How things have changed since 1981 when Mrs Thatcher was in power and Princess Diana and Price Charles were getting married, but more importantly, the property market has changed. Hindsight is a great thing; there are many property investors who have said they wish they had bought up every house in East Dulwich all those years ago, if you look at the capital growth figures below, you will see why!
East Dulwich Property Values since 1981 have risen by 1205%
Even if we take into account inflation, which was 287.53 % over this period, if you held a property in East Dulwich you would have seen a growth in your asset in real terms of 917.47%. It is easy to see from these kinds of figures why so many people are unable to purchase property and landlords have seen the opportunity for significant capital growth in their investments. These are just the headline figures, look deeper, and there have been more significant changes to the East Dulwich property market over the last 30 years.
Analysing the Local Authority data for Southwark Council in 1981, 64.90% Southwark people lived in a Council House, whereas 2011 it was 31.20% a decrease which can be mostly attributed to Margaret Thatcher allowing Council tenants the right to buy their Council House. On the other hand, the private rental sector has changed since 1981. The proportion of properties privately rented (through a private landlord or a letting agency) in Southwark has doubled, rising from 12.40% to 23.70% of property.
Based on the figures above you would expect some growth in the levels of homeownership, and this is exactly what we see. Back in 1981, the proportion of homeowners was 15.80%, but by 2011 this had increased to 29.30%, nearly doubling.
In the 1980/90s East Dulwich did experience a rise in homeownership. This was because the majority of Council tenants were buying their council house due to the right to buy scheme, which as a result left the younger generation with hardly any council houses left for them to move into and have left them with no choice but to rent privately.
Based on the above you can see why the buy to let market in East Dulwich is an investment sector that will continue to grow as the council aren’t building council houses in their thousands each year as they were in the 1950’s/60s and 70’s. The East Dulwich property market is always shifting and buy to let for too long has been heavily dependent on house price growth, where yield has been almost forgotten.
As the new tax regime introduced on Landlords between 2017 and 2020 and the ever increasing laws come into play, Landlords must take heed and focus more on yield that just capital growth. You might need to change your buy to let targets, your methodology to financing or even consider places other than East Dulwich in which to invest your money, but this will shine a light on investing in properties with healthier yields and create more realistic long term buy to let opportunities, instead of short-term growth bets.
The advice I give to landlords is these changes will make some owners panic, meaning competition for buy to let bargains will reduce as fear of change kicks in and amateur investors flee the market. These opportunities will provide a more steady platform for the more experienced buy to let landlords and the potential for more opportunity. If you want to learn more about the Dulwich Property Market, feel free to pop in for a coffee at our office for a chat with me.