67.7% of Harlow Properties have 3 or more bedrooms – Problem or Opportunity?

The orthodox way of classifying property in the UK is to look at the number of bedrooms rather than its size in square metres (although now we are leaving the EU – I wonder if we can go back to feet and inches?). It seems that homeowners and tenants are happy to pay for more space. It’s quite obvious, the more bedrooms a house or apartment has, the bigger it is likely to be. The reason being not only the actual additional bedroom space, but the properties with more bedrooms tend to have larger / more reception (living) rooms. However, if you think about it, this isn’t so astonishing given that properties with more bedrooms would typically accommodate more people and therefore require larger reception rooms.

In today’s Harlow property market, the Harlow homeowners and Harlow landlords I talk to are always asking me which attributes and features are likely

to make their property comparatively more attractive and which ones may detract from the price. Over time, buyers’ and tenants’ wants and needs have changed. In Harlow, location is still the No. 1 factor affecting the value of property, and a property in the best neighbourhoods, say Churchgate Street or Old Harlow can command a price nearly 50% higher than a similar house in an ‘average’ area. However, after location, the next characteristic that has a significant influence on the desirability, and thus price, of property is the number of bedrooms and the type (i.e. Detached/ Semi/Terraced/Flat).

In previous articles, I have analysed the Harlow housing stock into bedrooms and type of property, but never before now have I cross-referenced type against bedrooms. These figures for the Harlow Council area make fascinating reading. It shows 67.7% of all properties in the area have 3 or more bedrooms

	Detached	Semi-detached	Terraced (including end-terrace)	Flat
1 bedroom	12	27	40	513
2 bedrooms	104	407	2,993	2,113
3 bedrooms	850	2,024	6,194	288
4 bedrooms	901	730	1,290	42
5 or more bedrooms	330	153	236	7

I was genuinely surprised at the low numbers of one and two bed properties, especially 2 bed semis detached houses, especially as tenants like the smaller one and two bed properties in Harlow. You see, it might interest the homeowners and landlords of Harlow, that there has been a change in the numbers of properties on the market and the split in bedrooms on the market over the last 12 months

12 months ago, 25 one bed properties were for sale in Harlow, today 21, a drop of 16%

12 months ago, 41 two bed properties were for sale in Harlow, today 76, a rise of 85%

12 months ago, 85 three bed properties were for sale in Harlow, today 106, a rise of 25%

12 months ago, 75 four bed properties were for sale in Harlow, today 81, a rise of 8%

12 months ago, 45 five + bed properties were for sale in Harlow, today 44, a drop of 2%

It can quite clearly be seen more Harlow properties have become available, which can only be good news for Harlow first time buyers and Harlow buy to let landlords looking for a bargain (especially post Brexit) as property prices have stopped rising at the silly rates they were 12/18 months ago.

  

For several years Harlow buy-to-let investors have been the only buyers at the lower end (starter homes) of the market, as they have been enticed by high tenant demand and attractive returns. Some Harlow landlords believe their window of opportunity has started to close with the new tax regime for landlords, whilst it already appears to be opening wider for first-time buyers. This is great news for first time buyers ... but one final note for Harlow landlords ... all is not lost ... you can still pick up bargains, you just need to be a lot more savvy and do your homework ... one source of such information with articles like this is the Harlow property market Blog

Population in the Harlow area set to rise to 100,800 by 2036

Harlow faces a predicament. The population is growing and the provision of new housing isn’t keeping up. With the average age of a Harlow person being 38.2 years (compared to the East of England average of 40.2 years old and the national average of 39.4 years of age), the population of Harlow is growing at an alarming rate. This is due to an amalgamation of longer life expectancy, a fairly high birth rate (compared to previous decades) and high net immigration, all of which contribute to housing shortages and burgeoning house prices.

My colleagues and myself work closely with Durham University and they have kindly produced some statistics specifically for the Harlow Council area. Known as the UK’s leading authority for such statistics, their population projections make some startling reading…

For the Harlow Council area ... these are the statistics and future forecasts

2016 population  86,134

2021 population  90,087

2026 population  93,884

2031 population  97,396

2036 population  100,873

The normal ratio of people to property is 2 to 1 in the UK, which therefore means...

We need just over 7,000 additional new properties to be built

in the Harlow Council area over the next 20 years.

