132% increase in Property Values in Northampton since the Millennium

Northampton house prices since the Millennium have risen by 132.58%, whilst average salaries in Northampton have only grown by 51.27% over the same time frame. This has served to push home ownership further out of reach for many Northampton people as they have to battle against raising considerable deposits and meeting sterner lending criteria, as a result of new mortgage regulations introduced in 2014/5.  The private rental market in Northampton 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.  Roll the clock back 20 years in Northampton and there were 74,816 properties in the town, whilst the most recent set of figures show there are 89,984 properties - a growth of 15,168 properties.

However, anecdotal evidence suggests that a large majority of those 15,168 were bought by Northampton buy-to-let landlords, as over the same 20 year time frame, the number of rental properties has grown from 3,635 to 15,921 in the town - a rise of 12,286 properties.

Nevertheless, some say this historic growth of the Northampton 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 Northampton and these are the reasons why I believe that:

Firstly, what else are Northampton 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 132.58% rise in Northampton 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 Northampton; the stock of property for sale being at a six year all time low.

…Thirdly, if there are fewer rental properties in Northampton, as supply drops and demand remains the same (although ask any letting agent in Northampton and they will say demand is constantly rising) this will create a squeeze in the Northampton rental market and as a result rents will rise. In fact, I predict even if landlords don’t sell up, Northampton rents will rise as Northampton landlords seek to compensate for increased costs, which means more landlords will be attracted back.