Lomond Quarterly Insight - Spring 2023

Lomond Quarterly Insight

Property wisdom at work

In conjunction with

Spring 2023

Introduction

Ed Phillips, Group Chief Executive

National sales

Steadier sales market predicted Market dynamics | Market confidence | Market balance | Market metrics

National lettings

Strength in lettings market continues

Committed to renting | Renter affordability | Rental price dynamics | Market metrics

Scotland

Scotland’s key cities are highly sought-after property hotspots

Sales | Lettings | Quality locations | Investment potential

Yorkshire

People are at the heart of Yorkshire’s property market

Sales | Lettings | Options for everyone | Value for money | Spotlight on Leeds

Manchester and the North West

Forward-facing economic powerhouse

Sales | Lettings | Well connected | Academic excellence | Diverse employment types

Birmingham and West Midlands

Diversity and dynamism epitomise the West Midlands region

Sales | Lettings | Global city | Work–Life balance | Enterprising economy

South Coast

A progressive beacon where culture and creativity thrive

Sales | Lettings | An attractive choice | Young renters | Price growth

Lomond property services

Property wisdom to help businesses

Land and New Homes | Conveyancing | Investment Management | Mortgage Services

Properties under Lomond lettings management, a 21% year-on-year increase thanks to our expert knowledge and strategic acquisitions programme.

Property wisdom at work

Driving change

Our branches from Aberdeen to Brighton deal with a managed lettings portfolio of over 40,000 properties and more than £100 million of sales transactions each month. The Lomond Quarterly Insight is the first in a series of reports which bring together our unique and extensive data sets with the combined experience of over 1,100 staff, to provide a comprehensive view of what is really happening in the property market on both a national and regional level.

The estate agency world is changing and we are embracing and driving this change. In an era of increasing professionalism, legislative compliance and ever more focused consumer experiences, the benefits afforded by consolidation on day-to-day operational matters is invaluable. By leveraging central resources in finance, operations, compliance, marketing and human resources, we allow our 60+ branch network to thrive and grow.

Technology is central to our growth. From robust personalised websites to automated CRM systems, our commitment to granular reporting allows us to see the whole picture.

Acquisitions in the past two years, boosting our number of employees to over 1,100.

The power of our network

Our national coverage enables us to provide a bespoke, dedicated service for developers and investors of all portfolio sizes. Lomond Investment Management supports clients in the build-to-rent and single-family housing sectors, traditional lettings and offshore markets. With a strong presence across the majority of key UK investment cities, breadth of property experience and a network of market leading brands, we leverage our competitive advantage to maximise return and mitigate risk for investors.

Moving forward

Having completed 40 acquisitions since 2021, our processes are streamlined and we are proud of our success in integrating new brands into the Lomond network. We have ambitious growth plans for 2023 and are excited by the challenges and opportunities.

“People drive the property business.

Our strategic approach to management and acquisition means the expert knowledge and local wisdom of our branch network remains front and centre.”

Ed Phillips Group Chief Executive

Steadier sales market predicted

Market dynamics

Transactions by price band over past 12 months

Required readjustment

The initial shock to the market following the mini-budget has subsided and a more sensible and realistic analysis of the current market and its future direction is being witnessed. Price moderation is occurring but this is a normal reaction to the unprecedented market conditions of the past two years. Nationally the average price of a property remains 17% higher than three years ago, despite moderating by 6% since the peak of the market in the summer of 2022 (Dataloft, Nationwide).

National data for January and February indicates sales volumes are 7% lower than the pre-pandemic norm (Dataloft, HMRC, 2015–2019). However, based on conveyancing times of 12 to 16 weeks this reflects the market in the immediate aftermath of the mini-budget. Across the Lomond network, the number of valuations, new instructions and new applicants is higher quarteron-quarter than a year ago. The latest data from the Royal Institute of Chartered Surveyors supports what we are seeing on the ground; buyer demand and available supply is returning to more balanced levels in many areas.

Nationally the average price of a property remains 17% higher than three years ago, despite moderating by 6% since the peak of the market in the summer of 2022.