Whilst focusing on population growth does not tackle the housing crisis in the short term in Harlow, it has a fundamental role to play in long-term housing

development and strategy in the town. The rise of Harlow property values over the last six years since the credit crunch are primarily a result of a lack of properties coming onto the market, a lack of new properties being built in the town and rising demand (especially from landlords looking to buy property to rent them out to the growing number of people wanting to live in Harlow but can’t buy or rent from the Council).

Although many are talking about the need to improve supply (i.e. the building of new properties), the issue of accumulative demand from population growth is often overlooked. Nationally, the proportion of 25-34 year olds who own their own home has dropped dramatically from 66.7% in 1987 to 43.8% in 2014, whilst 78.2% of over 65s own their own home. Longer life expectancies mean houses remain in the same hands for longer.

The swift population growth over the last thirty years provides more competition for the young than for mature population.  It might surprise some people that 98% of all the land in the UK is either industrial, commercial or agricultural, with only two percent being used for housing, which means one could propose expanding supply to meet a expanding population by building on green belt – that most Politian’s haven’t got the stomach to tackle, especially in the Tory’ strongholds of the South of England, where the demand is the greatest. People mention brownfield sites, but recent research suggests there aren’t as many sites to build on, especially in Harlow that could accommodate 7,000 properties in the next 20 years.

In the short to medium term, demand for a roof over of one’s head will continue to grow in Harlow (and the country as a whole). In the short term, that demand can only be met from the private rental sector (which is good news for homeowners and landlords alike as that keeps house prices higher).

In the long term though, local and national Government and the UK population as a whole, need to realise these additional millions of people over the next 20 years need to live somewhere. Only once this issue starts to get addressed, in terms of extra properties being built in a sustainable and environmentally friendly way, can we all help create a socially ecological prosperous future for everyone. For more thoughts on the Harlow Property market, please visit the Harlow Property Market Blog

Rents in Harlow rise by 3.0% in the last year

I was reading the Sunday Papers, as is my want and, when reading the financial pages, it was announced UK inflation had increased to its highest level in a year. Inflation, as calculated by the Government’s Consumer Prices Index, rose by 0.3% over the last 12 months.  The report said it had risen to the those ‘heady’ levels by smaller falls in supermarket and petrol prices than a year ago. If you recall, in early 2015, we had deflation where prices were dropping!

So what does this mean for the Harlow property market ... especially the tenants?

Back in November, the Office of National Statistics stated average wages only rose by 1.8% year on year, so when adjusted for inflation, Harlow people are 1.5% better off in ‘real’ terms.   Great news for homeowners, as their mortgage rates are at their lowest ever levels and their spending power is increasing, but the news is not so good for tenants.

The average rent that Harlow tenants have to pay for their Private Rental Properties in Harlow (i.e. not housing association or council tenants) rose by 3.0% throughout 2015, eating into most of the growth.  2015 wasn’t a one off either.  In 2014, rents in Harlow rose by 1.9% (where salaries only rose by only 0.2%) However, it’s not all bad news for Harlow tenants, because in 2013 rents rose by 0.9%, (but salaries rose by 2.2%).

… and it must be noted that the private rents Harlow tenants have had to pay for Harlow property since 2005 are only 18.3% higher, not even keeping up with inflation, which over the same time frame, rose at 27.8% (although salaries were only 22.3% higher over the same time period)

More and more, talking to 20 and 30 somethings who rent – it’s a choice.  Gone are the days where owning your own property was a guaranteed path to wealth, affluence and prosperity.    I know keep mentioning Europe, but some of the highest levels of home ownership are in Romania at 96.1%, Hungary at 88.2% and Latvia at 80.9% (none of them European economic dynamos) and even West European countries like Spain at 78.8% and Greece at 74% (and we know both of those countries are on their knees, riddled with national debt and massive youth unemployment).

At the other end of the scale, whilst we in the UK stand at 64.8% homeownership, in Europe’s powerhouses, only 52.5% of Germans own a home and only 44% of Swiss people are homeowners.  Looks like eating chocolate, sauerkraut, renting and good economic performance go hand in hand.  Yet, joking aside, home ownership has not always been the rule in the UK.   In 1918, only 23% of people were homeowners, with no council housing, meaning in fact, 77% were tenants.

Tenants have choice, flexibility to move, they don’t have massive bills when the boiler blows up, it’s a choice.  Harlow rents are growing, but not as much as incomes. To buy or not to buy is an enormously difficult decision.   For while buying a Harlow home is a dream for the majority of the 20 and 30 something’s of Harlow have, it might not leave them better off in the long run and it isn’t necessarily the best option for everyone.  That is why, demand for renting is only going in one direction – upwards.