INTRODUCTION
The numbers are strong again this year, with stretching targets all met or surpassed.
Behind the numbers lies a new story, about
- important challenges in an unprecedented local property market,
- new thinking on tackling affordability
OVERVIEW
Investors competing with first time buyers drove up property prices and made starter homes harder to come by
- Co-Ownership limits raised, but not enough to keep pace
- 504 properties purchased for client households – a massive achievement
A buoyant market is good for staircasers
- 686 homes staircased (households leaving Co-Ownership)
- On average, clients staircased with over £19,000 to their name
FINANCIAL
We spent £20.5m on bricks and mortar this year, purchasing 504 properties.
A further £10.2m was paid to the Department for Social Development (returning grant that had earlier been used to purchase properties which had then staircased during the year).
Operating costs were tightly controlled but, as these include various necessary client services costs such as property valuations, inevitably rose. Next year will see further cost increases here as we shoulder the impact of providing cheaper valuations for our clients (an existing property valuation report, currently £90 to clients, will in future cost them £40).
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The housing grant element of our income fell in real terms this year as well as proportionately, from £12.6m to £7.2m. Next year, it will rise again to £15.2m.
The opposite is true for income from property sales which rose from £25.1m to £27.7m for 686 properties sold, reflecting an unusually buoyant property market.
The third main element in the income stream, namely rents, remained steady at £3.7m. Next year, rental income will reduce by around £1m as we are introducing lower rents for all Co-Ownership clients.
PEOPLE AND PROPERTIES
We purchased homes for people aged from 18 to 81 this year, which shows the flexibility of Co-Ownership in that it can meet the needs of many different people.
For the second year running we purchased just over 500 properties in the open market. Maintaining this level of activity was a massive achievement in a very different housing market.
At the start of the year properties were comparatively cheap compared to other regions such as London and Dublin – on average, sources suggest, around £30,000 less. Prices of terraced/apartments were particularly low compared to detached, making Northern Ireland a popular spot for investors in the starter homes market.
Co-Ownership’s property price limits were reviewed and raised by the Department for Social Development at the start of the year. Meanwhile, investors came into the market in unprecedented numbers and it became increasingly difficult for our clients to get a property agreed under these limits as the months went on.
A further price uplift has been announced for next year, with the option to review after 6 months.
| Top prices for Co-Ownership properties by council area | Spring 2005 | Spring 2006 |
| Ards, Belfast, Castlereagh, Derry, Lisburn, Newtownabbey, North Down | £115,000 | £135,000 |
| Antrim, Armagh, Ballymena, Ballymoney, Banbridge, Carrickfergus, Coleraine, Cookstown, Craigavon, Down, Dungannon, Fermanagh, Larne, Limavady, Magherafelt, Moyle, Newry & Mourne, Omagh, Strabane | £102,500 | £115,000 |
A buoyant market actually helps clients to increase their ownership share, and property sales held up well, despite rising property prices - 72% of staircasers leaving Co-Ownership had been with us for less than 5 years. Our unique equity valuation process ensures that the client, typically owning 50% of the property, receives the greater share of its value when staircasing. This year, the average return on the client’s initial investment was £19,208 (£16,777 last year).
