015 to 31.2% in 2021.
750 homes in the Mid Devon area are empty, which represents 1 in 50 homes.
198 of those have been empty for more than six months and are worth £57million.
Why are those properties standing empty and deteriorating and why could that become an issue for the whole of Crediton?
A couple of weeks ago was National Empty Homes Week, so I thought I would find out how many homes are empty in the Crediton area – the numbers surprised me, so I wanted to share my thoughts about them with you.
The latest Government statistics show that 198 propertiesin Mid Devon have been empty for more than six months.
Homes that are left empty for an extended period can affect our locality and occasionally invite anti-social behaviour.
With a shortage of housing in the Crediton area, these empty homes must be brought back into use to generate much-needed housing for local people.
As you can see in the first bullet point, some homes are only empty for a short period of time. Yet, those local properties that stand empty for more than six months and then deteriorate become a problem for our local community.
I appreciate there can be many genuine explanations why a property may be left empty for a long time. However, with council house waiting lists at high levels and the shortage of both properties to buy and rent in Crediton, we must ask what is being done about this at Government level and how this could affect the Crediton property market?
The collective value of these 198 long-term (6 months or more)empty houses in Mid Devon are worth £57million.
This impacts the Crediton housing market with a lack of properties coming onto the market for sale and rent. This results in house prices being pushed up, making it less affordable for first-time buyers to get on the first step of the housing ladder.
It’s a real shame that many local properties are empty for over six months when there is an increasing demand for accommodation, at a time when there’s such a competitive housing market.
So, one might ask if this issue of long-term empty properties is a new problem? Well, not really.
There were 413 homes long-term empty in Mid Devon in 2010.
I know our local authority likes to work with property owners of empty homes to bring them back into housing stock as it helps with the housing shortage, even with the help of grants if improvement work is needed for the empty home. Yet, they could use enforcement action where a homeowner is incapable or unwilling to bring their property back into use.
So, what is the Government doing nationally? Homeowners are charged a 50% premium on top of their Council Tax if their home has been empty for two years or more. This can rise to a 300% premium if the property has been empty for ten years or more.
However, the bigger question is, why are all these homesin the Crediton and Mid Devon area being left empty?
The real answer is – they are not.
A handful of the properties belong to the local authority and are in poor condition because the tenant trashed the property.
Probate (where the person’s estate is put in order and passed onto the beneficiaries of the will) takes between six and twelve months. Most of these long-term properties are being modernised and renovated, whilst other Crediton properties are part of a deceased estate. In other circumstances, some Crediton homes have been left empty after the owner has been placed into a care home, yet there is no Power of Attorney to put the home onto the market.
There is no ‘one fix all’ to the empty home syndrome in Crediton.
Empty properties in Crediton is not an issue that will sort the housing crisis we are suffering from.
The simple fact is the population is growing faster than the number of houses being built. We need to build more homes.
Whether that means council properties, housing association homes, private landlords or even owner-occupation housing the masses – that’s a massive question we could all talk about, day in day out until the cows come home.
So, tell me, what are your thoughts on the matter?
85% drop in the number of properties for sale in Crediton in the last 12 months.
36 Crediton homes have sold (stc) in the last three months alone, taking the time from the ‘for sale board’ going up to sale agreed to a median of 14 days.
The £200k to £300k price range in Crediton is the most active, where it only takes 12 days to sale agreed, but the £300k to £400k is taking 27 days.
Yet, what issues cause people to want to move home and what can people, who want to move in 2022, do to ensure they sell and find the home of their dreams?
There are 10 properties for sale today in Crediton; roll the clock back exactly a year, and the figure was 68 – there’s been a drop of 85%. This drop is being dubbed ‘for sale board crunch’.
The ‘for sale board crunch’ has left many prospective home buyers stressing to find the right property as the number of properties available to buy has dropped significantly.
I am sure you know people looking for their next home, but when they see it on the portals (Rightmove, OnTheMarket etc.) the properties are gone within days.
With demand at an all-time high, many home buyers are in a state of misery as house prices have grown in the last few years, forcing many of them to review their plans.
They are victims of the ‘for sale board crunch’ in the property market, the likes of which have not been seen since 2007.
Normally when there has been excess demand in the residential sales market, that frothiness has been taken care of by people moving into rented accommodation. However, the number of Crediton properties available to rent is at a 15-year low.
So why is the property market this way?