Stabilising market

Fall throughs over the past three months have returned to levels on par with a year ago, although withdrawal rates (taken off the market) remain high. However we expect these to stabilise further with the continued steadying of the mortgage market. Financial Conduct Authority (FCA) data shows that the majority of mortgages (around 90%) that will be exposed to interest rate rises before the end of June 2024 are not expected to become financially stretched. Product choice in the market is at levels last seen in summer 2022, with increased choice at all loan-to-value levels to suit the individual needs of prospective buyers.

There is slowly beginning to be more choice in the market for buyers and that space to work from home and gardens are featuring highly on wish lists.

Sales prices are moderating but property remains a solid long-term investment choice. Froth in the market has calmed but prospective sellers and buyers remain active.

Economy GDP growth Jan 2023 Average property price Jan 2023

Our data performs across our network

28.9%

Growth in private rented sector

2011–2021

This equates to an estimated 100,000 additional households in privately rented homes across Great Britain every year.

Strength in lettings market continues

A growing market

More than one in five households now live in the private rented sector. While the number of households in England, Wales and Scotland has increased by just over 6% over the past ten years, the number in the private rented sector has increased by close to 30%.

With over 130,000 units now in planning, and close to 80,000 completed, institutional investment via Build to Rent is on a steep upward trajectory. However, private professional landlords remain the cornerstone of the market. It is estimated that £13 billion will be lent to buy-to-let landlords for new purchases in 2023 and £30 billion to landlords looking to remortgage (UK Finance). As in the residential market, product choice has returned to the buy-to-let lending market, with rates below 5% now available.

Price growth remains

The demand–supply imbalance that typified the market throughout 2022 has continued into 2023. Renter affordability is liable to soften the rate of rent rises in future months but the trajectory for prices remains positive. On average three new applicants per

day register with each of our branch offices, but the number of instructions per branch across our regional network is only marginally higher year-on-year. Properties to let are in short supply and renewal levels remain high, many landlords raising rents by less than the current market rate for those who renew.

A considered choice

More than one in three private renters do not expect to buy¹. Deposits, mortgage finance and wider economic pressures certainly act as barriers, but for a not insignificant sector of the market renting is a considered lifestyle choice. It offers freedom and flexibility and the opportunity to live in areas that would be unaffordable in terms of a house purchase². Whether young professionals, families or more mature renters, the numbers seeking to rent long term are on the rise.

A shortage of property to let against a backdrop of constant demand continues to underpin price rises in the rental market

Demand for properties to rent is rising and with one in five households now privately rented, operators are more professional and business-driven.

Single Friends

Family

Couple

LETTINGS

Rental price dynamics

Market metrics Current at 3 April 2023

Earnings growth rate Nov 2022 – Jan 2023

Average rents annual change Mar 2023

Unemployment rate Nov 2022 – Jan 2023

Inflation current annual rate of change Mar 2023

Renter affordability Dec 2022 – Feb 2023 BTR pipeline under construction + planning

Our data performs across our network

Operating the largest lettings agency in Scotland, our branch network covers the strategic locations of Edinburgh, Glasgow, St Andrews and Aberdeen.

“Different rules and regulations govern the property market in Scotland compared to England. We’re proud to be the ‘go-to’ agency for those seeking to invest, rent or purchase in city locations north of the border”

David Alexander Regional CEO

Scotland’s key cities are highly sought-after property hotspots

Quality locations

Over 100,000 property sales take place each year in Scotland and our key market areas account for one in every three¹. Based on an analysis of 175 settlements across the country, all four key cities in our branch network are ranked in the top quartile of ‘Best Places to Live in Scotland’², offering a quality of life highly sought after.

The property markets in Edinburgh, the iconic capital of Scotland and named the number one city in the world in 2022, and in Glasgow, Scotland’s largest city and UNESCO City of Music, are dynamic and diverse. St Andrews is renowned as the location of Scotland’s oldest university, with the student market accounting for a considerable proportion of rentals here, while in Aberdeen, the so-called ‘oil capital of Europe’, the market is more local. However, with the average property price here 30% less than the average for Scotland, opportunities for property purchase and investment are high¹.

Perceptions of Scotland as an attractive place to invest have risen dramatically in recent years; the finance, digital, health and cleantech sectors

are all areas of high performance. With sustainability and climate change also increasingly on the agenda, Scotland is in a strong position to capitalise 3 Edinburgh and Glasgow have committed to Net Zero and carbon neutrality respectively by 2030.

