The title of this blog may have piqued your interest to read further so we feel it only fair to say from the offset that the answer is, we don’t rightly know. However, that is no reason not to read on. We thought that as we enter a new year it would be worth exploring what the experts are saying when it comes to the sales and rental markets, both nationally and locally, and how this might impact you and your property plans during 2020.
Firstly, we would like to begin with wishing you a Happy New Year. 2019 was a turbulent year for the property market. The first half of the year saw average prices in Gloucester increase by an encouraging 5%*, however, this has plateaued in the past six months, remaining at similar averages** which is most likely a reflection of the country’s indecision over Brexit, when it came to a head in the latter half of last year. Most media reports suggest that the Conservative majority victory in December will now bring decisive action for the country and much needed stability and this report from the BBC suggests that the majority of industry experts, including commentators from building societies and property portals, predict an increase in house prices, nationally, by between 1-3% percent during 2020.
Here in Gloucester, the position for rentals, reassuringly perhaps, remains strong. Here’s our table of current rental and property prices to give a comparison of net annual yields:
Average Price Average Rent Yield
One Bedroom £129,977 £554 5.1%
Two Bedroom £179,963 £674 4.5%
Three Bedroom £245,736 £867 4.2%
Four Bedroom £376,292 £1,445 4.6%
All figures provided at www.home.co.uk and current as of 09.01.20.
These latest figures are welcoming news. According to SDL Auctions*** the average yield across all properties in Gloucester in May 2019 was 3.87% so we have seen an increase in yield by 0.73% in just 6 months. And, with an average, current yield of 4.6%, one could argue this is a better return on your investment than a high street savings account where average rates remain under 2%.
It’s clear to see that although house prices stagnated in Gloucester in the latter half of 2019, the overall picture of the housing market remains positive. Property prices are still, on average, up by 5% on 2018 prices and the rental market shows an improving picture on rent prices and therefore suggests demand in the rental market, within the city, and its locales remains strong.
However, we are under no delusion – as we set out at the beginning of this post – that the ‘B’ word has cast doubt in many homeowners’ minds, bringing about indecision and uncertainty. We don’t have a crystal ball; we don’t know what is going to happen. But, in the past 30 years the UK has suffered 2 recessions and the one thing we have learned from a turbulent economy is that life still has to go on. Families grow, people change jobs, and, at the other end of the spectrum, some retire and downsize, move to a nursing home and some pass away. All these situations create challenges, but they provide opportunities too. Sometimes we have no opportunity but to move properties to fit in within our life decisions. If this sounds like you and you aren’t in a position to just give your home a lick of paint and wait a few more months before you think about selling, here’s our suggestions for some options open to you:
Become a Landlord and a Tenant
If you are indecisive, or worried about taking on the cost of a larger mortgage, but you really need to move to another area for work, school catchments, a new member of the family, whatever, you could consider renting out your property and renting yourself, so you can live where you want to live. It’s not for everyone, becoming a Landlord, but it may be a short-term solution to a long-term problem. Obviously, there will be matters to check out; will your mortgage lender (if you have one) allow you to rent the property out? Will the rent cover the mortgage? Can you afford any discrepancy between the mortgage you need to cover on your home and the cost of the property you want to rent? It may seem like a bit of a faff to rent your property out when you could just sell and buy, but if uncertainty is causing you anxiety and indecision over what to do and you need to make a decision, becoming a landlord and tenant, if only temporarily, might allow you the freedom to move on with your life.
Reassessing what you really want
At the risk of going all Kirstie & Phil on you; are you struggling to make your next move because you don’t really know what you want? Or perhaps you don’t think you can afford what you want? It’s difficult sometimes to know what the right thing to do is, so making a list of priorities can help you try and decipher what the best move for you is. We’ll be delving into this subject more in the coming weeks but in the meantime, consider your circumstances and work out what is most important to you. Is it having 4 bedrooms for your family of 5 or is it the school catchment area? If the school catchment area is most important, could 2 of your children share a bedroom? That way, perhaps a 3 bedroom property in your desired location is achievable and will at least get you into that location from which you could then look to extend the property in the future or move again, when the children do all need bedrooms of their own.
Take a break from the Property Ladder
We know what you’re thinking; ‘odd advice from an agent’, but not necessarily! We are a nation of homeowners, we are obsessed with the property ladder but we’re not living in 2001, no-one is anticipating house prices to increase by 1.2% month upon month. Taking 6 months off the property ladder in the current climate is not going to seriously affect your buying capability. In fact, being chain free might be an advantage when it comes to purchasing your next property and might give you some leverage for negotiation on your next purchase.
Still uncertain? Well, luckily for your we have a team of sales and lettings staff, highly experienced with the Gloucester property market and here to assist you make your next move. Call us 01452 310999, email us at gloucester@surepropertygroup.com or call into our offices in Worcester Street, Gloucester, to discuss your needs further.
We look forward to hearing from you.
Best wishes,
Rob Buckley & Tom Smith
Directors
Sure Sales & Lettings
* figures according to Rightmove – https://www.rightmove.co.uk/house-prices-in-my-area/marketTrendsTotalPropertiesSoldAndAveragePrice.html?searchLocation=gl1&sellersPriceGuide=Start+Search
** statistics according to Home.co.uk – https://www.home.co.uk/guides/asking_prices_report.htm?location=gloucester&startmonth=01&startyear=2019&endmonth=01&endyear=2020
*** https://www.sdlauctions.co.uk/latest-news/what-is-a-good-rental-yield-in-the-uk/