|Universities at Medway via Kent.ac.uk|
I am sure you will have seen that Medway Council recently announced its local plan proposals for the area to become a “university city”. If you would like a copy of the local plan please email me and I’ll happily send one over to you.
A university city, sometimes also called a college town, is one where the population is dominated by people who attend one of the local institutions of higher education.
All local authorities must have local plans in place by 2017. The consultation will run from Monday 16th January to Monday 6th March 2017. Medway Council’s report also discusses creating more employment opportunities, increasing the number of homes and bringing economic growth to the area.
At the moment Medway’s population sits at more than 276,000 and is expected to reach 330,200 people by 2035. The plan implemented by Medway Council involves managing the growing population over the next 20 years, while creating a sustainable environment for future generations, with a focus on the local universities and the prosperity they can bring to Medway.
So what does this mean to new and current landlords who want to invest in this future? Let us look at the current market first.
In Medway there is a limited supply of four- and five-bedroom homes. This is forcing landlords and investors with student lets to consider differentiating themselves by refurbishing their existing properties to high standards, as well as adding en suites where possible. The lack of supply of four- and five-beds means there is also more market pressure on other properties, such as three-beds, of which more exist.
The graph below shows that the advertised price of three-bedroom terraced houses has risen over the last four years to an average of £210,551 in 2015/2016:
According to Russell Quirk, founder of emoov, Medway has become one of the nation’s property hotspots, due to high demands for homes to buy.
House prices in Medway have risen sharply, with the average price of a semi-detached home in Gillingham being £247,000; that represents a rise of more than 10% over a period of 12 months. Terraced properties rose almost 5% to £180,000. Take a look at my blog post from September 2016 where I reviewed the supply of three-bed houses. We have plenty in Medway.
Moreover, despite the turbulence caused by Brexit, plus other economic factors over the past few years, property values in the Medway are 23.43% higher today than five years ago. It is also forecasted that the value of the average home in Medway will increase by 23.3% by 2021. According to Land Registry, values are currently rising in Medway by 8.2% year on year.
To accommodate the forecasted increase in population, over 158,500 housing units are planned across Medway and Kent to be built by 2031. The number of units planned are shown in the figure below taken from the Growth and Infrastructure Framework report by Kent County Council.
The figures below (also from the same report) demonstrate current phasing of anticipated housing sites in 2011 to 2031. The greatest proportion of houses are planned to be completed between 2017 and 2021, in which 55,100 houses are proposed. This accounts for 35% of the housing across Medway and Kent.
For the period between 2022 and 2026, 39,900 homes are proposed, which means that by 2031 there should be around 158,000 homes built across Medway and Kent. That is a significant number of properties.
However, we already know that there are not enough at the moment and I am sure these new homes will be snapped up as soon as they are on the market. Some of these homes will be great investments. And if plans include more four-bedroom homes, then this will clearly benefit HMO landlords.
We can also see that prices will also continue to go up as I feel there will always be a supply problem. The proximity and cost of London also means many more people are moving to Medway, which of course contributes to the increase in population.
Following a successful launch of the local plan, this increase in population will of course also include a significant number of university students. The numbers have already grown (see my previous blog post on that subject), with the new combined campus of the University of Kent, Canterbury Christ Church University and Greenwich University with over 16,000 students. That’s not to mention the University for the Creative Arts campus in Rochester.
This new drive to make Medway a university city will of course mean there will have to be more student lets. The stats show that property prices should also continue to rise, making this kind of property a good investment. This is good news for landlords and good news for Medway.
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