Over 1 in 4 Peterborough Properties Being Sold with No Chain

So is it a good idea to rent in between moving home, to be chain-free?

Moving home is said to be the third most stressful thing you can do, so if you can do anything to reduce that stress, so much the better? When buying your next Peterborough home, being chain-free can certainly reduce your stress and offers many advantages over other buyers (and some disadvantages).

So, what is a chain? A property chain is made when there is a line of home buyers and home sellers linked through their property transactions e.g. a Peterborough first-time buyer purchases a property, the sellers of that property then buy another property, and those sellers then buy another property, so on and so forth. Each home sale and purchase are reliant upon the success of every property in the so called ‘chain’. This means if there is one hiccup on one of the properties, every sale and purchase along the whole chain would collapse. No wonder everyone is on tenterhooks when there is a long chain involved.

Yet Peterborough buyers who sell their home before searching for a new Peterborough home considerably reduce their stress levels because they are not needing all the ducks to ‘line up in a row’ on the sale of their home in order to buy their new Peterborough home.

Being chain-free puts Peterborough home buyers in an enhanced position to negotiate with home sellers and they in turn may be more enthusiastic to accepting a lower offer.

Sounds brilliant this chain-free life doesn’t it? Everyone is a chain-free buyer once … when they are a first-time buyer and if they are lucky enough to have an additional home to move into. The other option is selling your Peterborough home and moving into rented accommodation, but that will end up costing quite a few thousand pounds (in what many perceive as wasted money) together with the added cost of employing the services of home removers twice (with all the hassle that entails doubled!). However, that is what many Peterborough homeowners are doing.  

27.7% of all the properties on the market today in Peterborough are being sold without a chain.

I can’t disagree, moving home twice in a short period will be stressful and rent could be perceived as ‘wasted money’, but I have to recommend you look at the bigger picture. It is one of the sturdiest sellers’ markets in a generation, meaning you should get top dollar for your Peterborough home, knowing that many buyers are keen to complete before the stamp duty holiday ends in the autumn.

Then by waiting for the return of stamp duty and for the full roll out on the immunisation programme to give more Peterborough homeowners the peace of mind to place their Peterborough home on to the property market, for Peterborough house prices to cool and the number of properties for sale to increase. Then you could pounce in and buy, with more Peterborough homes to choose from and at more realistic asking prices.

So, does the type of Peterborough property that is being sold make any difference?

  • 19.8% of detached houses in Peterborough are being sold chain-free
  • 21.5% of semi-detached houses in Peterborough are being sold chain-free
  • 28.1% of town house/terraced Houses in Peterborough are being sold chain-free
  • 37.2% of apartments/flats in Peterborough are being sold chain-free
  • 16.6% of bungalows in Peterborough are being sold chain-free

Of course, these aren’t all Peterborough homeowners going into rented accommodation hoping to bag a bargain next year. Many of the bungalows are being sold because their homeowner has either moved into sheltered accommodation or sadly passed on and there are Peterborough landlords selling their Peterborough buy-to-let rental investments.

And don’t get me wrong, there are also risks involved with this type of home buying strategy. Moving into rented accommodation means you are out of the Peterborough property market. Property values could dip in the next 12 months, yet they still could continue to rise – you are taking a gamble on a dip in the market and it could go wrong.

Like most things in life, it depends on your own personal circumstances, where you are in your life, your attitude to risk and your belief on what will (or won’t) happen to property values in Peterborough in the next 12 to 18 months.

If you would like a chat about your potential choices for your home move, then drop me a line.

Peterborough Property Market Improved by 21.8% Over Pre-Pandemic Levels

Has there ever been a better time for Peterborough home sellers?

The Peterborough property market, for people looking to sell, is at its sturdiest for at least the last five years with home buyers jumping onto the Peterborough property ladder with abandon.

Peterborough house prices are anticipated to rise throughout 2021 after the Stamp Duty cut (and subsequent extension until the summer/autumn) and the newly revealed 95% mortgages for Peterborough first-time buyers (and Peterborough homeowners with minimal equity).

In addition, the continued low interest rates and the demand for larger homes because of lockdown, means the Peterborough property market should remain bullish for a while. There is a surge in potential buyers putting themselves on mailing lists with Peterborough estate agents, making the biggest disparity between supply and demand for Peterborough property for many years.

Fears of a cliff edge for the Peterborough housing market at the end of March have dispersed, somewhat due to the Stamp Duty tax deadline extensions, but also because the elevated level of buyer demand caused by the three lockdowns has continued to swell since the start of 2021 meaning that today …

52% of Peterborough properties on the market are Sold (STC)

Interesting, when utilising data from theadvisory.co.uk website, the Peterborough average for the last five years has only been 43%, meaning there has been an uplift of 21.8% in the proportion of Peterborough properties sold (STC) compared to that five year average.

Yet what can’t be forgotten is that 9 out of 20 Peterborough house sellers are also Peterborough house buyers as well, so whilst they do indeed achieve a higher price for their Peterborough property, they also have to pay more for the Peterborough property they want to buy.

So, how much will Peterborough house prices rise by? 

Like all things in life, it’s all about demand and supply. I have discussed the demand, yet what about the supply of properties for sale?

