Talking to an elderly relative recently, he reminded me that
in his day, you could have bought a property for the same price of what a
decent second hand car would sell for today and that his father was buying property
for the same price as a decent 50 inch LCD TV!
Now of course, these are only headline prices and we have had wage
growth and inflation. Interestingly,
since the Second World War, property values in Grantham doubled in 1961, 1971,
1975, 1980, 1988, 2000 and 2006.
Looking at more recent times, since the start of the
Millennium, these increases in property values have generated large increases
in equity for many homeowners but on the other side of the coin also making
housing unaffordable for other people. It might interest readers to note that
most of Europe experienced sharp increases in property values in the early
years of 2000’s, with only Spain beating
us (although we know what has happened to the Spanish property market
over the last few years!). In the
2000’s, the British situation was different in two regards. First the property value boom started earlier
and saw more sustained increases, second, the regional pattern was fairly
uniform.
However, since 2010, the regional pattern has been completely
different in the UK. Compared with
2007 (the last property boom), average property values today in England
and Wales are 1.2% higher, whilst in Greater London, they are 35.7% higher,
whereas in Grantham they are 7.58% lower. The London property market has been like a
different country. Looking specifically
at Grantham though, it has continued for first time buyers to get on the
housing ladder. The best measure of the affordability
of housing is the ratio of Grantham Property Prices to Grantham Average Wages,
(the higher the ratio, the less affordable properties are).
·
1997 3.60
to 1 (i.e. the average value of a
Grantham property was 3.60 times higher than the average annual wage in
Grantham)
·
2000 4.37
to 1
·
2002 5.32
to 1
·
2003 6.66
to 1
·
2007 8.13
to 1
·
2009 6.49
to 1
·
2012 7.14
to 1
·
Today 7.97
to 1
You can see quite
clearly, even though we had an improvement just after the 2007 property crash
(i.e. the ratio dropped), in following subsequent years with Grantham house
price’s rising but wages not keeping up with them, the ratio started rise. This has meant there has been a deterioration
in affordability of property in Grantham over the last couple of years. This is one of the (many) reasons why the
younger generation is deciding more and more to rent instead of buy their own
house. The local Council sold off
council houses in the Thatcher years and for many on low incomes or with little
capital, owning a home has simply never been an option.
With fewer people able to save up the deposit
required by mortgage lenders, more and more people are looking to rent, this
has also resulted in a change in attitudes towards renting over the last
decade. This delay in moving up the property ladder has driven rents up
in Grantham over the last few years, as more people are seeking properties to
rent. All these things have combined to make the demand for rental
property in Grantham rise. If you are an existing landlord or someone
thinking of become a first time landlord looking for advice and opinion and
what (or not to buy in Grantham),
one source of information is the Grantham Property Blog http://granthampropertyblog.blogspot.co.uk/