Demand for homes has exceeded the number of properties for sale since the General Election in December 2019. After years of long drawn out Brexit negotiations, homeowners and buyers were more confident about their move. Many people who put their home move on hold in 2018/19 had more confidence to return to the market.
The first lockdown in the spring of 2020 did nothing to quell this pent-up urge, and since the late spring of 2020, the property market has been on fire! The lockdown changed what homeowners are looking for in their home. Proximity to public transport dropped down the wish list for buyers, and demand for apartments dropped. Whilst properties with larger gardens and rooms that could double up as home offices tended to be at the top of most buyers’ wish lists.
Around 36% more properties have sold in the last 18 months than the long-term 20-year average.
Looking at the supply side of the equation, in the last five years, an average of 204,410 new homes per year have been added to the number of properties available in the UK. Also, 239,600 properties came back into the market when they became available after their owners had sadly passed away. Yet still, that isn’t enough. The country needs at least 300,000 new dwellings to keep pace with demand.
There is also another problem that has come to light with the cladding issue of apartments. Just over three-quarters of million apartments have issues with cladding. Whilst these are being sorted out (which will take many years), they are essentially unsaleable unless a fire safety expert on these buildings signs them as safe.
These cladding issues prevent these apartments from coming onto the market (thus reducing the supply of properties to buy). It also precludes their owners from moving up the property ladder from their apartment to a house. Also, many first-time buyers who can save a bigger deposit or be gifted cash from the Bank of Mum and Dad are skipping the apartment as their first home and going straight for a house, thus intensifying the lack of larger properties for sale.
So, how long does it take to sell a Crediton property now?
Apartments: 13 days
Terraced/Town House: 11 days
Semi-Detached: 11 days
Detached: 20 days
This means it is a seller’s market in, empowering them to push up their asking prices in high demand areas. However, most sellers are also buyers, which means the advantage they have on selling their property is turned on its head when they come to buy.
Many sellers prefer to find their future home before putting their current home on the market. That is making the lack of properties on the market seem even harsher than it may otherwise be.
The ‘for sale board crunch’ would be somewhat eased if sellers put their property onto the market whilst they were hunting for their next ‘forever home’.
However, not all homeowners are doing so, partially because they (wrongly) believe they will be made homeless if they find a buyer and can’t find another property to buy (remember, you are not legally committed to moving until exchange of contracts).
A big issue will be finding a suitable home. We very much have a chicken and egg scenario. Some homeowners are waiting for the right property to come onto the market before they put their home on the market. This will probably mean that that property will sell even before the photographs have been taken of your home.
Yet, many homeowners are worried if they put their house on the market and it sells, they won’t be able to find another suitable home and thus be homeless.
Classic chicken and egg – so what do you do first?
There is another way of doing this. It’s a technique estate agents used to use before the internet, and it’s called ‘chain building’. Many homeowners are contacting me to move home yet don’t want to be made homeless. What we do is slowly build a group of people in a chain over many months. It requires a lot of patience to build a chain downwards and upwards around you.
There is no cost to this and no legal commitment to go through. It can take six, even twelve months to build a chain of people who are prepared to wait for the chain to form.
Yet, everyone normally gets their next ‘forever home’ by playing this long game
Because if you don’t play the long game, build relationships with estate agents (who can build these chains) and only rely on waiting for properties to appear on Rightmove or OnTheMarket, you will be sorely disappointed.
According to national research from Denton House Research, 7 out of 8 people who viewed a house through an estate agent in 2021 were not on the mailing list of that agent before they viewed it.
That means all these properties, built on a chain builder (as above), will sell yet won’t appear on Rightmove or Zoopla, meaning you will miss out.
You must get yourself on the mailing list of our estate agency (and other agents if they do this chain building) so you don’t miss out on your next forever home. You can also join our free private Facebook Group here https://www.facebook.com/groups/propertypremiere where we post all upcoming properties to the market before they arrive on Rightmove etc. I’d love to see you in there!
If you would like a chat about anything mentioned in this article, feel free to drop me a message or call me on 01363 777999
The average house price in Crediton and mid Devon has increased by 170% to £314,700 in the last 20 years, a profit of £198,150
That means, when adjusted for inflation in those two decades, house prices have risen in real terms by 97.9%
What does this mean for existing Crediton and mid Devon homeowners and first-time buyers trying to get on the property ladder?
Since 2001, UK average house prices have risen by an astonishing 187.2% across the UK, while in London the figure is 247.6%.
Looking back at the people that bought in those first few years of the new Millennium, few of those buying or selling property in 2001 could have forecast the massive financial impact that their decision then would have on the rest of their lives.
