Grantham Property Market – What is really happening?

I had an interesting conversation with a local Grantham accountant the other day. He is quite an observant chap (I know this because I have known him for a few years .. but I suppose you have to be to be an accountant!). Anyway, he mentioned a few things he had noticed recently in Grantham, one that Grantham property prices had gone up in the last few years but nowhere near the growth levels that were being achieved in central London, and secondly, that he thought the number of for sale boards in Grantham (and more importantly ones with sold slips on them)  had increased over the last couple of years.

The rate of house price inflation in Grantham continues to slow with growth of 4.3%  in the 12 months to February compared to 6.7%  just over six months ago, according to the latest Land Registry data. However, there is considerable local variation with house price growth ranging from 1.6% in the City of Leicester  to 6.9%  in Leicestershire  over the last 12 months.

Whilst Grantham hasn’t seen the 20%+ per year in house price growth of London over the last couple of years,  Grantham has seen  a sharp uplift in the number of properties sold throughout  2014 as base line demand for housing grows, which suggests there is substance to the recent pick-up in house price growth in the town.. Since the Second World War in the UK, when the number of properties sold has grown, property values grew soon after. The 14.8% uplift in property transactions in Grantham in 2014, compared to 2013, indicates the most significant recovery in house market activity in Grantham (outside London) since 2007.

When you compare Grantham with London, you could be looking at two different countries. In London, its mid/late teens house price to earnings ratios are impacting demand (ie the average property value is often 15 or 17 times the average wage in London .. in fact in Knightsbridge the ratio can be 30 to 1).  However, the number of people wanting to sell has dropped considerably, meaning that falling sales volumes combined with a general slowdown in activity in the run up to the General Election are resulting in lower mortgage approvals for home purchase. 

Transactions are a great indicator for house prices. The acceleration in house price growth in London in the last two years was preceded by three years of rising transactions. A similar pattern is being registered in the Grantham area, as pent up demand returns to the market supported by low mortgage rates and an improving economic outlook.

But before you get the Champagne out, while the uplift in activity is welcome news, the number of Grantham property sales in 2014 are still 24.96%  lower than the level seen in 2007 and property values are 11.7% below  the 2007 levels. The ongoing housing recovery is far from broad based and remains focused on middle to higher value areas within Grantham where households have equity and find it easier to access mortgage finance

Massive drop in Home Ownership in Grantham

An Englishman’s home is his castle but when it comes to the UK  the ‘Brit’s are still a nation of homeowners ‘(although wasn’t it Napoleon who thought we were all shop keepers!). It  is interesting to note that up until the mid to late 1960’s, more people rented their home (albeit mostly from the local council) than owned their own. In fact, I was surprised to read that in 1921, over 75% of homes in England and Wales were privately rented with the remaining 25% being owner occupied.  

It was only after the Second World War, when the Beatles were rocking, that people started to buy instead of rent .. but instead of owning our property outright, we borrowed money from banks and building society’s to buy them and the roots of the growth of the private rental sector can be drawn back to the late 1970’s early 1980’s, when the council houses began to be sold off under the right to buy scheme. 

In 2001, 68.5% of households were owner occupied in Grantham, but ten years later, that percentage dropped massively to 62%.  But here is the interesting part, when you look at the actual numbers of households, 10,918 households in Grantham were owner occupied in 2001. Ten years later, in 2011, that number (who owned their own home) had actually slightly increased to 11,081 households.

So why big drop in percentages but not in actual properties? An additional 1,666 properties were built in Grantham between 2001 and 2011, but a lot of them were bought as buy to let investments, thus more than doubling the number of private rental properties in Grantham. In fact, the number of properties in Grantham, which were privately rented, jumped from 1,496 in 2001 to 3,132 in 2011!

With the South Kesteven District Council housing waiting lists being in the 5 to 10 year range for a decent property in a decent location. Therefore, with no more council houses being built, and an increasing number of people looking for a roof over their head, private renting is the only option

With every report stating the rental market will continue to grow throughout the rest of this decade and beyond, linked with high demand and limited supply in the Grantham, then if you are considering buying a property for buy to let investment in Grantham, as I don’t sell property (I’m just a letting agent), I am always happy to give you my considered opinion on which property to buy (or not as the case may be).. If you are a landlord, new or old, I am certainly more than happy for you to pick up the phone or visit the Grantham Property Blog where you will find the best buy to let deals on a day by day basis from all the agents in Grantham