There are 41% fewer Peterborough properties for sale today compared to 6 years ago

Whilst February saw a lower than normal level of new properties coming onto to the Peterborough property market, the easing of lockdown road map and faster rollout of the vaccine is also persuading more Peterborough homeowners (especially those older Peterborough homeowners who have had their jabs) to start making the first steps towards moving home in 2021.

This will mean there will be more Peterborough properties available for sale in the conventionally busier post Easter market in the coming weeks and months which should cause more equilibrium and help keep Peterborough property prices in check.

These are interesting times for the Peterborough property market. If you are a Peterborough homeowner or Peterborough landlord looking to buy or let your Peterborough property in the coming weeks or months, don’t hesitate to drop me a line to discuss what all the points raised in this article mean to you.

Peterborough Pensioner Homeowners are now Worth £3,157,572,800

How wealth is distributed will always be a contentious issue, especially as the Baby Boomers (those aged between their late 50’s and late 70’s) wealth has grown exponentially over the last 20 years, compared to the wealth of the younger generation.

With most UK property in the hands of the older generation, with its total value about to smash through the £8 trillion barrier (up from £3 trillion at the start of the Millennium), is it right that so much wealth is concentrated in the hands of the older generations?

As national house prices have continued to grow unabated (for example in the last eight years by 49.9%, whilst real take home pay has only increased by 11.8%), this has meant younger people are finding it even harder to get onto the property ladder and those already on it to move up it.

Looking at the older end of the age range for home ownership …

of the 65,427 homes in Peterborough, 14,305 households are 65 years or older, and 69.6% of those households (9,950) are owned (mostly without a mortgage).

A full split as follows …

  • Owned 69.6%
  • Council House 23.9%
  • Privately Rented 4.2%
  • Living Rent Free 1.9%
  • Shared Ownership 0.5%

I talk with many Peterborough pensioners who want to move yet are unable to. There appears to be a shortage of suitable properties in Peterborough for members of the older generation to downsize into. Due to their high demand and low supply, Peterborough bungalows and suitable ground floor apartments achieve on average a 15% to 25% premium per square foot over two/three storey properties. Yet would it surprise you only 1% of new builds in the UK are single storey bungalows (compared to 7% 25 years ago)?

Peterborough pensioner homeowners are now worth 3.15bn.

YouGov did a survey a couple of years ago and they found that just over one third of homeowning pensioners in the UK were looking to downsize into a smaller property. As I have stated before, as a nation, we need to rethink how we can encourage older homeowners to sell their larger homes to release them to the younger families that desperately need them.

The Government over the last 11 years have appeared to target all their attention on first-time buyers with a strategy such as the Help to Buy Scheme. However, this doesn’t address the long-established under-supply of appropriate retirement housing vital to the needs of Peterborough’s quickly ageing population. Unfortunately, Peterborough’s housing stock is sadly ill-equipped for this demographic shift to the ageing homeowners.

Also, to add insult to injury, those more mature Peterborough pensioners in their 80’s and 90’s who do live in the restricted number of Peterborough bungalows and suitable ground floor apartments are finding it difficult to live on their own, as they are unable to leave their bungalow/apartment because of a shortage of sheltered housing and ‘inexpensive’ care home places.

This in turn means the younger 60 to 70 year old Peterborough retirees (in their bigger two/three storey family houses) can’t buy those Peterborough bungalows (occupied by the older retirees), which means those Peterborough families in their 30’s and 40’s can’t buy those larger family houses (occupied by the younger 60 to 70 year old retirees) they need for their growing families … it’s like everyone is waiting for everyone because of the logjam at the top of the property ladder.

So, what is the solution? Quite simple – build more homes!

In the last 30 years, the UK population has grown by around 12 million people, yet the number of properties has only grown by around 4.2 million.

With obstructive planning regulations, immigration, people living longer and increased divorce rates (meaning one family becomes two) we have needed 275,000 properties to be built a year since the Millennium to just stand still and meet demand. Twenty years ago, the UK was building on average 185,000 households a year, that figure dropped in the five years after the Global Financial Crisis in 2008 to 140,000 households a year. Thankfully that has increased steadily over the last five years and last year we created 245,000 households in the UK, however we still have all those years since the Millennium to make up for.

The answer is to build on more land for starter homes, bungalows and sheltered accommodation because land prices are holding back the property market, as the larger national building firms are more inclined to focus on traditional two and three storey houses and apartments than bungalows (because they make more money from them). You might say there is no land to build the property on, yet …

only 1.2% of the UK is built on with residential properties.

So how could Peterborough people make money on this news? Shrewd Peterborough property investors should consider purchasing bungalows, especially ones that need some titivating (possibly after somebody has passed away). Bungalows purchased at the right price and location are a great gamble for flipping. They should also be considered for renting out as demand will only outstrip supply. This would be a start to the solution of rebalancing the Peterborough property market so everyone is happier with their lot.

If you would like a chat about the Peterborough property market – don’t hesitate to give me a call.

13% Drop in Peterborough Homes ‘For Sale’ in Last 4 Months

What does this mean for Peterborough property owners?

With most Peterborough families home schooling their children in lockdown and the forthcoming Stamp Duty Holiday deadline on the 31st March 2021, less Peterborough properties have been coming onto the Peterborough property market since the new year. This has prompted a 13% drop in the supply of Peterborough homes for sale compared to October 2020.

