What is happening to the Rotherham Property Market?

Posted on by Chris Holmes

The question of which is one we are asked frequently. However, you may be surprised to find out that there isn’t just one big Rotherham property market, but lots of small micro-property markets.

Recent data released by the Office of National Statistics (ONS) suggests that at least three of these micro-property markets have emerged over the last 20+ years in the town.

We have named them as follows:

  1. ‘lower’ Rotherham Property Market.
  2. ‘lower to middle’ Rotherham Property Market.
  3. ‘middle’ Rotherham Property Market.

You may be interested to know how we have classified the three sectors:

  1. ‘lower’ – the bottom 10% (in terms of value) of properties sold
  2. ‘lower to middle’ – lower Quartile (or lowest 25% in terms of value) of properties sold
  3. ‘middle’ – which is the median in terms of value

Who is buying in the ‘lower’ and ‘lower to middle’ sectors in Rotherham?

The ‘lower’ and ‘lower to middle’ sectors of the Rotherham property market have been fuelled over the last few years by two sets of buyers.

The first set make up the clear majority of those buyers – they are cash rich landlord investors who are throwing themselves into the Rotherham property market to take advantage of alluringly low prices and even lower interest rates. The other set of buyers are the first-time buyers (FTB), although the FTB market is in a state of unparalleled deadlock. This market has been trampled into near-immobility and incapacity by the new 2014 stricter mortgage affordability regulations and also fewer mortgages with low deposits.

How is each micro sector doing?

We’ve been examining the three different micro sectors that are identified below and the figures show that they have all performed quite differently:

You can quite clearly see that it is the ‘middle’ market that has performed the best.

What do all these figures mean to homeowners and landlords?

There’s quite a lot of significance. The worst performing sector (with the lowest percentage uplift) was the ‘lower’ housing market. Therefore, if we applied the best percentage uplift figure (i.e. from the ‘middle’ market percentage uplift), to the ‘lower’ 1995 housing market figure, the 2017 figure of £62,500, would have been £68,189 instead. Which is a notable difference.

Why haven’t you mentioned the upper housing market in Rotherham?

Firstly, the lower or middle market is where most of the buy-to-let investment landlords buy their property and where the majority of property transactions take place.

Secondly, due to the unique and distinctive nature of Rotherham’s up-market property scene (because every property is different and they don’t tend to sell as often as the lower to middle market), it is much more difficult to calculate what changes have occurred to property prices in that part of the Rotherham property market – looking at the stats for the up-market Rotherham property market from Land Registry, only 9 properties in Rotherham (and a 3 mile radius around it) have sold for £1,000,000 or more since 1997.

How will this information help me?

Homeowners and buy-to-let landlords can benefit from this information. When you realise that there isn’t just one property market in our area, but several micro property markets, you can spot trends and bag yourself some potential bargains. Even in this market, we have spotted a number of great opportunities over the last few months, especially in the ‘lower’ and ‘lower/middle’ market.

To keep up to date with all our latest news and the buy-to-let bargains, why not follow us on Twitter or like our Facebook page.

If you are an investor or landlord that is interested in our services, please contact the office. 

 

Rotherham Property Values Rise by 1.5% in the Last 12 Months due to Supply and Demand Issues

Posted on by Chris Holmes

Recent set of data from the Land Registry has stated that property values in Rotherham and the surrounding area were 1.58% higher than 12 months ago and 9.12% higher than January 2015. Despite the uncertainty over Brexit, the property values in Rotherham are continuing their medium and long-term upward trajectory. As economics is about supply and demand, the story behind the Rotherham property market can also be seen from those two sides of the story.

 

Supply-side Issues

 

The supply issues of the Rotherham property market and putting aside the short-term dearth of property on the market, one of the main reasons of this sustained house price growth has been down to of the lack of building new homes. The draconian planning laws over the last 70 years (starting with The Town and Country Planning Act 1947) have meant the amount of land built on in the UK today still stands at an unbelievably small 1.8%. That figure is made up of 1.1% with residential property and 0.7% for commercial property.

 

The following pie chart shows how land in the UK is actually used:

 

 

 

This shows that restrictive planning regulations are meaning that homes that people of Rotherham need aren’t being built. Adding fuel to the fire, landowners have deliberately sat on land, which has kept land values high in turn keeping house prices high.

 

Demand-side Issues

 

Looking at the demand side of the equation, one might have thought property values would drop because of Brexit and buyer’s uncertainty. However, certain commenters now believe property values might rise because of Brexit. Many people are risk adverse, especially with their hard-earned savings. The stock market is at an all-time high (ready to pop again?) and many people don’t trust the money markets. The thing about property is its tangible, bricks and mortar, you can touch it and you can easily understand it. Brits have historically put their faith in bricks and mortar, which they expect to rise in value, in numerical terms, at least.

 

Nationally, the value of property has risen by 635.4% since 1984 whilst the stock market has risen by a very similar 593.1%. However, the stock market has had a roller coaster of a ride to get to those figures. For example, in the dot com bubble of the early 2000s, the FTSE100 dropped 126.3% in two years and it dropped again by 44.6% in 9 months in 2007… the worst drop Rotherham saw in property values was just 16.94% in the 2008/9 credit crunch.

 

Despite the slowdown in the rate of annual property value growth in Rotherham to the current 1.58%, from the heady days of 4.88% annual increases seen in mid 2010, it can be argued the headline rate of Rotherham property price inflation is holding up well, especially with the squeeze on real incomes, new taxation rules for landlords and the slight ambiguity around Brexit.

 

Now that mortgage rates are at an all-time low and tumbling unemployment, all these factors are largely continuing to help support property values in Rotherham (and the UK).

 

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