He was particularly worried that with all the newspaper headlines of a booming housing market, there wouldn’t be any demand by tenants. One of the best pieces of advice I can give to those looking to invest in property is a simple trick of the trade. You can judge the affordability of an area’s property market (and thus how much demand there could be) by simply finding the ratio of the average property price to the average salary. The lower the ratio, the more affordable property is.
When we put this to the test, we found that an average property in the Grantham currently has an average property value of around £176,600 with the average salary being £18,510. This is a ratio of 1 to 9.5, which is very close to the UK National average of 1 to 9.46. So lots of first time buyers should be buying property? Not really. The issue isn’t affordability, it’s the raising of the 5% deposit, which when you take into account fees, will be in the order of £9,000.
Tenant’s inability to raise that sort of money for the deposit is driving demand for rental property.