Investment potential

Investment yields across our Scottish network have risen in all our strategic cities in recent times. With demand for city living rising back to pre-pandemic levels, average monthly rental prices

for newly-agreed apartment lets have risen by over 14% year-on-year in Edinburgh, Fife (St Andrews) and Glasgow, with indicative gross yields in all cities above 5%. Combined, our branch locations offer access to over half of Scotland’s higher education institutions, and nearly two-thirds of Scotland’s student population. The number of students studying in Scotland has increased by 25% in the past five years, compared to a rise of just 20% across the UK as a whole⁴ and graduate retention rates, especially in Glasgow and Edinburgh are high⁵.

Indicative gross yields for apartments offer a good investment

Dataloft, UK HPI, Registers of Scotland, DRMA

Dataloft, UK HPI

Yorkshire

From The Pennines to the east coast, The Dales to The Peaks, our branches span the breadth and depth of Yorkshire.

“Yorkshire’s pride and passion is evident in its impressive city skylines, thriving market towns, and the breathtaking landscapes of its three National Parks and coastline.”

Martin Elliott Regional CEO

Number of branches

Yorkshire

Options for everyone

Home to nearly 5.5 million people and covering an area nine times larger than London, Yorkshire offers it all. The cities of York, Hull, Leeds and Sheffield provide a dynamic rental market for both young professionals and students, while market towns from Beverley to Wetherby, Harrogate to Holmfirth, offer a breadth of choice for renters and buyers alike.

Properties remain relatively affordable; the house-price-to-earnings ratio is one of the lowest of any region. At £150,000 the average price of a first-time buyer property is over £70,000 less expensive than the national average. With a significant proportion of the housing stock across the region built prior to the end of World War II², there is opportunity to purchase and upgrade older stock, whether to provide a family home or a rental proposition.

Yorkshire ranks highly for its quality of life. 31% of Yorkshire is officially designated a National Park or Area of Outstanding Natural Beauty (AONB), while 52% of its 252km coastline is Heritage Coast.

Across England and Wales fewer than than half of properties sold in the past year have been priced below £250,000. The figure for Yorkshire is 70%, with 95% selling at or below £500,000¹.

Spotlight on Leeds

Leeds is currently a significant focus for regeneration and investment in the region. With a diverse economy, the city is the UK’s leading centre for healthcare and innovation, a leading financial centre outside of London, as well as home to five of the region’s twelve universities. Over 4 million people, the equivalent of 75% of Yorkshire’s residents, can access the city within just one hour3. With city centre rental values of around £1,500 per month for a two-bed property, competition for properties is high, and while stock levels in much of the region are improving, the availability of properties here remains tight⁴.

Leeds – a global ‘must see’

People are at the heart of Yorkshire’s property market No 1

Best place to visit in England

Property sales by price band

Detached

Yorkshire Terraced Semidetached Apartment

Manchester and the North West

Covering Manchester, Stockport and Chester, our local experts have an unrivalled depth of knowledge in key strategic locations.

“Built on innovation and industry, with its people at the heart, Manchester is one of the fastestgrowing economies in the UK and a compelling proposition for investment.”

Jason Watkin Regional CEO

Acquisitions in the last two years

Manchester and the North West

Forward-facing economic powerhouse

Well connected

With a rich cultural and sporting heritage, Manchester has a well-earned reputation as one of the UK’s most forward thinking, dynamic and well-connected cities. Manchester

Piccadilly is the second busiest train station outside of London¹ and over 5.6 million journeys are made across Greater Manchester’s transport network daily. Manchester Airport is the UK’s busiest outside of London, serving over 23 million passengers each year. A UNESCO City of Literature, Manchester is diverse and multi-cultural, with creativity woven into its fabric. Offering over 1.3 million employment opportunities

Manchester is the top regional tech city after London, with major investment coming through².

