dothesums blog

Link: http://dothesums.co.uk/blog

I have just come back to the office from a family trip to Huddersfield. It is some years since I was last in that part of West Yorkshire, but it proved very instructive.

With some time to to kill, I had a look around and obviously paid particular attention to the local property market. There seems to have been a lot of recent development with flats and houses, finished with a local sandstone appearance, for sale or to rent, seemingly around every corner. I would estimate that several times more properties have been built, up to the recession that is, than in my own local area.
Indeed my daughter is renting a property on a development in Huddersfield, none of which have been sold and a number of which are empty, because they cannot be let.
Clearly a case of oversupply depressing an already depressed property market in a town where unemployment is rising and personal incomes are falling?

Feeling slightly smug and fairly confident that I would not buy there, I checked the figures.

The five year forecast for semi's, terraced and flats is fairly poor, about 2.5% per annum for the next five years, which is just about equal to expected inflation. In other words, values will remain static in real terms. Only detached, of which there are only a few, had a reasonable gain in value, averaging about 6.0% per annum, say 3.5% in real terms.

Remember that a forecast looks at the expectation for the local economy and the property supply/demand in the locality, rather than any spurious national average put out by banks as a publicity exercise.

I conclude that a fresh pair of eyes and some some common sense produces a view, pretty much supported by the more detailed objective analysis. Personally I want to do both, if I am investing large sums of money in any asset.

The ridiculous days of buying property sight unseen and financially unappraised, I think, I hope, are long gone.