Population in the Dagenham area set to rise to 273,200 by 2036

Population in the Dagenham area set to rise to 273,200 by 2036 

Dagenham faces a predicament. The population is growing and the provision of new housing isn’t keeping up. With the average age of a Dagenham person being 33.4 years (compared to the London average of 35.6 years old and the national average of 39.4 years of age), the population of Dagenham is growing at an alarming rate. This is due to an amalgamation of longer life expectancy, a fairly high birth rate (compared to previous decades) and high net immigration, all of which contribute to housing shortages and burgeoning house prices.  

My colleagues and myself work closely with Durham University and they have kindly produced some statistics specifically for the Barking and Dagenham London Borough Council area. Known as the UK’s leading authority for such statistics, their population projections make some startling reading… 

For the Barking and Dagenham London Borough Council area ... these are the statistics and future forecasts 

2016 population206,934 

2021 population226,625 

2026 population244,139 

2031 population259,402 

2036 population273,245 

The normal ratio of people to property is 2 to 1 in the UK, which therefore means... 

We need just over 33,000 additional new properties to be built  

In the Barking and Dagenham London Borough Council area over the next 20 years. 

Whilst focusing on population growth does not tackle the housing crisis in the short term in Dagenham, it has a fundamental role to play in long-term housing development and strategy in the district. The rise of Dagenham property values over the last six years since the credit crunch are primarily a result of a lack of properties coming onto the market, a lack of new properties being built in the district and rising demand (especially from landlords looking to buy property to rent them out to the growing number of people wanting to live in Dagenham but can’t buy or rent from the Council).  

Although many are talking about the need to improve supply (i.e. the building of new properties), the issue of accumulative demand from population growth is often overlooked. Nationally, the proportion of 25-34 year olds who own their own home has dropped dramatically from 66.7% in 1987 to 43.8% in 2014, whilst 78.2% of over 65s own their own home. Longer life expectancies mean houses remain in the same hands for longer.  

The swift population growth over the last thirty years provides more competition for the young than for mature population.  It might surprise some people that 98% of all the land in the UK is either industrial, commercial or agricultural, with only two percent being used for housing, which means one could propose expanding supply to meet a expanding population by building on green belt – that most Politian’s haven’t got the stomach to tackle, especially in the Tory’ strongholds of the South of England, where the demand is the greatest. People mention brownfield sites, but recent research suggests there aren’t as many sites to build on, especially in Dagenham that could accommodate 33,000 properties in the next 20 years. 

In the short to medium term, demand for a roof over of one’s head will continue to grow in Dagenham (and the country as a whole). In the short term, that demand can only be met from the private rental sector (which is good news for homeowners and landlords alike as that keeps house prices higher).  

In the long term though, local and national Government and the UK population as a whole, need to realise these additional millions of people over the next 20 years need to live somewhere. Only once this issue starts to get addressed, in terms of extra properties being built in a sustainable and environmentally friendly way, can we all help create a socially ecological prosperous future for everyone. For more thoughts on the Dagenham Property market, please visit the Dagenham Property Market Blog: Dagenhampropertyblog.blogspot.co.uk 

 

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62.8% of Dagenham Voters voted to leave the EU – What now for the 44,647 Dagenham Landlords and Homeowners?

It’s 5.50am as I start to type this article and David Dimbleby has just announced the UK will be leaving the EU as the final votes are counted. 

As most of the polls suggested a Remain Vote, it came as a surprise to most people, including the City. The Pound has dropped 6% this morning after the City Whiz kids got their predictions wrong and MP’s from the Remain camp are using words like “challenging times ahead”. .. and now the vote has been made .. what next for the 32,324 Dagenham homeowners especially the 20,416 of those Dagenham homeowners with a mortgage? 

The Chancellor in the campaign suggested property prices would drop by 18%. Using Treasury estimates, their method of calculating this was tenuous at best, but focused around the abrupt and hasty increase in UK interest rates, which in turn would raise the cost of mortgages, and therefore lower demand for property, causing a drop in property prices.… and I would say, yes .. that will probably happen. 

Dagenham Property Values 

Dagenham property values will probably drop in the coming 12 to 18 months – but by 18% - I am sorry I find that a little pessimistic and believe that figure was rhetoric to get homeowners and landlords to vote in a particular way. But the UK property market is quite a monster. 