Propelled by increasing demand, Manchester has experienced an 11% year-on-year increase in house prices, significantly outperforming the national average of 7%. Aside from the city centre, other hotspots in the surrounding areas are attracting interest. The former industrial hotbed of Stockport, undergoing dramatic regeneration, was named by The

Almost 1/3 of Manchester’s population are in the private rented sector, a 19% increase in the number of households in the last decade.

booming. Manchester University is ranked 28th in the world with 44% of students from overseas, and is the most targetted by the UK’s leading employers. It is the UK’s joint third best student city and over the last five years the number of students studying in Manchester has increased by 20%, the proportion living in outside accommodation increasing by 31%3 A steady increase in demand has supported a 15% uplift in rents over the last 12 months alone. City centre renters are loyal to the locality, with over half of renters moving less than five miles from their previous address 4

Diverse employment types

22%

Sunday Times as one of the ‘best up-and-coming areas to invest in’, and the picture-perfect village of Christleton near Chester was deemed one of the best places to live in the North West.

Academic excellence

Home to four major universities, offering world class higher education to over 100,000 students, and attracting a young, skilled workforce, the city is

12%

21% 11%

Finance/ Professional Media/ Creative

Public sector Tech

Dataloft, Census 2021

Dataloft Rental Market Analytics – Manchester

Birmingham and West Midlands

Our heart of England branches cover Birmingham, and from Cannock down to picturesque villages on the Cotswolds border.

“A city reinventing itself, boasting a rich heritage and vast culture, Birmingham is one of the youngest and fastest growing cities in the UK, and is a major magnet for international investors.”

Richard Crathorne Regional CEO

Number of employees

Birmingham and West Midlands

Diversity and dynamism epitomise the West Midlands

A global city

With more miles of canal than Venice, more trees than Paris and one of the largest retail centres in Europe, the UK’s second largest city can rival any European capital. Put on a global stage by the 2022 Commonwealth Games and considered by EY the UK’s Most Investible City, international interest is only growing. Home to large financial and creative sectors, supported by a strong talent pool and with a population set to reach over 1.23 million by 2038, Birmingham is a thriving investment hotspot.

At the heart of the HS2 network, the West Midlands is benefitting from economic growth and prosperity, with job creation from the project forecast at 175,000. The vast majority of the UK’s population live within four hours’ of Birmingham and HS2 is set to improve journey times to London from the city to just 49 minutes¹. Supported by significant inward economic investment and a growing proportion of young professionals, the Birmingham build-to-rent pipeline is taking off. JLL report the city has attracted £380 million of build-to-rent investment, the highest of all cities outside of London.

Nearly half of those renting in the city are aged under 30, apartment living dominating this market.

Enterprising economy

57 per 10,000

Highest number of business start ups per person of any region outside of London

Work–life balance

Just 51% of those working in Birmingham live there². A high proportion choose to live in prosperous surrounding areas such

as Sandwell, Sutton Coldfield and Lichfield, noted for their excellent work–life balance, access to green space and property types to suit everyone. Over half of homes let in Birmingham’s surrounding areas are 2 and 3+ bed houses, which have experienced strong annual rental increases of 8% and 7% respectively. Real estate and retail growth in these areas are driving local economies; Lichfield is predicted to become the UK’s joint fourth fastest-growing economy between 2024 and 2026, as well as being in the top ten UK locations for jobs growth3

Dataloft Rental Market Analytics

Age

South Coast

Reaching from Chichester to Camber, our network of south coast branches are market leaders for sales and lettings.

“Affectionately termed ‘London by the Sea’, our region is home to a unique property micro-climate which has consistently proved its resilience against wider national market trends.”

Paul Broomham Regional CEO

£127m

Value of properties sold in last 3 months

South Coast

A progressive beacon where culture and creativity thrive

An attractive choice

A magnet for those seeking a relaxed and alternative lifestyle, the cosmopolitan feel and artistic vibe of the south coast attracts many to move here from the wider South East and London. More than one in four who move to Brighton and Hove do so from London. For those needing to commute, the capital can be reached in an hour, with over 400 trains daily. Although the journey time from Worthing is 20 minutes longer, the property price differential and the quality of life on offer – Worthing is ranked in the UK top 10 for Life Satisfaction – mean the ‘direct from London’ market accounts for more than 11% of the local market1

Property prices, for both sales and rentals, offer discounts compared to London. A two-bed rental apartment in Brighton is on average £550 less per month than in the capital, a saving of over 20%. The saving on the purchase price is 22%. In Worthing, the sales price of a semi-detached house is on par with a two-bed London apartment. For those looking to rent in Worthing, two-bed apartment rents here are at a 30% discount to London2

Younger renters dominate the Brighton rental market; the age demographic in Worthing is more mixed.

