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As they struggle to meet demand, Argos have had to increase the wages of their HGV drivers from £11.41 an hour to £15 an hour - a rise of 31.2% meaning their pay goes from £27k to £35k. Care home providers are offering signing-on bonuses of many thousands of pounds to entice nursing staff away from their competitors, and new homes contractors say labour costs are growing as the housing boom pushes up demand for bricklayers and joiners. Restaurant chains, coffee shops, blue-collar workers in factories and warehouses are seeing wages rise at an extraordinary rate.
The average wage for a worker in Luton in full-time
employment is £582.30 per week (before tax).
We can all argue over the reasons behind it; some suggest the ‘B’ word (ending in ..xit), whilst others put it down to the pandemic and some the demographic changes of UK population.
So, before I look at what it could do to the Luton property market, let me look at why wages are rising. You will note all the above inflation wage increases are in blue-collar industries.
(Blue-collar workers refers to any worker who engages in physical or manual labour, such as building, hospitality, maintenance etc., whilst white-collar workers are those classed in the professions and service industries).
What are the reasons for these wage increases?
- In the past, the demand for inexpensive ‘blue-collar’ labour has been fed by a steady supply of Eastern European workers since 2004. Yet with the ‘B’ word, that has now ended.
- Also, even in late July, the furlough scheme has kept 1.9 million Britons from their jobs.
- Fewer ‘Generation Z’ (those in their late teens to mid 20’s) who normally would work in the hospitality industry are not working at the same rate they used to, when compared to before the pandemic.
- And finally, fewer ‘Baby Boomers’ (those born before 1965) are working since the end of the first lockdown.
How could these wage increases affect
the Luton property market?
White-collar wages, since the turn of the millennium have risen in real terms yet blue-collar wages have remained stagnant (although they started to pick up slowly just before the pandemic).
So, if all blue-collar workers are now seeing a substantial increase in their real wages since the pandemic what will this mean, especially for the Luton property market? It would mean the following …
- Continued reduction in unemployment
- Growth in consumer spending
- Rents will continue to rise in the short term
- Rise in homeownership in the medium term
Starting with unemployment:
685 Luton people have come off the dole queue in the last 12 months alone, reducing the unemployment rate by 0.8% to the current 9.1% in our local authority area.
If wages continue to grow for everyone, that means unemployment will continue to reduce.
Secondly, these pay rises will start to burn holes in people pockets. We should assume those people with the extra cash will spend it. In fact, it is a recognised trait in economics that blue-collar workers tend to spend a lot more of any increase in disposable income (when compared to white-collar workers). This would give a boost to the retail, hospitality, leisure and travel industries very quickly.
Luton rents are already 7.1% higher than 12 months ago,
and if wages continue to grow, then rents will increase even further. This is because rents in the private sector tend to rise in line with wages rather than with property prices.
This is excellent news for Luton buy-to-let landlords.
Next, if wages for blue-collar workers continue to grow, I believe we will finally see a long-term growth in home ownership again. In 2008, 68% of people owned their own home, yet that had been slowly reducing over the 2010s to 63% in 2018. Yet since 2018, this has increased slightly to 65%.
The Brits who had the biggest problem jumping on to the property ladder were not just the 20 somethings, but also middle-aged blue-collar workers. With blue-collar wages stagnant over the last two decades, and accelerating house prices, it was much tougher for them to save up a deposit for a mortgage.
Yet with the recent Government backed 5% deposit mortgages and more disposable income (because of the wage rises), some might decide not to spend the extra on going out and holidays and buy their first home instead (because most people want to own the place where they live – if they can afford it, they will buy).
Overall, if this increase in blue-collar wages is across the board, then this could be one of the greatest things to happen to the Luton property market in a long time.
It is certainly long overdue. Since the millennium, wages at the bottom end of the pay scale (i.e. blue-collar workers) have deteriorated, while the professional white-collar middle classes have done much better. The disparities between both classes/workers are both imbalanced and harmful to the economy and society as a whole.
But what is the real story behind the headlines?