In those years, there have been winners and losers, where some buyers have made hundreds of thousands of pounds and renters have paid out tens of thousands of pounds and yet been unable to buy their first home – but life is often not as simple as that, so in this article I wanted to discuss the matter further.
The average house price in mid Devon has increased by 170% to £314,700 in the last 20 years, a profit of £198,150.
Now of course these are average prices and don’t take inflation into consideration.
Yet even when adjusted for inflation, house prices have still risen by 97.9% in the last 20 years.
Characteristically, the longer a homeowner has owned their property, the larger the gain when they sell. Yet most of these profits are never seen by homeowners. It has never been money in the bank unless you sell up and downsize or move somewhere cheaper. Instead, these gains are re-invested back into the housing market when they buy their next home.
So, whether the gains are banked or tied up in their bricks and mortar, it looks like all mid Devon homeowners are in the driving seat.
What about all the first-time buyers, priced out of the market and unable to get on to the property ladder?
Are the young losing out again?
Reading the newspapers you would think so, yet nothing could be further from the truth. In fact…
It’s 26.8% cheaper today to buy a housein Crediton compared to 2007
That isn’t a typo!
In 2002, 28.3% of a first-time buyer’s household income went on the mortgage payments. Today, that figure stands at 37.3%, yet in 2007, it was 51% … hence why it’s cheaper today!
Of course, for most young potential first-time buyers, the other largest barrier to home ownership is the matter of raising an adequate deposit.
Rising rents (and future energy prices) won’t help and will in fact make this problem worse, giving ambitious first-time buyers not much left at the end of the month to save a deposit for their first home.
With soaring house prices, this means the amount renters need to save for their deposit is growing year on year.
For these annoyed renters, there is the unpleasant irony that if they could only get on the housing ladder, they would find themselves better off. They would spend a lower proportion of their monthly take home pay on keeping a roof over their heads.
Some people in the press have suggested the older generation, with all the equity tied up in their homes over the last 20 years, should release some of the money and give it to their children or grandchildren to help them on the ladder maybe?
Reports in the press have also described many homeowners in their 60’s (and older) changing their plans to move home. Many were planning to downsize to release the tied-up equity in their home. That equity would either be used to invest in the bank to produce an income for them and/or to help their children (sometimes even grandchildren) on to the property ladder.
Yet with the interest paid by banks and building societies on any lump sum being very low, to many mature homeowners it hardly seems worthwhile making the move to downsize. This means many younger would-be first-time buyers are missing out on help from the Bank of Mum and Dad (or the Bank of Grandad and Grandma) with their deposit.
However, the problems caused by low interest rates could also be their saviour.
Many older homeowners have turned to Equity Release, thus allowing them to get hold of a share of the equity amassed in their property, in exchange for a tax-free lump sum of cash.
Cash that could be used to help withdeposits for their children/grandchildren?
The mature homeowner then stays in their larger family home and helps their family buy a property.
Whilst I am not a mortgage adviser (and you must take proper advice from a qualified mortgage broker), equity release mortgages don’t have end dates and the interest payments are rolled up (until you pass away). This means that there aren’t any monthly payments.
The interest rate you pay is normally fixed for the mortgage and because interest rates are so low, that means the debt shouldn’t balloon up. And should you decide to sell in a few years’ time, you just pay back the capital, redemption fee and the small amount of interest accrued.
Now of course, that does mean there will be less foryour offspring to inherit when you pass away.
Equity release mortgages though have had some bad press recently. In the past they were unregulated and pricey. Yet today, there is more protection for borrowers.
One answer to the growing interest debt is to pay part or all of the monthly mortgage interest charged, yet you must have the income for that.
You also need to take advice on how the equity release will affect your liability for nursing home fees and inheritance tax. Also, if only one person in your home is the owner of the property, if that homeowner dies, the partner who is not on the mortgage (because only owners can go on a mortgage) won’t have any rights to stay in the family home.
Finally, if you are planning to move, don’t just compare the interest rate, but the redemption charge for early repayment – some of them can be very high.
My advice – take professional advice and speak to your family and involve them. Yes, we have all built up some amazing equity in our Devon homes, and yes, there is potential to help the younger generations with that wealth. Just go in with eyes open and know all the facts, all the pros and all the cons – then decide what is best for you with all that information to hand.
What are your thoughts, as a mature homeowner or a first-time buyer, on this? It would be good to hear from you.