Bristol Market Report: June 2017
The Bristol Property Market: Post Election Blues or Full Steam Ahead?
Over the last two years Bristol has been one of the star performers in the UK property market. There have been double digit percentage price rises year on year for both sales and rental, but with the uncertainty from the General Election and Brexit on the horizon is that bubble about to burst?
In this month’s report we look at what has driven the Bristol boom and what the future holds and whether now is the time to consolidate.
- Why has Bristol boomed?
Hardly a week goes by without Bristol topping a poll as the best place in the UK to live. It is no longer a well-kept secret. But what is the allure?
Many people cite the “vibe” of the city. It is true that Bristol is not as intense as London and for many that lack of intensity is an attraction, however businesses continue to thrive. Bristol is, and always has been, a merchant city, as a port it has always been looking outwards and that ethos is still prevalent today. A commercial mind-set is hardwired into the city’s DNA and people relocating to Bristol understand that.
Bristol is “open for business” and that attitude attracts more companies to the city which in turn brings more people. The result: a greater need for housing with the corresponding uplift in property values. Just this week broadcaster Channel 4 announced that they are contemplating making Bristol their headquarters. If this comes to fruition we will see an influx of highly paid media executives looking for property and, used to London prices willing and able to outbid local buyers. And so the cycle begins again.
It is not just executives moving to the city. There are plenty of white collar employees moving into the city as Bristol booms. They don’t want large houses in BS6, BS8 and BS9 they want affordable apartments and family homes in areas with good communication links, good schools, and good amenities. For young singles, apartments within a mile radius of the city centre are the basic requirement whereas for families, suburban areas and villages on the edge of the city are ticking their boxes.
So the property boom has been built around the economic boom Bristol has enjoyed over the last few years. The $64,000 question is can it continue?
- Will the Bristol Bubble Burst?
Regardless of your politics, businesses hate uncertainty and we are entering uncertain times. The General Election was supposed to deliver a clear majority and bring “strong and stable” government. Well that went well didn’t it? The agreement between The Conservatives and DUP may or may not last and businesses will probably wait and see before making any large investment plans including relocation.
Talking of uncertainty there is Brexit and that is the black cloud hanging over our economy. Will we have a hard Brexit, soft Brexit, sane or insane Brexit? Nobody knows. But what we can say with certainty is that businesses on both sides of The Channel want to do business with each other and as they are the ones that pay the taxes that keep politicians in jobs, my thinking is that a deal will be done. But while we wait for a deal there will be uncertainty and nervousness, how will this manifest itself?
In the rental market the uncertainty surrounding the status of EU nationals will see a reduction in the numbers coming to the UK for work especially from Spain and Italy, this may ease the pressure at the lower end of the rental market.
In the sales market, I think we will see less people moving “for the sake of it” and will see people more likely to upgrade their current property rather than move up the ladder. Good news if you are a builder or architect less good if you are a vendor. Don’t get me wrong, I am not predicting a housing crash, but I do think we will see a slowing down in price rises and a drop in the number of transactions.
The changes on how buy to let properties are taxed are just beginning to bite, and creeping up behind them is more rigorous stress testing by lenders. From September buy to let lenders will be looking at all of a landlord’s property portfolio and stress testing them all before making a lending decision. They will not only be looking at rental income affordability but also potential tax liability. If you are looking to invest in buy to let after September then be aware that it might be better to put down a larger deposit (33 %+) in order to get the purchase over the line.
But What about Bristol?
There is some good news for Bristol specifically.
Transport has long been the Achilles heel of the city, but at last there might be some light at the end of the tunnel. The electrification of the line from Paddington to Parkway makes the journey to London fifteen minutes shorter and crucially means that up to four trains an hour can now run on the line. This makes North Bristol even more viable for London commuters and areas close to Parkway and in good school catchment areas are likely to benefit. The metro bus promises to take public transport into the 21st century although the jury may still be out on that one.
Bristol is still expanding. Bristol University has plans for a new business school in the Temple Meads area, SME’s are relocating and expanding, bringing new employees to the city. House builders continue to develop at a pace, the new Bristol South link road has opened up a swathe of land waiting to be developed. The new metro mayor is looking to bring a joined up plan for Bristol BANES and South Gloucestershire (North Somerset refused to join in)
So there are mixed messages regarding the future. The next 18 months could be interesting……..
3. What should I do with my property?
As discussed earlier there are many mixed messages clouding the future and what you do with your property depends on your own personal circumstances. However, there are some things we can say with a degree of certainty.
Buy to Let Landlords
Firstly if you have a fixed rate mortgage that runs out in the next 12 months, then you should look at getting a new deal before September. Personal experience shows that during the first few months of new lending regulations the criteria are rigorously adhered to, leaving no wriggle room. It is quite literally a case of “computer says no!”
If you are thinking of selling you need to make sure your property will attract potential investors by having all the relevant information ready. Selling a buy to let is going to get complicated, so the vendor with all the relevant information available for potential purchasers will be the vendor that sells quickest.
There are likely to be less people actively looking to buy in the short term so your property needs to be
- Presentable – Vendors need to make sure that the photographs show the property in the best light. That the property has a floor plan. That when viewings take place the property is tidy and the lawn is mowed as a bare minimum.
- Priced right – The days of putting a high price “out there” hoping to get someone to take a punt are gone. Purchasers are being canny and it is better to get a lot of interest and competition amongst buyers than to have little interest and the property looking “stale”.
Rents are still increasing but at a slower rate. What nobody knows is how the banning of tenant fees will affect the market. Depending on who you believe there are two scenarios out there
Scenario 1 – Agents no longer being allowed to charge tenants will have to increase their charges to landlords which will be passed on to the tenant in increased rents.
Scenario 2 – With tenant fees abolished it will be cheaper for tenants to move so tenants won’t put up with rent increases and just move to cheaper equivalent accommodation thus creating more competition in the market and keeping rents and landlord charges lower.
Both scenarios have merit and I don’t think anyone will know how this will play out until we actually start operating under the new regime.
I still believe that there will be an expanding market for rented property, however, we are likely to see longer tenancies, giving tenants more security. Rents will stabilise, and demand will keep rising.
In conclusion, in all my years in property I have never known so much uncertainty, we can be certain that Brexit will set the agenda for at least the next two years, but how it will affect the housing market is far from clear.
More Help & Advice
Whether a Bristol Landlord, Buy to let Investor, tenant or homeowner, if you need help on understanding the Bristol property market give us a call on 0117 973 9394.
With over 25 years of experience and an unrivalled knowledge of the City we can provide you with the help and guidance you need. Whether you are looking to make changes to your property portfolio, change letting agent or finding that dream home.
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