Housing Demand in Yorkshire – A Rising Market

In many parts of Yorkshire and the Humber region, housing market change is being driven by investor, as opposed to consumer, purchases. A number of interesting insights were discovered through a study of the area by the Chartered Institute of Housing.

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More property for your cash and a buoyant rental market

Most investors in the area landlords and the key factor attracting them was not equity growth, but the healthy return on investment that being a landlord in the area offered. Properties can be bought at comparatively low prices and then let out for comparatively high rents. So, you get more property for your cash and there is also a buoyant rental market with high demand.

Much of the demand for rental in ‘rural’ areas comes from those who like convenient access to major towns and cities, but who prefer a slower pace of life at home. Many of these are well-educated professionals, often working in well-paid jobs in the cities, who are starting families. For this group, the perceived ‘dangers’ of city life (for their children) has caused a shift in their housing priorities.

New investment from London and the south east

The study also revealed that the majority of landlord investors in the area were based nationally, as opposed to locally. In fact, a number of local lettings agents reported an increasing proportion of landlord investors from London and the south east.

One agent tells us: “Yes, some of the old (local) landlords are being squeezed out because they can’t compete with the new investors. I can’t say this is a bad thing because the new investors are improving the housing stock in the area.”

The numbers stack up

Another local estate agent adds: “And landlords aren’t that bothered about whether the area has better open spaces or a new wall down the road. They are interested in economics. At the moment the numbers stack up and that’s why they buy into it.”

These investment-based housing decisions are having a significant impact in the area’s housing market. Two regional housing experts, who were interviewed during the study, referred to this investment as “speculative.”

Speculative investment the “driving force”

One, an officer at the House Builders’ Federation, comments: “Speculative investors have driven the market and they’ve made profits because demand outstrips supply. Speculative investment has definitely been the driving force behind housing market growth in many areas.”

The other, director of strategy for a sub-regional regeneration agency, agrees: “Speculative buying is going on everywhere. People are saying ‘If these properties cost less than £50k I’ll buy eight.’”

And a just-released property article in Yorkshire Life supports these findings with opinion from local agents.

A favourable asset comparison

Jamie Adam of Jackson-Stops & Staff tells us: “By late autumn 2011, we saw a renewed impetus in the property market, with purchasers attracted by the stability of the market compared with the general economic situation. The property market might have dropped a few points over the last 12 months, but this still compares favourably with those whose assets are linked to the stock market and the wider economy. We hope to see a continued interest from both local and national buyers in 2012.”

Many opportunities for shrewd investors

Stewart Charnock-Bates of Charnock Bates agrees: “There are many reasons to believe that property will prove to be a good investment this year. Arguably, prices have bottomed out, money is cheap to borrow and clients are now being realistic with their expectations. So, I anticipate there will be many opportunities for shrewd investors.”

“Don’t wait! It’s a good time to be a landlord in Yorkshire!”

Will Linley of Linley & Simpson comments: “Don’t wait! It’s a good time to be a landlord and there is no shortage of hotspots in Yorkshire. With demand continuing to outstrip supply, void periods are at their lowest level and competition is high. We have the largest portfolio of homes to rent in Yorkshire, but I have eight applicants on our books for every property. This is the highest ratio of applicants to properties since we launched over a decade ago.”