Milton Keynes House owners desert the housing market with an 8 year low

Even though the housing market is in an upbeat state in many parts of the UK, getting on the property ladder is still challenging for many and regarded as unattainable by some.  However, that goal has become even worse recently in Milton Keynes as the number of houses available to buy is at an 8 year all time low.

Back in Spring 2008, there were over 3,700 properties for sale in Milton Keynes and since then this has steadily declined year on year, so now there are only 1,162 for sale in the town.  This continuing diminishing supply of housing has been happening over those years for a while and there simply aren’t enough properties in Milton Keynes to match demand.

According to a recent report by the National Association of Estate Agents, that said, “There are now 11 house hunters fighting after every available house which isn’t sustainable.”   What that means is Milton Keynes youngsters, who are looking to buy their first home, are finding themselves being squeezed out by the competition.  However, in the meantime, nobody wants to live with parents until they are in their 30’s, so that in turn creates demand for more rental properties, which means landlords have a greater demand for more rental properties so are buying more, resulting in even less smaller properties for the youngsters to buy, it’s a vicious circle.   

Talking to fellow agents, mortgage arrangers, surveyors and solicitors in the town, all of whom have extensive dealings in the Milton Keynes property market like myself, most of us agree the movement in the Milton Keynes market is taking place in the middle to upper market, higher up the property ladder and it’s second and third steppers pushing through the properties that are being bought and sold.

That has meant as people tend to move less in the middle to upper market, the number of the properties actually selling has drastically reduced over the last couple of years.

When we look at the individual areas of the town, it paints an interesting picture.

• MK2 -  Central Bletchley, Fenny Stratford, Water Eaton 22 properties sold in May 2015 (with an average value of £ 164,799), whilst over the Summer months of 2014, the number of properties selling in this postcode was always in the mid/late 20’s.
• MK3 - Far Bletchley, Old Bletchley, Newton Leys, West Bletchley23 properties sold in May 2015 (with an average value of £208,471), whilst over the Autumn months of 2014, the number of properties selling in this postcode reached into the early 60’s.
• MK4 -  Emerson Valley, Furzton, Kingsmead, Oxley Park, Shenley Brook End, Tattenhoe, Tattenhoe Park, Westcroft, Whaddon, 30 properties sold in May 2015 (with an average value of £310,014), whilst over the Summer months of 2014, the number of properties selling in this postcode reached into the early 70’s.
• MK5 - Crownhill, Grange Farm, Oakhill, Loughton, Medbourne, Shenley Brook End, Shenley Church End, Shenley Lodge 15 properties sold in May 2015 (the most recent set of figures from the HM Land Registry), whilst over the Summer months of 2014, the number of properties selling in this postcode was always between 22 and 25 per month. (Interestingly the average value of those properties was £279,786).
• MK6 -  Ashland, Beanhill, Coffee Hall, Eaglestone, Fishermead, Leadenhall, Netherfield, Oldbrook, Peartree Bridge, Springfield, Tinkers Bridge, Woughton on the Green, Woughton Park, Simpson, 21 properties sold in May 2015 (with an average value of £192,928), whilst over the Summer months of 2014, the number of properties selling in this postcode reached into the late 20’s.
• MK10 - Broughton, Kingston, Middleton, Monkston, Oakgrove 43 properties sold in May 2015 (with an average value of £ 308,684), whilst over the Summer months of 2014, the number of properties selling in this postcode remained in the mid 60’s.

So what does this all mean for homeowners and landlords alike in Milton Keynes?  Demand for Milton Keynes property is fairly good, especially at the lower end of the market.  However, with fewer properties coming up for sale, it means property prices are proving reasonably stable too.

You see I believe a more stable, consistent Milton Keynes property market, with less people seeing property as an easy way to make a quick buck (as many did in the early 2000’s when prices were rising at nearly 20% a year so people were buying and selling every other minute), but a property market that has a steady growth of property values in Milton Keynes, year on year, without the massive peaks and troughs we saw in the late 1980’s and mid/late 2000’s might just be the thing that the Milton Keynes property market needs in the long term.

For more insights, comments and facts on the Milton Keynes Property market please visit the Milton Keynes Property Blog ,where you will find many similar articles to this.

Could your Milton Keynes property save you from Pension oblivion?

If you were born in the early 1970’s or late 1960’s, if you haven’t started to think about it yet, retirement is closer than you think. In fact the number of years you have left to work is less than the number of years you have worked. The basic state pension is worth £115.95 a week for a single person in 2015/16 (or £6,029 a year) and £231.90 a week for a couple (£12,118 a year) as long as your partner has paid their stamp (although there are certain get of jail cards if they haven’t). 

As a household, could you live on just over £12k a year?

However, could the property you are living in in Milton Keynes save you from poverty when you reach retirement? You see, a regular income is vital in retirement, and the bricks and mortar you own in Milton Keynes could provide a way for you to finance life when you retire.

If you are in your 30’s, instead of saddling yourself with bigger and bigger mortgages, going from your first time buyer flat, to a terraced, to the semi and then the large detached house, you could instead keep your terraced or small semi, turning it into buy a buy to let property, let the rent pay the mortgage and then rely on capital growth to provide you with a lump sum when you sell the property and retire.  One of the biggest plus points of buy to let is what is known as leverage. Let me explain ... say you have a deposit of 25% and the value of the property rises by 3% a year, your gains in fact multiply to 12%.  However, if property prices drop, 'leverage' can be catastrophic, as losses will also be multiplied. Property values have dropped a number of times in the last 50 years, but they always seem to bounce back ... property must be seen as a long term investment.

Let me explain how leverage could work for you. If you had bought a Milton Keynes house in Spring of 1983 for £40,000, using a 75% mortgage and 25% deposit, (meaning your deposit would be £10,000). Today, that Milton Keynes property would have risen in value to £289,516, a rise of 623.8%. However, when you look at the growth on just your deposit, the rise is even better ... instead of 623.8%, we see a rise of 2795% (remembering that the mortgage would have been paid off).

However, buy to let is not all about capital growth and in retirement, income is more important than capital growth, as rent is the key to a steady income.

So surely the best strategy is to buy those Milton Keynes properties with the high rents (when compared to the value of the property). These are called high yield properties in the buy to let world because the monthly return is so much greater. So surely they are the best in Milton Keynes? Possibly, but the properties that offer these higher yields (in the order of 5% to 6% per year) tend to be in such areas as Netherfield or Fishermead in Milton Keynes, historically they haven’t offered such good capital growth when compared to the town average, have a higher tendency for void periods and such properties tend to attract tenants that have a greater propensity to be high maintenance.

Therefore, if a high maintenance rental portfolio wasn’t for you, another strategy could be buy a property with relatively smaller rental returns of 3% to 4% per year (i.e. lower yields), but in a more up market area such as Loughton. Properties such as these tend to suffer from less void periods (i.e. when there is no tenant in the property paying you rent) and they historically have had better long term capital growth when compared to the town average.

Every landlord is different and every property is different. All I suggest to you is do your homework.

As regular readers will know, I am happy to share my knowledge and experience of the Milton Keynes property market, high yields, high capital growth, what to buy, what not to buy and where to buy in the Milton Keynes Property market can always be found on the Milton Keynes Property Blog