During my school years, my parents seemed to move every
other year (or it seemed that way). In reality, looking back at the house moves,
we actually moved three times before I left home. However, whilst my parents
kept the removal van people in business whilst I was at school, from research I
have carried out it shows things have changed considerably in Grantham over the
last few decades, and interestingly, the trend is getting worse ... for the removal
van people at any rate!
In Grantham, there are 17,944 properties. However, after we
remove the 3,062 council houses, 3,375 privately rented houses and 219 houses
where the occupants live rent free, that leaves us with 11,288 owned properties
(be that 100% outright, with a mortgage or shared ownership). This means 62.9%
of the properties in Grantham are occupied by the owner (the national average
is interestingly 64.2%) but the number of people who have sold and moved house
in Grantham, over the last 12 months, has only been 1,024. This means on these
figures, the homeowners of Grantham are only moving on average every 11.02
years.
These are the reasons. Firstly, the cost of moving house has
risen over the last twenty years. Secondly, with many remortgaging their
properties in the mid 2000’s before the price crash of 2008, there is a
reluctance or inability in a small minority of homeowners to finance a home sale/purchase,
due to lack of equity. These are both factors driving fewer moves by existing
homeowners.
However, the big effect has been the change in house price
inflation. Back in the 1970’s and 1980’s, house prices were doubling every 5 to
7 years. Even in Greater London, with its stratospheric property price
increases over the last few years, it has taken 13 years (August 2002 to be
exact) for property values to double to today’s levels.
This change to a relatively low inflation Grantham property
market (i.e. Grantham property values not rising quickly) is significant because
the long term consequences of sustained low house price growth is that it eats
into mortgage debt more slowly than when property price inflation is higher. Grantham
homeowners cannot rely on inflation to shrink their debt
in real terms as much as they did in say the 1970’s and 1980’s.
So what does this all mean for Grantham buy to let
landlords? Well for the same reasons existing Grantham homeowners aren’t
moving, less ‘twenty something’s’ are buying their first home as well. Grantham
youngsters may aspire to own their own home, but without the social pressure
from their peers and parents to buy their first property as soon people reach
their early 20’s, the memory of the 2008 housing crisis and the belief the hard
times either aren't over or the worst is yet to come, current and would-be
homeowners are warming to the idea of renting. I also believe UK society has changed, with the
youngster’s wanting prosperity and happiness; but wanting it all now...
instantly... today... without the sacrifice, work and patience that these
things take.
As a society, we expect things instantly, and if it doesn’t come
easy, doesn’t come quick, some youngsters ask if it is really worth the effort
to save for the deposit? Why go without holidays, the newest iPhone,
socialising four times a week and the fancy satellite package for a couple of years,
to save for that 5% deposit if there is no longer a social stigma in renting or
pressure to buy as there was... say... a generation ago?
Even though,
in real terms, property prices are 5% cheaper than they were ten years ago
(when adjusted by inflation), 18.8% of Grantham
properties are privately rented (nearly double it was twenty years ago).
As a
result, the demand for rental properties continues to grow from tenants,
meaning those wishing to invest in the buy to let market, over the long term,
might be on to a good thing? For advice and opinion on the Grantham Buy To let
property market, one source of information is The Grantham Property Blog