For the past couple of decades, like clockwork, Peterborough estate agents’ busiest times for putting property onto the market is the new year to Easter rush, with a smaller flurry of new properties coming onto the market in the mid/late summer. Yet, since the ending of lockdown 1.0 in the late spring 2020, nothing has been normal about the Peterborough property market.

Throughout the summer, the number of properties coming onto the market in Peterborough steadily rose to its peak in October and the number of properties then becoming sold subject to contract (stc) rose even higher (and whilst statistics don’t exist for the properties sold stc, anecdotal evidence suggests there were just under 50% more Peterborough properties sold stc in the last six months of 2020, compared to the same 6 months in 2019).

However, back to the number of properties for sale…

the peak of the number of Peterborough properties on the market in autumn was 1,654 –  that now stands at 1,439.

The first lockdown caused many Peterborough homeowners to want to move with the need for extra space to work from home and in some cases larger gardens. This was further exacerbated by Peterborough home movers also trying to take advantage of the Stamp Duty Holiday to save themselves money on this tax.

This meant many more Peterborough properties came onto the market (more than a “normal” year) in the last 6 months of 2020. However, those Peterborough home movers motivated to move for the extra space/save money on the tax, did so in the summer/autumn and have already placed their home on the market (and are probably by now sold stc rushing to get their house purchases through before the deadline on the tax savings).

So, how does Peterborough compare to other property markets, and what does this reduction in Peterborough properties on the market mean to Peterborough homeowners and landlords?

There are 9% less properties on the market today in Peterborough, compared to 12 months ago.

When I compared that to the national picture, according to Zoopla, there are 12% less properties on the market today (compared to a year ago).

However, the complete opposite is taking place in London. There are currently 47,900 apartments for sale in London compared to January 2020, when there were only 32,600 – a massive rise of 46.9% … all the more interesting when there are only 15.1% more London semi-detached houses for sale and 1.8% more London detached homes over the same 12-month period. The jump in London apartments for sale is being pushed by an upsurge of London up-sizers eager to trade their city living apartment up to suburban houses, and a small handful of panicky London buy to let investors who are wanting to exit the London property market following falling rents for apartments. Looking closer to home, there are…

1% more semi-detached for sale in Peterborough than a year ago, whilst there are 25% less terraced homes.

So, whilst there are some differences between the supply of individual types of property in Peterborough (e.g. semi-detached vs terraced), the overall reduction in the number (i.e. supply) of properties for sale can only mean one thing, when there is a reduction in the supply of anything and demand remains stable, this will mean continued upward pressure on Peterborough house prices in the short term (although I suspect there will be some downward pressure on Peterborough semi-detached with that level of increase in supply – maybe some interesting ‘opportunities’ for all you Peterborough landlords?).

Will overall demand for Peterborough property continue to be stable?

Lockdown 3.0 will probably cause another wave of Peterborough people who want to move home (thus increasing demand). The last property crash (the Credit Crunch in 2009) was caused by a huge increase in the supply of properties for sale when people lost their jobs and interest rates were much higher. People couldn’t afford their mortgages and so dumped their homes onto the market all at the same time – causing an oversupply of property for sale and hence house prices dropped.

Compared to the 1,439 properties for sale in Peterborough today, at the height of the Credit Crunch in January 2009, there were an eyewatering 3,098 properties for sale in Peterborough.

It was this increase in the level of property for sale in Peterborough (mirrored across the whole of the UK) that caused property prices to drop between 16% and 19% (depending on the type of property) in Peterborough over the 12 to 14 months of the Credit Crunch. So, as long as there is no sudden change in the demand or supply of properties and interest rates remain at their current ultra-low level – the medium-term prospects for the Peterborough property market look good.

If you are a Peterborough homeowner or a Peterborough buy to let landlord and want to chat about the future of the Peterborough property market – do drop me a line.

5,090 Peterborough Homeowners to be ‘Unchained’ From Toxic Leasehold Agreements in Biggest Shake-up of Property Law in Decades

When William the Conqueror invaded our fair shores in 1066, like all good kings, he needed to buy loyalty and raise cash to build his castles and armies. He did this by feudal law system and granted all the faithful nobles and aristocrats with land. In return, the nobles and aristocrats would give the King money and the promise of men for his army (this payment of money and men was called a ‘Fief’ in Latin, which when translated into English it becomes the word ‘Fee’… as in ‘to pay’).

These nobles and aristocrats would then rent the land to peasants in return for more money (making sure they made a profit of course) and the promise to enlist themselves and their peasants into the Kings Army (when requested during times of war). The more entrepreneurial peasants would then ‘sublet’ some of their land to poorer peasants to farm and so on and so forth.

The nobles and aristocrats owned the land, which could be passed on to their family (free from a fee i.e. freehold), while the peasants had the leasehold because, whilst they paid to use the land (i.e. they ‘leased it’ which is French for ‘paid for it’), they could never own it. Thus, Freehold and Leasehold were born (you will be pleased to know that in 1660 the Tenures Abolition Act removed the need of Freeholders to provide Armies for the Crown!).

