We thought it was timely to provide an Isle of Wight property market review for the residential and commercial market so far, in 2017. It is always interesting to contrast the local market with regional and national levels.
The Royal Institution of Chartered Surveyors have just published their UK Residential Market Survey for August. The main points are :
A mixed regional picture with some Regions faring better than others.
London continues to see a fall in values, and August also saw the South East region see a fall in values overall for the third month in a row.
There continues to be a shortage of properties coming onto the market for sale, and listings on agents’ books are near to an all time low.
From our perspective, of carrying out surveys and mortgage valuations for property buyers, the Isle of Wight market has followed the national picture for the South East. Estate agents instruction levels over the past three months have been low and buyer enquiries have been subdued. There is a shortage of housing stock, in particular family homes and bungalows. When good quality family homes and bungalows have come to the market, in a good location and in good condition, they have been sale agreed within a matter of a week or two.
The shortage of stock has helped to maintain price levels and for family homes and bungalows especially, there is still some growth being seen. Location and property condition are key to obtaining maximum value. There is strong evidence of a premium being achieved for new build property, possibly reflecting the cheaper running costs and easier maintenance.
Lettings / Holiday Homes
In the lettings market, new landlord instructions have been more or less flat, reflecting the lack of buyers in the Buy to Let market. The changes to the taxation regime for privately rented property is still dampening demand. Tenant demand remains strong. Given the disparity between supply and demand it is anticipated rents will continue to grow.
The demand for second homes, and properties being bought for holiday lettings, has rebounded more than the general “Buy to Let” market. We have seen a good number of buyers of this type over the Spring and Summer.
By way of example, we are involved with the sale of 10 new build apartments at Esplanade Shanklin. The properties enjoy good sea views, but are not being sold as holiday units as the Planning Permission allows permanent residential use. During 2017, 5 units have been sold of which 4 are second homes and / or holiday lettings units. The holiday lettings units have enjoyed high levels of booking despite this being their first year.
As is normal in September, this sub market for holiday lettings and second home buyers has now gone very quiet.
General Residential Outlook
September and October are traditionally busier times of the year for owner occupier house moves, as people return to work from Summer holidays and look to move before Christmas. The first two weeks of September have remained relatively quiet although agents are beginning to see a slight increase in instruction levels. With uncertainty over Brexit negotiations and political unrest in North Korea, the next few months could be fairly subdued. Prices being achieved are generally static.
There have also been some open market transactions of residential development land, for small and medium sized schemes of up to around 10 units. Individual plot sales have tended to be purchased by small builders for their own speculative development, very often pricing out of the market the private “self build” buyers.
Commercial Property Market
It is harder to compare the local commercial property market with regional and national data. The latest RICS Commercial Market Survey paints a gloomier picture than our take of things on the Island. The main exception to that is the demand for industrial property.
The market for good quality, small industrial and business units, both for rent and purchase, has continued to be the leading light of the commercial market locally. Rents and prices have increased during the year. The yields on good quality modern industrial units of up to 10,000 sq. ft being purchased for owner occupation have been down to near 8%. The rents achieved on smaller units, again in the better locations of Newport, have been up to £10 per sq. ft. These are keener prices than have been achieved before.
Other sectors of the commercial market, including some trading properties like hotels and guest houses, and public houses have seen an increase in activity compared to 2016. The prices achieved have generally reflected more of a buyers’ market for these properties. Correct pricing before placing the property on the market is the key to achieving a sale in a reasonable timescale.
The hotel market shows signs of further activity in change of use and redevelopment. The Carlton Hotel on Esplanade Sandown is being demolished to make way for the first new build seafront hotel that the Island has seen for many a year, with Premier Inn due to open the 100 room hotel next year.
The former Auckland Hotel, in the prime hotel area of Shanklin Queen’s Road, has been bought by a care home company for conversion to a new style of care home. The same company are rumoured to be buying a large hotel in Sandown, for conversion to a hotel specialising in holidays for elderly persons.
High Street shops in the main towns have stayed reasonably well let on the whole. The closure by BHS of their Newport store leaves a large void unit in the upper part of High Street, whilst several large units in the lower High Street area that had been vacant for some time have found new owners or occupiers.
The market for offices in Newport has had some activity, including the letting of a large suite of upper floor space, formerly occupied by IoW Council, to a firm of Solicitors.
The most recent Clive Emson Property Auction including Isle of Wight properties was earlier in September. This achieved an unusually low success rate for the Isle of Wight lots, with 5 of the 8 lots not selling. This may be an indication that the general commercial market is also slowing down.
The RICS Survey reports expectations for flat prices or modest increases in value over the next 12 months, for all sectors other than secondary retail units. That is in line with our local expectations, and our colleagues in our Fareham office.
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Daniells Harrison Chartered Surveyors are the Isle of Wight property experts. We deal with both residential and commercial properties; from surveys and valuations to planning, design and build advice as well as managing a commercial property agency.