Since the last In/Out EU Referendum in June 1975, property values in Dagenham have risen by 3,128.7% (That isn’t a typo) and whilst property prices did drop nationally by 18.7% between the peak of 2007 and bottom of the market in 2009, when one compares property values today in the country, compared to that all-time high of 2007, (the period before the financial crisis of the Credit Crunch of 2008/9) .. they are still up 10.14% higher. 

Another Credit Crunch? 

And so, notwithstanding the Credit Crunch, the worst global economic outlook since the 1930s and the recession it brought us, a matter of a few years later, the Government were panicking in 2012/3/4 that the housing market was a runaway train. Now the same Credit Crunch doom-mongers and Sooth-Sayers that predicted soup kitchens in 2008/9 are predicting Brexit meltdown. 

Bad news sells newspapers. 

Stock markets may rise, stock markets may fall, yet the British public continued to buy property in 2009/10 and beyond. Aspiring first time buyers and buy to let landlords dusted themselves down, took a deep breath and carried on buying… because us Brit’s love our Bricks and Mortar.. we need a roof over our head. 

However, as mentioned previously, if the value of the pound drops, in the past UK Interest Rates have risen to reverse that drop. However, whilst a cheaper pound will make your pint of Sangria a little more expensive on your Spanish holiday this year and make your brand new BMW pricier .. it will make British export cheaper! Which is great for the economy. 

Interest rates 

… and what of interest rates? Since 2009, interest rates have been at 0.5% and lots of people have become accustomed to those sorts of levels. So what if interest rates rise .. end of the world? 

Interest rates in the 1986/88 property boom were on average 9.25%, the 1990’s they were on average around 6.5% and uber-boom years (when UK property values were rising by 20% a year for three or four straight years across the UK) .. 4.5%. 

Many of you reading this who are in their 50’s and older will remember interest rates at 15%. But I suspect interest rates won’t rise that much anyway, as Matt Carney (Chief of the Bank Of England) knows, raising interest rates causes deflation – which is the last thing the British economy needs at the moment. In fact they have been printing money (aka Quantitative Easing) for the last few years (which causes inflation) to the tune of £375bn a month. 


A bit of inflation because the pound has slipped on the money markets (not too much mind you) might be a good thing? .. because whilst property values might drop in the country, they will bounce back. It’s only a paper loss.. because it only becomes real if you sell. 

And if you have to sell, again as most people move up market when they sell, whilst your property might have dropped by 5% or 10%, the one you want to buy would have dropped by the same 5% to 10% .. and here is the best part – (and work your sums out) you would actually be better off because the more expensive property you would be purchasing would have come down in value (in actual pound notes) than the one you are selling. 

The Dagenham landlords of the 12,323 Dagenham buy to let properties have nothing to fear neither, nor do the 36,283 tenants living in their properties. Buy to let is a long term investment. I think there might even be some buy to let bargains in the coming months as some people, irrespective of evidence, panic. 

Even if we pull up the drawbridge at Dover and immigration stopped today, the British population will still increase at a rate that will exceed the current property building level. Britain is building 139,600 properties a year, but needs according to the eminent ‘Barker Review of Housing Supply Report’, the country needs to build about 250,000 properties a year to even stand still, and as the birth rate is increasing, the population is living longer and just under a quarter of all UK households now are occupied by a single person demand is only going up whilst supply is stifled. Greater demand than supply equals higher prices. That is definitely a fact. 

So, what will happen next? 

Well, there are many challenges ahead. The country has spoken and we are now in unchartered territory – but we have been through a couple of World Wars, an Oil Crisis, Black Monday, Black Wednesday, 15% interest rates and a Credit Crunch … and we survived! And the value of your Dagenham property? It might have a short term wobble… but in the long term -it’s safe as houses regardless.

If you want to read more articles on the Dagenham property market, whether you are Dagenham landlord, Dagenham homeowner, first time landlord or a first time buyer – then visit the Dagenham Property Market Blog: dagenhampropertyblog.blogspot.co.uk

The Importance of Life Cover in the Dagenham Property Market

A Quick Dagenham Property Update

The majority of sales in Dagenham during the last year were terraced properties, selling for an average price of £263,488.

Flats sold for an average of £178,129, with semi-detached properties fetching £285,889.

Dagenham, with an overall average price of £247,123, was similar in terms of sold prices to nearby Parsloes Park (£254,331), Heathway (£239,229) and Eastbrook (£253,720).

Overall sold prices in Dagenham over the last year were 13% up on the previous year and 30% up on the 2008 level of £189,597.