One school of thought is that some fear these wage increases will fuel hyperinflation (and in turn, interest rates will have to rise to counter that).
As I have mentioned many times in my articles on the Luton property market, the last thing we need is a rise in interest rates (as mortgage rates will increase accordingly). A rise in interest rates will put a massive brake on the Luton property market – which is not good for anyone.
Also, we have to remember a few things …
there are still 1.9m people on furlough
(which stops at the end of September).
Not all of those people will go back to their original jobs, meaning they will need to find a new job, so the pay pressures could just as easily diminish as employment bottlenecks clear.
Also, the 8.3% wage increase is based on a year-on-year figure (i.e. a snapshot of now versus a year ago) and therefore the headline figures have been profoundly distorted by the large numbers of blue-collar workers on furlough in 2020 (i.e. they were on 80% pay). The Office for National Statistics have gone on record saying that, accounting for some of the distortions caused by the pandemic, real wages for blue-collar workers are more likely 3.5% up.
Finally, as with all things, the devil is in the detail. The newspaper headlines reporting the over inflated pay rises this spring are true. However, in truth (of course we all know bad news sells newspapers) these wage rises were focused on professions with specialist skills. For example, whilst wages for HGV lorry drivers have risen by double digits, pay rates for courier drivers have remained stagnant. At the same time, wage growth for white-collar jobs is almost at zero for yet another year.
To conclude, there are interesting times ahead for everyone involved in the Luton property market. I do not profess to know all the answers, however, I do have my own opinions. Whether you are a Luton first-time buyer, second-time buyer, homeowner, landlord or tenant and would like to pick my brains on any aspect to do with the Luton property market, please do not hesitate to drop me a DM, give me a call or send me an email.
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A recent report by Legal & General stated that since the pandemic, many older homeowners had put their plans to move home 'on ice'. It said that fewer OAP homeowners are planning to downsize from their large family homes after the pandemic made them realise the actual value of their local community and space.
Historically, many OAPs move home to another part of the country to live near their grown-up children. Yet the pandemic has shown that OAPs can live quite well locally without moving to a strange new town to live near their children. The support networks of their friends in their existing community has emphasised the significance and importance of having friends close by.
Yet this trend isn't just for OAPs moving away. Many Luton OAPs who aren't moving away from Luton (because their family is still local) are also deciding to stay put longer for the same reasons. Even though they are rattling around their large 3 and 4 bed detached family homes, they love the space their large Luton homes offer.
And for those Luton OAPs who are wanting to move, the issue is that the choice of properties they could buy to downsize is limited. This scarcity of properties for sale, called the 'housing crunch’, can be seen by that lack of choice of properties for OAPs to move to.
Only 78 bungalows are for sale
within a 3-mile radius of Luton
In a 'normal' Luton property market, I would expect this to be double or even triple this number.
All these factors combined means these OAP "eternal homeowners" threaten to make the scarcity of properties coming on to the market even worse!
So, why is this an issue for everyone else?
Well, because Luton OAPs aren’t moving from their large 3 and 4 bed detached homes to smaller bungalows or ground floor apartments, this is creating a blockage on the housing ladder. Luton families, in their 30’s and 40’s, are desperate for larger 3 and 4 bed detached homes for their ever-expanding families. But if the OAP sellers of those family houses aren’t moving, they will remain overcrowded in their existing homes.
Let’s look at the numbers first.
- There are 4.42m UK over-65 property owners, and their properties are worth a combined £1.53 trillion (which covers just under three-quarters of the national debt).
- 3% of those aged 65 and over own their home (although 1 in 10 still has a mortgage).
- There are 16,145 Luton homes occupied by OAPs, representing 20.8% of all the households in Luton (notable compared to the UK average of 31%).
- 3% of those Luton OAPs are retired, meaning the rest are still working! (The national average is 83.4%).
- The total value of the property in Luton owned by OAPs is £3.23bn.
- 3% of Luton OAPs own their home outright (compared to the national average of 65.8%), and 6.5% of Luton OAPs own their home, albeit with a mortgage (compared to the national average of 5.5%).
