Is there a two speed Nottingham property market?

Even with the General Election on the horizon, property values in Nottingham are only 1.74% lower than they were 3 months ago. The diversion and ambiguity of an election typically makes house sellers who need to sell, price their property more realistically (although this generally only lasts a couple of months). Looking specifically at it from a Nottingham landlord’s point of view, the Nottingham properties favoured by investors are in short supply in many parts of the town because of a number of factors.

Firstly, there’s been an increase in first time buyers coming to buy their first home over the last 12 months and secondly, to continue to keep their risk profile as low as possible, the banks have also been chasing landlords with high deposits (by offering very enticing mortgage rates on smaller loans). These type of landlords tend to be attracted to the modern two and three bed town houses and semis in Nottingham.

As I mentioned a couple of weeks back, the pension rules are changing, which means buy-to-let landlords can use some, or all, of their pension pot to buy a property (if they are happy to overlook the tax implications) so whilst many pension pots may not be able to fund a suitably big enough tax free lump sum to buy the property outright, for most it will provide enough for the 25% deposit (required by most BTL mortgage providers). It also shouldn’t be forgotten that, for landlords, the interest paid on the mortgage is tax deductible against the rent, thus lowering your income tax paid.

In the last 12 months, I have noticed a particular uplift in interest from ‘50 something’ Nottingham people wanting to become landlords for the first time. In Nottingham, the highest returns for the lowest investment are at the lower end of the market eg the classic Victorian terraced house/apartments . Unfortunately Victorian terraced houses/apartments , with two bedrooms are coming to the market in smaller numbers than the larger four beds in top end sectors of the Nottingham property market. When looking at the numbers, in the later part of the Summer of 2013 in Nottingham, in one month alone 1,368  two/three bed properties were on the market. However, in January this year, a notoriously excellent bumper month for properties coming on to the market, there were only 968 two/three beds to choose from. Today, that figure stands at only 960 ..whilst the number of four and five beds has increased significantly!

At that lower end of the price brackets, (ie where first time buyers and landlord investors compete with each other to buy those smaller properties) I believe, throughout 2015, there will be a steady decrease in supply and likewise an increase in demand. This could lead to a polarised Nottingham property market, as more properties become available at the top of market, there may not be so much demand .. and that can only mean one thing ... prices will go up quicker on the smaller properties than the larger ones in Nottingham, thus narrowing the gap for people looking to move up market!

If want a chat about the Nottingham property market please email me on jaclyn.bartlett@centrickproperty.co.uk or call 0115 855 9720 (option 1).