The Mayor's Plans for Affordable Dagenham Property

Mayor Sadiq Khan is just over a month into his new job and it is beginning to dawn on him that solving London’s housing problems is not going to be easy. His pre-election pledge to build 50,000 homes a year with 50 per cent of them affordable already seems out of reach. 

“I can’t solve it [London’s housing crisis] overnight,” he told Homes & Property. Instead, he could only promise bad news for the capital’s desperate would-be buyers “for the foreseeable future”. Heaping blame on his predecessor, he conceded that for now, “we are going to be churning out homes that Boris Johnson gave permission for. And they are not affordable.” 

He explains that it takes at least two years to build homes once they are approved. So for two years London’s new homes will have been given the go-ahead in the Boris era — only 13 per cent of which are defined as affordable, up to a budget-busting £450,000. Khan says that to speed up affordable land, he has asked Transport for London to fast track those pieces that are surplus. But even if he manages to expedite the development of the 75 TfL sites already identified, this is only expected to yield 10,000 new homes. 

And what does he mean by speed up? 

The previous plan was to deliver these homes over the next 10 years. When asked about what he wants to see built, gone is the old definition of affordability. He wants to create diversity of homes in the capital with “first dibs for Londoners”. He sees this as including “a role for council homes, a role for a new type of rental property called a London living rent [in new builds where the rent will be capped at a third of the average local earnings] and a role for shared ownership”. 

This is good news for those at the lower end of the income spectrum wanting to buy or rent. And it may mean that affordable housing will once again be accessible to the very people the schemes were originally designed for — London’s key workers. Read more Rents across Britain are rising three times faster than in London But the details appear to be missing. 

Key omissions include his definition of affordable housing; how many units he wants to see built, and who will deliver them. 

More details will follow in the London Plan — the document where the Mayor spells out his expectation for London’s housing market. But this will take time, and is subject to public consultation as well as consideration by government and scrutiny from the London Assembly. When added to the two- to three-year lead time for any new housing, this is likely to constitute another unwelcome delay for Londoners desperate for a home. And as the Mayor’s tenure is only four years, it may be that not one of his proposed affordable houses from the new plan will be built while he is in office. 

In the meantime, James Murray, the deputy mayor for housing, said that as a rule of thumb, spending a third of the household’s income on housing was considered “affordable”. Applying this metric to the average Londoner’s full-time salary of just over £34,000 a year, implies building developments that include at least some properties that costs less than £930 a month. This chimes with the Mayor’s comments that he thinks it will be possible to build shared-ownership homes, at least on TfL land, that “people can buy with a deposit of £5,000 and a monthly rent/mortgage of £1,000”. 

With many residential mortgage rates available for two per cent or less, this sounds like an easy thing to deliver. 

Read more 
 A 'Brexit' money-back guarantee: reservation fee for off-plan homes in Southwark to be refunded if buyers don't like the result of the 'in or out' vote 
London's 'feast or famine' property market: central prime property slumps while home values on the capital's fringes soar 
TfL's grand plan for London: 10,000 new homes by stations to be fast-tracked by newly elected Mayor Sadiq Khan 

It isn’t. 

Apart from their mortgage, shared owners are required to pay a 100 per cent of the service charge and only get a modest discount on their market rent, despite also being responsible for all of the flat’s upkeep. As a result, a 25 per cent share in a one-bedroom flat in The Cavallo, E1, for example, has an estimated total monthly cost of £1,513, while a 35 per cent share in a one-bedroom flat in Canonbury Cross, Islington costs an estimated £1,836 per month. 

Substantial changes will be needed to the shared-ownership model if the Mayor is to pull some new flats into the realms of “real” affordability. But pushing down on prices, or capping rents/service charges risks exacerbating another problem — building the flats in the first place. 

The Mayor’s audit showed that fewer than 5,000 affordable homes were built in London last year. As Khan says, part of problem was the lack of investment in housing by the previous Mayor. But the other problem is that only a small proportion of the capital’s available land falls under his direct jurisdiction. After this he will need to work with other public and private bodies to get his vision delivered. 

Profit matters, even for housing associations; if he wants to attract pension fund investment and increase private sector development, profit is likely to matter more. 

Khan’s next steps are hamstrung by his limited powers, the limited pipeline from his predecessor and the likely limits he wants to put on developers. No wonder he appears to have stopped citing his pre-election pledge to deliver 50,000 new London homes a year. 

If you want to read more articles on the Dagenham property market, whether you are Dagenham landlord, Dagenham homeowner, first time landlord or a first time buyer – then visit the Dagenham Property Market Blog: dagenhampropertyblog.blogspot.co.uk