Many Luton OAP homeowners simply love the house and neighbourhood they live in, often living in their homes for over 25+ years. I talk to many mature Luton homeowners who say they are afraid to put their home on the market, because they believe (incorrectly) if they find a buyer for their home and can’t find another property to go to ... they would be made homeless.
I can only share my opinions on the matter. The one thing I have seen in my years in the property market is that so many Luton people leave it too late to move home. So, when they do move, they aren’t fit enough to do all the jobs in their new home. Indeed, is it better to move home in your late 60's/early 70's, meaning you can still do the little things to make your new house a home, rather than in your late 70's/early 80’s and find the jobs are much harder to do?
Also, if you are worried about finding your next home, get yourself on the mailing lists of all the Luton estate agents. A recent study showed only 1 in 6 buyers were on an agent’s mailing list for the property they bought. Therefore, by being on the mailing list, you will get to know of any suitable properties coming on the market before most others. This is important in this housing market; a property is often sold STC before it hits Rightmove (to a buyer that put themselves on the agent’s mailing list).
By downsizing, you could use the additional funds to top up your pension, take the family on a holiday of a lifetime (once it’s safe to do so of course), or help your children get on the housing ladder themselves with a deposit for their own home.
I fully appreciate many of the 12,079 OAP homeowners in Luton have many reasons to stay, be that sentimental, friendship, support networks etc. My advice to all of you is to do your homework, put yourselves on the mailing lists of agents (in case the property of your dreams comes up) and do what is best for you. By downsizing, you are giving yourself better options for your quality of life and massive opportunities to spend more time on the things you enjoy like your family, holidays, or even helping others.
The choice, as they say, is yours.
If you are a Luton homeowner and want to ask me anything about what I have said, please drop me a line to discuss the matter further at no cost or obligation.
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With Rightmove announcing a national drop of 0.3% in average asking prices in August, some are asking if the steam has been let out of the property market. Yet with the gains we have seen in the last 12 months, is this just a minor bump in the road? Alarm bells normally ring when new homeowners coming to the market for the first time are having to lower their initial asking price when compared to the market as a whole.
So, what is actually happening in the national and local property market to asking prices and the number of properties for sale, and where does that leave Luton homeowners and Luton landlords?
1 in 7.4 homes already on the market today have reduced
their asking price in the last two weeks
That means new sellers bringing their property to the market for the first time, are having to curtail their initial asking price to remain competitive. Normally, this should ring alarm bells, particularly when this is the first time this has happened in 2021. Therefore, it’s vital to ‘look under the bonnet’ of the figures and see what, exactly, is happening locally.
Average asking prices for Luton homes
are 3% up compared to July
However, that figure hides some interesting anomalies - the average asking price of Luton apartments/flats are 2% lower than in July (that doesn’t mean they have dropped in value by that much – just the headline asking prices) whilst semi-detached houses have seen the average asking price rise by 3% in the last month.
So, if this is what is happening to Luton asking prices, what about the number of properties for sale. Looking nationally first…
there are currently just 285,970 properties for sale in the UK, which means 1 in 67 British homeowners are presently on the market – interesting when compared to 2005, it was 1 in 13.5 homeowners on the market.
With such little supply of properties for sale nationally, demand remains robust. Yet the property buyers in the market are being a little more reserved with the offers they are making compared to the Stamp Duty holiday frenzy times seen earlier in the year. They will pay handsomely, and yet top dollar won’t offer the ‘crazy price’ levels some Luton buyers were offering in the spring – hence the recent reduction in asking prices to a more realistic level.
Looking at the movement in the available properties for sale and to rent in Luton over the last few months, an interesting picture arises.
Number of Luton properties on the market
Luton Properties for Sale
Luton Rental Properties Available
The number of Luton properties for sale (and rent) is still at record lows when compared to the 30-year long term average.
The choice for Luton tenants is limited as well, as many tenants aren’t moving home. With the additional increase in demand from 1 in 10 Luton homeowners choosing to go into rented accommodation (albeit temporarily) Luton landlords with exceptional properties are getting decent rents, as discussed in a recent article I wrote about the level of rents in Luton.