4.3 million properties in the UK are leasehold

… and 5,090 properties in Peterborough are leasehold. By definition, even when you have the leasehold, you don’t own the property (the freeholder does). Leasehold simply grants the leaseholder the right to live in a property for 99 to 999 years. Apart from a handful of properties in the USA and Australia, England and Wales are the only countries of the world adhering to this feudal system style tenure. In Europe you own your apartment/flat by using a different type of tenure called Commonhold.

The average price paid for leasehold properties in Peterborough over the last year is £135,780.

The two biggest issues with leasehold are firstly, as each year goes by and the length of lease dwindles, so does the value of the property (particularly when it gets below 80 years). The second is the payment of ‘ground rent’ – an annual payment to the freeholder.

Looking at the first point on the length of lease, the Government brought in the Leasehold Reform Act 1967, which allowed tenants of such leasehold property to extend their lease by upwards of 50 years. However, this was very expensive and as such only kicked the can down the road for half a century (when the owner would have to negotiate again to extend another 50 years – costing them more money, time and effort).

Ground rents on most older apartments are quite minimal and unobtrusive. The reason it has become an issue recently was the fact some (not all) new homes builders in the last decade started selling houses as leasehold with ground rents. The issue wasn’t the fact the property was sold as leasehold nor that it had a ground rent, it was that the ground rent increased at astronomical rates.

Many Peterborough homeowners of leasehold houses are presently subject to ground rents that double every 10 years.

That’s okay if the ground rent is £200 a year today, yet by 2121, that would be £204,800 a year in ground rent, meaning the value of their property would almost be worthless in 100 years’ time.  One might say it allows for inflation, yet to give you an example to compare this against, if a Peterborough leasehold property in 1921 had a ground rent of £200 per annum, and it increased in line with inflation over the last 100 years, today that ground rent would be £9,864 a year.

This is important because the majority of leasehold properties sold in Peterborough during the last 12 months were apartments, selling for an average price of £135,638.

So, without reforms, the value of these Peterborough homes will slowly dwindle over the coming decades. That is why the Government reforms announced recently will tackle the problem in two parts.

Firstly, ground rents for new property will effectively stop under new plans to overhaul British Property Law. Under the new regulations, it will be made easier (and cheaper) for leaseholders to buy the freehold of their property and take control by allowing them the right to extend the lease of their property to a maximum term of 990 years with no ground rent.

Secondly, in the summer, the Government will create a working group to prepare the property market for the transition to a different type of tenure. Last summer the Law Commission urged Westminster to adopt and adapt a better system of leasehold ownership – Commonhold. Commonhold rules allow residents in a block of apartments to own their own apartment, whilst jointly owning the land the block is sitting on plus the communal areas with the other apartment owners.

These potential leasehold rule changes will make no difference to those buying and selling second-hand Peterborough leasehold property.

Yet, if you are buying a brand-new leasehold property, most builders are not selling them with ground rent (although do check with your solicitor). The only people that need to take any action on this now are people who are extending their lease. If you are thinking of extending the lease of your Peterborough property before you sell to protect its value, your purchaser may prefer to buy on the existing terms and extend under the new (and better) ones later (meaning you lose out).

Like all things – it’s all about talking to your agent and negotiating the best deal for all parties. Should you have any questions or concerns, feel free to pick up the phone, message me or email me and let’s chat things through.

As Unemployment Hits 7.6% in Peterborough, What Effect Will This Have on the Peterborough Property Market in 2021?

12 months ago, the unemployment rate in Peterborough stood at 3.4% of the working population, yet with Coronavirus hitting the UK, what impact will this rise in unemployment have on the Peterborough property market?

As I have discussed a number of times in my articles on the Peterborough property market, this summer saw the Peterborough property market do exactly the opposite of what was expected when Covid hit.

The Stamp Duty holiday added fuel to pent up demand for people to move to property with extra rooms (to work from home) and gardens. This prompted a brief hiatus in the number of people selling and buying their home in Peterborough over the last summer and autumn.

Yet, insecurity around rising unemployment, led to many mortgage companies becoming more cautious in the later months of summer, predominantly when lending to the self-employed or first-time buyers borrowing more than 85% of the value of the home (as they wouldn’t want to lend money to someone that could not afford a mortgage due to an insecure income or not having a job).

Back in the late spring, economists were predicting that UK unemployment would rise to a peak of 6.5% in Q3 2020, returning back to the 2019 levels (3.4%) by 2022.

As we speak (Christmas 2020), nationally the unemployment rate stands at 6.3%. The toll Covid has had on people’s livelihoods has been massive, with an additional 1,434,515 people out of work, although it is important to note this unemployment rate is still lower than the five years following the Credit Crunch years – 2008 to 2013.

So, with such a growth in unemployment and the spectre of a ‘No Deal Brexit’, this may hold back the enthusiasm of many companies to take on more staff, reducing any rebound in employment. If unemployment remains high, this will influence perceptions of employment and personal/household financial security, which are the ultimate drivers for both house prices and whether people buy and sell.

4,275 Peterborough people were unemployed a year ago and today that stands at 9,475.

Looking at all the study papers on the topic, there is a link between unemployment and house prices, yet it’s not as strong as you would think. The larger factors are the demand and supply of property on the market and interest rates. Interestingly, in the past two recessions, the comparatively richer regions of London and South East house prices have been more sensitive to unemployment and house price changes than the rest of the UK, yet London and the South East also bounced back quicker and higher after the two recessions. 