Age profile of renters

Brighton and Worthing

+23% 5-year property price growth

+25% 5-year rental price growth

Landlocked

Bordered by the South Downs Area of Outstanding Natural Beauty to the north, and the waters of the English Channel to the south, the availability of land for new housing development is scarce. The amount of dwelling stock in the South East has increased by 8.8% over the last decade. Worthing has seen a rise of just 6.3% and Brighton and Hove only 4%. Over the past five years just 2.5% of sales per year in our region have been new build compared to 12% across the South East3. The juxtaposition between

supply and demand continues to fuel the market even in testing times and our applicant numbers and activity pipelines for both sales and lettings are strong.

University city

Brighton’s universities are key drivers of the local property market. With nearly 6,000 staff and more than 36,000 students at the University of Sussex and the University of Brighton, demand for property to both buy and rent is perennial.

Dataloft Rental Market Analytics

Dataloft, Land Registry, Dataloft Rental Market Analytics

Lomond property services

Land and New Homes

Offering a full range of consultancy and sales and marketing services to landowners, developers and individual investors. Including research and viability reports, land consultancy and sourcing, through to turn-key marketing for land disposal, acquisitions and developments. For residential house builders and developers, our extensive database, bespoke marketing programmes, and enviable track record going back over 25 years, have seen our Land and New Homes teams appointed sales agents on many prestigious development properties throughout the UK.

Conveyancing

Working with a trusted panel of solicitors and conveyancers in your area, we speed up the moving process by up to 4 weeks. Offering end-to-end digital onboarding, Compliance, Legal Preparation, Conveyancing and Surveys, our online portal houses all important documents and provides complete visibility to all parties, tracking the progress of conveyancing in real time. A fully regulated service, providing clear, independent and professional advice.

Investment Management

Providing an account-managed single point of contact service for lettings, management, block and estates management and sales throughout the UK, irrespective of portfolio size and geographical location. We work with both Build To Rent and Single-Family Housing clients as well as Institutional and Individual Investors. Our bespoke, innovative solutions maximise return and mitigate risk for investors seeking a trusted partner to manage the specialist processes of marketing and managing all aspects of their property portfolios.

Lomond Mortgages

From online, digital services to in-branch brokers, we access the whole of the mortgage market with our specialists’ brokers. With expertise in mortgages for first time buyer, homemovers, and remortgages, as well as buy to let mortgages for the one off investor or career portfolio landlord, we provide fully independent advice and access to all major lenders.

Ed Phillips Group Chief Executive

Lucy Jones Chief Operating Officer

Ian Sutherland Chief Financial Officer

Our Lomond network

We have an established network of high quality regional sales and lettings agents across Scotland, Yorkshire, Manchester, Birmingham, Brighton and Exeter. With integrity, technology and innovation at our core, our brands are market leaders, with a competitive advantage over the strongest independents and the largest corporate and franchise agencies in the industry. Our ambition is to continue acquiring and transforming local agents across the UK, expanding existing regions and venturing into new areas.

The UK’s leading network of Sales & Lettings agents

In conjunction with Dataloft

Dataloft is an established property market intelligence company with a long track record of analysing and reporting on the housing market. We are committed to stripping away the mystique of complex data analysis and adding value for clients through interpretation, insight and creativity.

Head Office

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Regional Offices

3rd Floor, The Senate, Southernhay Gardens, Exeter EX1 1UG

Richmond House, Lawnswood Business Park, Leeds LS16 6QY

Contact info@lomond.group

lomond.group

Disclaimer: This report is produced for general information only. While every effort has been made to ensure the accuracy of this publication, Lomond and Dataloft Ltd accepts no liability for any loss or damage of any nature arising from its use. At all times the content of this report remains the property of Lomond and/or Dataloft Ltd under copyright, and reproduction of all or part of it in any form is prohibited without written permission from Lomond and/or Dataloft Ltd. Analysis, editorial design, graphics and charts by Dataloft. Date of publication: April 2023.

Property wisdom at work