With the current level of Luton properties for sale being around 40% to 50% below the long-term average (depending on the type of Luton property you own), it means when a Luton property is properly priced, given the intense competition, often it comes down to the position of the buyer and not the price they are prepared to pay.
When I say, “position of the buyer”, I mean, do they have a chain, do they have to sell their own property to buy another property?
Many Luton house sellers are selling their home before they buy. Selling before you buy can be a fruitful approach in a fast-moving property market. That does mean your own purchaser will have to demonstrate a certain amount of patience whilst you wait for the right home to come on to the housing market.
However, because it is currently taking on average 19 weeks between sale agreed and exchange of contracts, with mortgage providers and solicitors taking their time due to the backlog, this often allows you to potentially play catch-up if it takes a couple weeks to find the right property for you.
Many home sellers are going even further by selling their Luton home first and then going into transitional rented accommodation. This subsequently puts them in pole position when their forever home comes up for sale as they have no chain. Although this takes a lot of determination and resilience, it does mean you will be in the very best position when the property of your dreams comes up.
The choice they say, as always, is yours!
If you would like a chat about the Luton property market and the best thing for you and your personal circumstances, do drop me a line. In the meantime, what are your thoughts on the current Luton property market? Do share in the comments.
Author: Taylor Kay
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Should you sell or should you buy in this most interesting Luton property market?
I have calculated that at least 135 Luton house sellers have rented a home to break their house chain in the last 12 months, although at a cost as they face paying many thousands of pounds in rent.
There are a number of reasons behind this. One is because they cannot find another Luton property to buy amidst a continuing shortage of new Luton properties coming to the market. Although, there are others who have achieved such a high price for their home they have decided to cash in and are (hopefully for them) waiting for the Luton property market drop?
Or will it drop? (More on that later).
Those selling their home have seen the…
average Luton home rise in value in the
last 12 months by £5,600.
Yet, if they have had to go into private renting, they have paid for that privilege in the rent they have had to pay.
The average cost of a six-month rental agreement in Luton is £4,667, meaning accidental Luton tenants have pumped £630,000 into the Luton rental market in the last 12 months.
The unevenness between the number of properties for sale and demand for them is at its widest since the early 2000’s. Whilst we have seen a slight improvement in the number of properties for sale in Luton, there are still…
30% fewer homes up for sale today in Luton,
compared to August last year.
This serious shortage of Luton property for sale is discouraging some hesitant Luton homeowners from putting their property on to the housing market, anxious they will not be able to find their next home and will be left renting.
Yet some savvy Luton homeowners are moving into a rented property as a way to navigate the shortage of properties to buy. If you have someone offering you top dollar for your Luton home, whilst you will have the hassle of two moves, the increase in value of your Luton home will more than offset the rent.
Also, when you come to buy your next Luton home, you will be chain free and in pole position to buy your ‘forever home’, rather than being overlooked for the home because you are sold stc and burdened with a chain.
Yet this trend has made life tougher for long-term Luton tenants.
On average there were normally 650 to 800 properties available to rent in Luton on Rightmove at any one time (pre-pandemic), today there are only 340 available.
To give you an idea of how this has affected the Luton rental market, with heightened demand and lower supply, demand for rental properties has grown to such an extent…
the average rent in Luton has grown from £778 per month a
year ago to £854 per month today.
Tenants are suffering from less choice and higher rents in the Luton property rental market, with few indications it’s going to significantly ease on the run up to Christmas.
So, what is going to happen to the Luton property market?
Well, those of you that follow me know I regularly write about the Luton property market in my property blog. If you would like some recent articles I have written about the future of the local property, either drop me a line and I will send you some links to those posts, send me a DM or contact me by telephone.
In the meantime, please do share your thoughts on the matter in the comments.
Author: Taylor Kay
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Whether you are a Luton homeowner, first-time buyer or landlord; the last 15 months has been a roller coaster ride when it comes to the Luton property market.