The concept behind this is that more expensive house prices in the South drop more than lower priced houses in the rest of the UK. Why? Because those more expensive regions have, by definition, more expensive house prices meaning the homeowners have higher mortgages, so if they become unemployed, their homes are more likely to be repossessed (because of the high mortgages), and consequently that reduces house prices in that area quicker because repossessed houses tend to sell much more cheaply compared to normal house sales.

The health of the Peterborough property market in 2021 and beyond really depends on what happens to the economy as a whole and more specifically what is happening in the Peterborough economy.

When we drill down though, unemployment has hit different sectors of the economy to a lesser or greater extent. For example, for office workers, people who work in tech & sciences and the professional services, the impact on jobs has been comparatively mild, with many personnel able to work from home. Yet for others, such as those who work in the hospitality, leisure, retail, entertainment and catering industry, remote working is simply not an option, and these have been hit the hardest.

Unfortunately, the industries mentioned above are the ones that tend to employ the younger generation, who invariably live in private rented accommodation, rather than own their own home. Being made redundant puts their dream of buying their first home back even further as they try and get themselves back on their feet by initially finding a job (let alone save for a deposit).

Housing markets will recover quickest in towns and cities, where jobs are in more resilient employment sectors.

For example, in London, unemployment jumped really quickly (and high) in 2009 with the Credit Crunch, yet came down just as quick in 2011, just as the property market in London started to take off, whilst in Peterborough, it took a lot longer for unemployment to drop and the Peterborough property market didn’t really start to get going until 2013.

If we have a determined economic contraction, with a lengthier and leisurely economic recovery, impeded by financial stress, that will lead to much higher unemployment in the 10% to 12% range in the summer of 2021. However, before I get to the initial question, I need to highlight another interesting fact, because…

What is particularly interesting is the increase in unemployment in Peterborough amongst men has been higher than women, with a growth of 5.0 percentage points for men compared to 3.3 percentage points with women.

So, what is the prediction for the Peterborough property market under the cloud of this growth in unemployment?

One massive redeeming factor that could just save the Peterborough property market is low interest rates. This will keep mortgage payments low, meaning repossessions should be kept to a minimum (therefore, there shouldn’t be a flood of cheaply priced Peterborough properties coming onto the market all at the same time and dragging Peterborough house prices down with it, as it did in the previous two recessions of 2009 and 1989).  

Yet, irrespective of the ultra-low interest rates, I still consider property prices in Peterborough at Christmas 2021 won’t be much different from today, and in fact could be slightly lower.

This is because people have been paying top dollar in the last six months to secure their dream Peterborough home, quite often spending the money they saved on Stamp Duty on the purchase price. When Stamp Duty Tax returns in April 2021, there will be less money to pay for the property … thus Peterborough property values will be, by implication, lower in a year’s time.

What about Peterborough landlords and the rents?

Nationally, rents fell just over 2.3% between 2008 and 2010, following the Credit Crunch, while national house prices fell 15.9%. I anticipate Peterborough rents will also remain comparatively robust in the coming months and years.

Rents are very much tied to the rise and fall of wage growth and I can’t see why this relationship shouldn’t continue. Rents will rise in Peterborough by between 13% and 15% in the next five years, yet if property prices do rise in 2023/24, that means future rental yields will be marginally lower in 2023/4 comparative to today, especially as ultra-low interest rate expectations (according to the money markets) seem to be here to stay for a long time.

Therefore, something tells me there could be some interesting Peterborough buy-to-let investment opportunities for Peterborough investors willing to play the Peterborough buy-to-Let market for the long term.

To conclude, these are just my personal opinions. If you are a Peterborough landlord looking for advice and an opinion on what to buy to maximise your returns, please don’t hesitate to contact me. If you are a Peterborough homeowner, looking to buy or sell and need any advice or an opinion on where the market is and where your Peterborough home sits in the bigger Peterborough property market picture – again feel free to drop me a line. 

The 2020 Review of the Peterborough Property Market

Looking back at the Peterborough property market for 2020, it can certainly be seen as a frenetic game of two halves, albeit with a very long half time in the spring. Between the General Election in mid-December and Christmas, many Peterborough agents saw an unusually higher uplift in activity in the property market just as we were getting ready for Christmas 2019. Yet once the New Year festivities were out of the way, that pre-Christmas uplift in the local property market was nothing when compared to the bang on Monday 6th January 2020 with the fabled ‘Boris Bounce’ of the Peterborough property market. January, February and most of March were amazing months, with the pent up demand from people wanting to move from the Brexit uncertainty of 2018/9 being released in the first few months of 2020.

The pandemic hit mid-March, and the Peterborough property market was put on ice for nearly three months (as was almost everyone else’s lives). Yet at the end of spring, the property market was one of the first sectors of the economy to be re-opened. Every economist predicted house price drops in the order of 10% in the best-case scenario and 25% in the worst yet nothing could be further from the truth.

When the lockdown restrictions were lifted from the property market, those three months allowed Peterborough homeowners to re-evaluate their relationships with their homes. The true worth of an extra bedroom (for an office) became priceless, as people working from home were having to take calls and work from the dining room table. Peterborough properties with gardens and/or close to green spaces all of a sudden became even more desirable. More fuel was put on the fire of the Peterborough property market with the introduction of the Stamp Duty Holiday, meaning buyers could save thousands of pounds in tax if they moved before the end of March 2021. This stoked the local property market and now …

Property values in Peterborough are set at 0.8% higher today compared to a year ago.

