103% increase in Property Values in Lancaster since the Millennium

Lancaster house prices since the Millennium have risen by 103.73%, whilst average salaries in Lancaster have only grown by 51.27% over the same time frame.  This has served to push home ownership further out of reach for many Lancaster people as they have to battle against raising considerable deposits and meet sterner lending criteria, as a result of new mortgage regulations introduced in 2014/5.

103% increase in Property Values in Lancaster since the Millennium

The private rental market in Lancaster has grown throughout the last twenty years with buy-to-let investors purchasing a high proportion of newly built residential properties that were built and designed for the owner occupier sales markets.  For example, in Lancaster, roll the clock back 20 years and there were 18,558 properties in the Constituency, whilst the most recent set of figures show there are 20,360 properties – a growth of 1,802 properties.

However,  evidence suggests that a large majority of those 1,802 were bought by Lancaster buy-to-let landlords, as over the same 20-year time frame, the number of rental properties has grown from 1,339 to 4,352 in the area – a rise of 3,013 properties.

Nevertheless, some say this historic growth of the Lancaster rental market might start to change with the new tax rules for landlords introduced by Mr. Osborne over the last seven or eight months.  Yet the numbers tell another story.  Across the board, mortgage borrowing climbed to a 9 year zenith in March this year as the British property markets traditional Easter rush corresponded with landlords hurrying to beat George Osborne’s new stamp duty changes.  Buy-to-let landlords borrowed £7.1bn in March 2016 (the latest set of figures released) which was 163% up on the £2.7bn borrowed in the previous March.

You see, from my point of view, I don’t think things will get worse in the buy-to-let market in Lancaster and these are the reasons why I believe that:

Firstly, what else are Lancaster landlords going to invest in if it isn’t property – the stock market?  Since the Millennium, the stock market has risen by an unimpressive total of 5.54%, quite different to the 103.73% rise in Lancaster property prices?

Secondly, its true the 3% stamp duty is the first blow on top of a number of other tax changes to be phased in between 2017 and 2021, such as landlords facing a constraint in their ability to offset mortgage interest and, if sizeable numbers of landlords do take the decision to sell their portfolios, this will lead to a substantial amount of second hand properties being put up for sale.  Yet that might not be a bad thing, as I have mentioned in previous articles there is a serous shortage of properties to buy at the moment in Lancaster: the stock of property for sale being at a six year all time low.

Thirdly, if there are fewer rental properties in Lancaster, as supply drops and demand remains the same  this will create a squeeze in the Lancaster rental market and as a result rents will rise.  In fact, I predict even if landlords don’t sell up, Lancaster rents will rise as  landlords seek to compensate for increased costs, which means more landlords will be attracted back.

What are your thoughts?  I would love to know.  If you are in town pop by and see me at my JDG office.  Equally if you are looking to invest in the property market,  chat to me about what where and what I feel would be a great property investment.

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