I am genuinely concerned about the Penicuik property market, but in a way that might surprise you.
Looking at all the data on the Penicuik property market, and putting aside the need for more houses to be built in the next decade to balance out the increase in population (helped in part by inward European migration) but not matched by a similar increase in housing being built, my research shows there is a widening gap between what property buyers want and what is available to buy.
In a nutshell, many more buyers are looking for the smaller one and two bed properties (the typical semi detached and smaller terraced houses/apartments), whilst there is an over supply of the four and five bed properties, which are the typical large detached properties available.
Demand for smaller properties comes from both first time buyers and the growing number of buy to let landlords, where it is more cost effective and efficient to buy smaller properties to let out compared to larger properties which tend to offer poorer returns. Also, landlords with larger loans (on those larger more expensive properties) will also be hit harder with the changes in the way tax is paid on buy to let investments, which starts in 2017.
I recently carried out some research on how various types of properties have performed in Penicuik since the year 1996 and what struck me was just how different the various types of properties have performed over the last 20 years and what this means for our property market and for people trying to trade up from their starter home to their next home. In a nutshell, this mismatch of supply and demand isn’t a new phenomenon, it’s been happening under our noses for years!
In the last 20 years, the average terraced house in Penicuik has risen in value from £36,154 to £145,880 whilst the detached house has risen in value from £94,231 to £313,732. Nothing seems amiss until you look at the percentage growth. The terraced house has grown in value by 293% whilst the detached house grew by only 233%, meaning the gap between the inexpensive terrace’s and expensive detached properties has in percentage terms narrowed enormously (this isn’t just a Penicuik trend, it has happened all across the Country).
I am concerned because more houses need to be built, not only in Penicuik, but in the Midlothian and Scotland as a whole. In particular, there is specific need for more affordable starter homes for the growing demand from both tenants (and the landlords that will buy them) and first time buyers.
The government needs to face up to the fact that unless they can get the planners (to release more building land), the banks (to finance the building of house), the builders (to build houses) and themselves together to ensure long term plans can be made and implemented, this issue will continue to worsen.
It is estimated that the country needs 30,000 houses a year to be built to start to tackle the chronic housing shortage that we have. Last year, only 16,270 properties were built, the year before 14,890 and 14,050 in the year before that.
This means only one thing for Penicuik’s landlords. Unless Nicola Sturgeon and John Swinney start to rip up huge swathes of the Scottish countryside and build on acres and acres of green belt, demand will always exceed supply when it comes to property for the foreseeable future.
Therefore investment in the local Penicuik property market as a buy to let investment could be the best move to make as stock market investments are possibly on the wane. Everyone is different and, trust me, there are many pitfalls in buy to let. You must take lots of advice and seek out the best opinion.
If you would like to explore how I can help you with your property investments, or should you require any advice about investing in the Penicuik property market, wish to enquire about our Investment Analysis Reports, Property Sourcing, Residential Lettings or Property Management services, please do not hesitate to contact me on 01968 674601 or at firstname.lastname@example.org.
Alternatively please feel free to pop in and see me at our offices in Bank Street for a chat, the coffee is always on.