The fallout of that increased demand for a new home meant those Peterborough properties on the market coming out of lockdown in early summer with those extra rooms and gardens were snapped up in days for ‘full’ price. Peterborough buyers were having to spend their Stamp Duty savings on paying top dollar for the home of their dreams. Yet the increased number of properties coming onto the market in the late Summer quenched a lot of that demand and the prices being achieved became a little more reasonable and realistic. This increased the number of properties sold (stc), so much so that, nationally, almost two thirds more homes have been sold (stc) than would be expected at this time of year!

However, as we all know, just because a property is sold (stc), it doesn’t mean the property is actually sold. The number of people who have moved home in the last 12 months in Peterborough, is as you would expect, much lower. Over the last 10 years, on average 3,539 Peterborough homes have changed hands per year, compared to only 1,511 Peterborough homes in the last 12 months.

So, what is a Peterborough property worth today? Drilling down to the four types of homes locally, some interesting numbers appear. Looking at the table, you can see what the average property types are worth locally, and within each type, the average price paid in the last 12 months. (So, if the average price paid for the last 12 months is higher than the overall average, that means more higher priced property in that type has sold in the last year compared to the overall average – and vice versa). 

 Average Overall Value TodayAverage Price Paid in the Last Year
Peterborough Detached£319,800£308,440
Peterborough Semi-Detached£194,990£207,290
Peterborough Town House/Terraced£151,000£160,670
Peterborough Apartments/Flats£122,080£117,760

Of course, these are overall average values. To give you an idea what Peterborough properties are selling for by their square footage, these are those averages …

Average Value per sq. ft. (internal)
Peterborough Detached£202.95
Peterborough Semi-Detached£195.70
Peterborough Town House/Terraced£173.63
Peterborough Apartments/Flats£155.80

So, what about 2021? Well normally when the country’s GDP drops like a stone (as it did in the Summer of 2020), the property market follows in unison. Yet as the economy went south, the house price growth and activity in the property market went north. This would appear to be a quite remarkable outcome given that economic framework, but it is gradually becoming clear that, as far as the Peterborough property market is concerned, people’s time in lockdown has been spent reflecting on what they really wanted from their home and has meant that the normal rules of the game simply do not apply…. for now.

Peterborough House Prices 2021

What will happen to the value of your Peterborough home next year?

What will a no deal Brexit on the horizon, the end of the stamp duty holiday in March, mortgage payment holidays coming to an end, unemployment set to rise after furlough and ongoing on/off coronavirus restrictions do to the Peterborough property market and the value of your Peterborough home?

In the late spring of 2020, every man and his dog were forecasting impending doom on the British property market. Drops of 10% were considered optimistic as we all held our breath  after lockdown was relaxed. Yet, the property market didn’t listen to the forecasters. UK property values today are 2.5% higher than they were a year ago, and more locally,

Peterborough house prices are only 0.8% higher than a year ago

So, what exactly is going to happen to the Peterborough property market in 2021?

Well, with the end of furlough and 1.7m people still on the furlough scheme at the start of October, a number of economists are saying that unfortunately many of those furloughed will become unemployed. Unemployment currently stands at 4.5% in Q3 2020 (compared to 3.8% in Q3 2019). The Government’s independent Office for Budget Responsibility believes the unemployment rate will peak at 9.7% in early 2021, and then return to pre-coronavirus  levels in 2022. In the past recessions of the early 1980’s, early 1990’s and Credit Crunch of 2009, when unemployment went up, the property market went down.

Yet, in this recession, the link between unemployment and property values may not be so direct.

So why is the link between unemployment and house prices potentially broken? It comes down to interest rates.

The reason Peterborough house prices have gone up by 361.38% since the middle of the 1990’s isn’t because the labour market has got so much sturdier, nor that the economy has outperformed every G8 country, or that the UK has had less boom and bust economic cycles than the previous decades. Instead, it’s because of the fundamental and underlying decline in the Bank of England (BoE) interest rates.

High BoE interest rates equal high mortgage payments which holds everything back regarding the property market. In the 1980’s, the average BoE interest rate was just over 11%, making mortgage payments very expensive and keeping property prices dampened. In the 1990’s, the average BoE interest rate was a little over 6%, in the 2000’s just over 4%. However, in the 2010’s, it had been a really low 0.5%. Now with interest rates down to 0.1% because of coronavirus and the BoE threatening negative interest rates, there appears little threat of an eruption in mortgage repayment costs.

With mortgage payments at an all-time low of just under 30% homeowners’ disposable income (compared to 48% in 2007), those middle-aged people lucky enough to still be in a job (who are mainly made up of workers whom are spending a lot more time working from home), they could be more inclined to dedicate more of their monthly income to mortgage payments than they did pre-coronavirus for a bigger garden or a move out of the big cities?

So, if unemployment isn’t going to make a huge difference to the Peterborough property market, what is?

Most commentators believe a no deal Brexit will have hardly any short-term effect on the property market (apart from certain upmarket parts of central London).