With 213,120 UK house buyers and 58,580 UK tenants moving home in June, the summer has been manic for many people. Meaning some Luton homeowners are asking if they should be staying put? Or should they wait for the best home to come onto the market before putting their home up for sale or find a buyer but be unable to find a property – it’s all rather confusing.
Then we have some Luton landlords who are asking themselves if they should buy another property investment (and some even wondering if they should sell and cash in on the boom) and then finally, with 95% mortgages back, first-time buyers are asking if they should look to take the plunge and buy their first home or wait.
In this article, I hope I can help you with the decisions you might want to make and to navigate this unusual post lockdown housing market. Let me start with some stats to show you what is happening at the moment in Luton.
The average time it takes to sell a Luton property in
this housing market is 26 days.
Interesting when compared with nearby Dunstable at 22 days, Houghton Regis at 23 days, Harpenden at 43 days and Redbourne at 33 days.
Look back five years, it took 63 days on average to sell a Luton home – the local property market is now certainly ‘cooking on gas’!
The property market has certainly solidified a little over the last few weeks. The Stamp Duty holiday rush has seen its run and the pent-up post-Brexit and more importantly post-lockdown demand has receded and although I am still observing competing offers on most Luton properties, I can certainly get a feeling of a small shift in the balance-of-power between the seller and buyer.
Many people have put their house hunting on hold as they go on their first holiday since 2019, be that glamping in Cornwall or having days out on a ‘staycation’. That means between now and mid-September, depending on what type of property you are looking for, many buyers could well discover that there are fewer competitors for their next home than there might be.
Also, July and August are notoriously barren months for estate agents putting new properties up for sale. Yet since the typical ‘seasonal property market’ is so out of kilter as a result of the pandemic, many agents are taking on a decent number of very good properties now, which is not something that characteristically would have happened in the summer months.
The important thing is not to wait for the property to hit the portals (i.e. Rightmove etc). Yet research shows, nearly 5 out of 6 people who bought their home were not on the agents mailing list before they viewed the home they eventually bought. That’s OK in a normal property market as you can wait until it hits Rightmove or Zoopla, yet these are unprecedented times and if you are not on an agent’s mailing list – you will miss out on properties.
If you don’t put yourself on the agent’s mailing lists, you will
end up losing out on the property of your dreams.
So, the question is should you put your Luton home on the market first or wait for the right property to come along?
Roll the clock back a few years and it was standard practice for people to wait for their dream home to come onto the market, then put theirs on and hope that it would sell in time. This housing market is different and only those who are in a position to proceed (cash buyers or those sold subject to contract) will be considered as serious buyers.
Yet, nobody wants to be homeless if they do sell.
Estate agents are returning back to their old skills from the 1980s and 1990s by chain building. By starting at the bottom of the chain of the smaller house and building up a chain, waiting for everybody to find their next homes, nobody need be made homeless.
This is not an issue because most house sales are taking on average between 20 and 25 weeks and as long as everybody communicates with each other and everyone knows where they are, then normally things go through, albeit slower. Can you believe it – estate agents really are earning their money with this!
So what Luton homes are selling the fastest?
Luton Terraced and Town Houses are selling in 22 days
Luton Semi-Det Houses are selling in 24 days
Luton Detached Houses are selling in 24 days
Luton Apartments are selling in 40 days
Luton landlords, maybe there are some bargains to be had on some apartments with that length of time on the market? Again, do your homework or even consider picking up the phone to me for a chat.
So, there you have it. The lessons I hope you have now learnt from this are to put yourself on agent’s mailing lists, talk to agents about your requirements so you get the heads up first when a property is coming on to the market (don’t just do everything over a computer screen) and once you have found a property be a little bit more patient with how long it takes to build a chain and then get the property through to an exchange and completion so you get the keys to your forever home.
Whether you are a Luton homeowner, Luton landlord or first-time buyer and would like some advice and opinion on your circumstances in the current Luton property market, please don’t hesitate to either pick up the phone or drop me a message.
To everyone else, what are your thoughts on the Luton property market?
Author: Taylor Kay