One of my professional landlords called me towards the end of last week informing me how he thinks he should be purchasing more detached properties in Walsall. He told me how he thinks they will bring about better returns when he sells them although he hasn’t sold anything yet. I thought this didn’t ring quiet true in my mind so, me being me, I began to look at the stats to see what the actual numbers was telling us.
Rightmove announced that average ‘asking prices’ fell slightly last month by 0.6% in the West Midlands, leaving them 2.9% higher than a year ago.
Whilst it could be said that this monthly change is very modest, in the same period a year ago, we saw a monthly fall of 1.5% in the West Midlands, which is the norm given the onset of schools breaking up and everyone going on holiday. These types of fluctuations in the market are normal which we as property agents witness on a regular basis.
Looking at all the data on the Walsall & Surrounding Area property market – putting aside the need for more houses to be built in the next decade to balance out the increase in population (helped in part by inward European migration) but not matched by a similar increase in housing being built, my research as a Letting Agent in Walsall shows there is a widening gap between what property buyers and buy-to-let landlords want, and what there is available to buy.
In a nutshell, many more property buyers across WS postcodes are looking for smaller one and two bed properties in Walsall & The Surrounding Area (the typical terraced and smaller semi-detached houses and apartments), whilst there are a larger proportion of the four and five properties, which are the typical detached properties, available.
Demand for smaller properties comes from both first time buyers and the growing number of buy to let landlords, where it is more cost effective and efficient to buy smaller properties to let out compared to larger properties which tend to offer poorer returns in comparison.
Also, private landlords in Walsall with larger loans (on those larger, more expensive properties) will also be hit harder with the changes in the way tax is paid on buy-to-let investments, which start in 2017.
In the last 15 years, the average terraced house in Walsall has risen in value from £32,896 to £89,818 whilst the detached house has risen in value from £97,715 to £215,612.
Nothing seems amiss until you look at the percentage growth.
The average terraced house has grown in value by 173% whilst the average detached home by only 120.6%, meaning the gap between the comparatively inexpensive terrace’s and expensive detached properties has in percentage terms narrowed enormously (this isn’t just a Walsall thing, it has happened all across the Country).
It is well publicised that the country needs 200,000 houses a year to be built to keep up with demand, let alone reverse the imbalance between demand and supply for buy-to-let property investment in Walsall.
Last year, only 141,040 properties were built, the year before 135,510, and 146,850 in the year before that.
It’s apparent to see from the figures that unless David Cameron starts to rip up huge swathes of the countryside and build on acres and acres of greenbelt, demand will always exceed supply when it comes to property for the foreseeable future.
There are many pitfalls to consider when investing in the Walsall Property Market. If you wish for me to provide an honest opinion please feel free to email me the link on the email address below.
Phone: 01922 637672