The stamp duty holiday ends at the end of March 2021 and that certainly will reduce the number of Peterborough people moving (as many moved their plans forward to beat the deadline) meaning there will be less Peterborough people moving in 2021, yet that will curtail the supply of property for sale and hence keep Peterborough property prices higher.

Next, the Help to Buy scheme, (started in 2013 and where the Government underwrites part of the mortgage for the first time buyer, meaning they can obtain a 95% mortgage) ends in April next year, yet the Tories indicated at their conference last month they would probably create ‘Help to Buy – Part 2’.

The bottom line is in the early 1980’s and 1990’s recessions, when interest rates were over 15%, obviously home owners couldn’t afford to keep up the mortgage payments when made redundant or on reduced wages, so many handed in their keys to the bank and homes got repossessed, thus exacerbating the issue with falling property values.

However, with interest rates so low, this will not be the case. I envisage that UK property prices will be between 4% to 5% higher by December and Peterborough values just behind that at 2% to 3% higher, before levelling out in 2021 (although we might see a modest dip in certain sectors and types of Peterborough homes depending on location and condition).

My advice to Peterborough buy to let landlords is to wait on the subs bench until April 2021. Something tells me there will be some Peterborough landlords who will be looking to exit the rental market after having their fingers burnt after the eviction ban has been lifted.

I also suspect those Peterborough first time buyers, eager (and able) to break free the rental-rat-race will want to take up the anticipated ‘Help to Buy – Part 2’ scheme, particularly if the BoE base rate stays low. The other winners in 2021 will be low mortgage/equity rich households upsizing to the countryside or leafy suburbs to test out their boss’s promise of ‘flexible-working’.

Yet the losers will be the 18yo to 29yo renters … most likely to be made redundant and least likely to buy a home.

My advice to the Government for this cohort is to not ignore them once the country is out of this coronavirus situation. It’s all very good keeping the Home Counties Tory voting Baby Boomers happy with green belt policies and other policies to keep their property values higher, yet as the Generation X and Millennials get older and take over as the largest demographic to keep happy (for the polls), the hitherto inconceivable action of the Government levying Capital Gains Tax on your main home may come to fruition.

I mean, we have £400bn to pay back because of coronavirus … it has to be repaid and it has to come from somewhere. Those denied real access to buying their own home in the last 10 years, because of massive house price gains over the last 25 years, could vent their anger via the ballot box — if not at the 2024 General Election, maybe in 2029, when they realise that the futile housing policies of both Labour and Tories of the last 23 years have left them with enduring financial diffidence.

Maybe we should all look to the grocer’s daughter from Lincolnshire who in 1979 set out a bold vision of home ownership for everybody. Whichever political party truly picks up the batten and reframes it for the current 2020’s generation and comes up with the goods, will be the ultimate winner in this game.

Peterborough Homebuyers Have Saved £223,660 Thanks to the Stamp Duty Holiday

Yet Many Could Miss Out

Peterborough homebuyers and Peterborough landlords purchasing residential property have saved £223,660 since the Chancellor reduced Stamp Duty on 8th July 2020, yet many more Peterborough homebuyers could miss out.

My analysis of properties sold in Peterborough from the Land Registry between the introduction of the Stamp Duty holiday on 8th July 2020 and 14th August 2020 (which is the most up to date sales data), reveals that many Peterborough homeowners have saved a considerable amount of money in Stamp Duty. According to my research…

since the stamp duty holiday was launched, 78 Peterborough homeowners have saved on average £2,867 each.

That’s a total Peterborough property value of £20,073,240.

Mind you, it’s not all good news as I estimate 172 Peterborough homebuyers risk missing out on the stamp duty savings (worth as much as £15,000 each) due to solicitors/conveyancers and mortgage lenders struggling with demand and failing to hit the 31st March 2021 deadline.

The short-term tax relief, together with the easing of lockdown restrictions, has seen demand for Peterborough property soar this summer as Peterborough property buyers race to move home.

Chancellor Rishi Sunak introduced a stamp duty holiday in the summer, with the stamp duty holiday due to end on 31st March 2021. Yet, I fear the combined pent-up demand caused by…

  1. The post Boris Bounce
  2. People wanting to leave their metropolitan city centres for homes in the countryside
  3. Property with gardens
  4. Property with extra rooms for working from home
  5. The stamp duty savings

…has created a certain amount of constipation and backlog in the Peterborough property market.

I know 31st March 2021 seems an age away, however nothing could be further from the truth. The average Peterborough property sale was taking 19 weeks between the offer price being agreed and the keys/monies handed over BEFORE THE POST-LOCKDOWN. So, with as many as 40% to 50% more Peterborough homeowners in that same sales pipeline of agreeing the offer and the legal and finance to be sorted as we speak, solicitors/conveyancers and mortgage lenders are really struggling with demand for their services, meaning the average time will increase. Hence, I believe as many as…

172 Peterborough people could miss out on the £493,200 stamp duty tax savings.

There is time left to sell and legally complete your Peterborough property sale before the 31st March stamp duty deadline if you put the property on the market now with a realistic asking price, a decent marketing plan and razor sharp reflexes when it comes to the legal and mortgage work.

Yet with 40% to 50% more home movers in the system, those looking to sell their Peterborough home should be very suspicious of agents being too optimistic on their initial asking price (many estate agents get a commission to put a property on the market, meaning they over-egg the pudding on the suggested asking price to flatter you, only to badger you to reduce the asking price weeks later).

Those wasted weeks at an inflated asking price will mean the difference between you securing a buyer and you then buying your next Peterborough home with or without the Stamp Duty savings, which are up to £15,000 per home move.

And whilst many Peterborough buyers seem ready, willing and able to pay top dollar prices for properties that match their changed post-lockdown home needs, speaking privately to many Peterborough agents, some Peterborough homeowners’ price expectations for their homes are now becoming too optimistic, meaning they will undoubtedly lose out.

We also can’t forget as many as 1 in 5 mortgage surveys are being down valued by the surveyor, meaning unless all parties are willing to negotiate, the sale falls through and the homeowner has to go back to ‘Square One’.

My best piece of advice for those currently sold and in the sales systems with lawyers and mortgage brokers is to speak to your solicitor and mortgage broker every single week and ask if there is anything you need to do to ensure the sale proceeds smoothly and expediently. Also, if you are asked for any information from your solicitor or mortgage broker in between times, drop everything and respond quickly to their request. The odd day here and there will make all the difference.

Why are Some Banks Reining in Over-Enthusiastic Peterborough Homebuyers and Buy-to-Let Investors

The Peterborough property market is an enigma and chock-full of contradictions.

Not with standing an economic recession and forecasts of property values dropping, nobody seems to have informed the Peterborough homeowners selling their homes and those Peterborough people looking to buy them. As I have discussed in many recent articles on the locality, the Peterborough property market is booming and property values in some sections of the market are rising, yet amidst enthusiastic reports of gazumping, there are disgruntled and malcontent grumbles about mortgage company surveyors down valuing property on survey.

However, before we talk about the banks and surveyors, let’s look at what is happening in the Peterborough property market now.

Land Registry figures published last week showed unyielding evidence for what everyone in the property industry had been saying since the market reopened after a seven-week lockdown on May 13: property prices are rising.

The average value of a Peterborough home rose by 0.5% in the year to June to £223,300

Many expect the statistics to show more rises following the Stamp Duty Holiday announced in July, which unbridled a burst of buying activity in the Peterborough property market. In many (not all) sectors some properties have been going for over the asking price whilst some have been going to sealed bids.

Some newspapers have even suggested a small minority of homeowners are ‘backdoor-gazumping’, which is genteelly being referred to by estate agents as ‘retuning the asking price’ – as in, the homeowner removing the property from the market, ‘retuning the asking price’ in an upward direction, then placing it back onto the market.

Conceivably enthused by these stories, some house sellers and estate agents might be getting a little carried away and placing overambitious asking prices on homes they are selling. Customarily a property with too high an asking price wouldn’t sell – yet some over-enthusiastic Peterborough buyers are paying over the odds for certain types of properties.

So, let’s look at what is happening to the Peterborough property market (Peterborough plus 3 miles) by house type and the number of bedrooms…

 Number of Peterborough properties
on the market
…and of those –
how many are Sold STC
% Sold STC
compared to those for sale
Detached House103145143.7%
Semi Det House82239648.2%
Terraced/Town House68032848.4%
Apartment52015329.4%
Bungalows37216945.4%

And when we look at the number of bedrooms …

Number of Peterborough properties
on the market
…and of those –
how many are Sold STC
% sold STC
compared to those for sale
Studio/1 bed2166931.9%
2 beds83535041.9%
3 beds141167047.5%
4 beds77134344.5%
5+ beds2188036.7%

As you can see, the best performing type of properties in Peterborough are the terraced/town, very closely followed by the semi-detached houses and the best-selling properties when it comes to bedrooms are 3 beds.

These are quite impressive figures for the Peterborough property market, yet some of the banks are having none of it

They are looking apprehensively into 2021 when furlough/the new job support scheme ends, meaning it’s quite tough for all buyers borrowing high percentage mortgages (i.e. more than 80% to 85% of the value of the property in a mortgage). 

It is even tougher for self-employed buyers (whose income is less than assured) to get those high percentage mortgages – and finally, the banks are most certainly concerned with high percentage mortgage buyers who pay over-inflated prices for property using the bank’s money… hence the down valuing (Definition of Down valuing : the buyer and seller agree a sale price, then the mortgage is applied for with the buyer’s bank and the bank’s surveyor states the purchase price the buyer is paying is too much).

One small note to Peterborough landlords – I am also hearing that some overzealous Peterborough buy to let landlords who are over-egging the potential rental figures on their buy-to-let purchase in order to obtain the mortgage, are also being reined in by the banks.

Now this is not a huge issue (e.Surv – a nationwide surveying firm only reported a 4% increase in surveyors having to down value property in Q2 2020 compared to Q1), yet should you be lucky enough to have multiple offers on your home, ask the agent what the overall buying position of the buyers are. You need to specifically ask what percentage loan the buyer is taking on and the position of the buyer in the chain (they have to find this out anyway by law and you have a right to know that information as the property seller if you ask).

The bottom line is the highest bidder might not be the best buyer for you. It’s true, average property prices are rising nationally, yet this does not mean you should pay over the odds for your next Peterborough property.

If you would like a chat about any aspect of the Peterborough property market – please do send me an email on info@woodcockholmes.co.uk or call me on 01733 303111.