I had the
most interesting chat with a local Grantham landlord the other day about my
thoughts on the Grantham property market. The subject of the affordability of
renting in Grantham came up in conversation and how that would affect tenant
demand. Everyone wants a roof over their head, and since the Second World War,
owning one’s home has been an aspiration of many Brits. However, with rents at record highs, many are
struggling to save enough for a house deposit.
Let’s be
honest, it’s easy to get stuck in a cycle of paying the rent and bills and not
saving, but even saving just a small amount each month will sooner or later add
up. George Osborne announced such
schemes as the upcoming Help to Buy ISA,
where the Government will top up a first time buyers deposit.
Therefore, I
thought I would do some research into the Grantham property market and share
with you my findings. Grantham tenants
spend on average just under a third of their salary to have a roof over their
head. According to my latest monthly research,
the average cost of renting a home in Grantham is £508 per month. When the average annual salary of a Grantham
worker stands at £26,201 per year, that means the average Grantham tenant is
paying 23.2% of their salary in rent. I
doubt there is much left to save for a deposit towards a house after that, and
that my Grantham Property Blog reading friends is such a shame for the
youngsters of Grantham.
You see one
the reasons for rents being so high is property prices being high. As I have mentioned before, there is a severe
lack of new properties being built in Grantham.
It’s the classic demand vs supply scenario, where demand has increased,
but the number of houses being built hasn’t increased at the same level. Also, Grantham people aren’t moving home as
often as they did in the 80’s and 90’s, meaning there are fewer properties on
the market to buy. If you recall, a few
weeks ago I said back in Spring 2010, there were over 920 properties for sale
in Grantham and since then this has steadily declined year on year, so now
there are only 311 for sale in the town.
So, the
planners in Grantham haven’t allowed enough properties to be built in the town
and existing Grantham homeowners are not moving home as much as they used to,
thus creating a double hit on the number of properties to buy. This is a long term thing and the continuing
diminishing supply of housing has been happening for a number of decades and
there simply aren’t enough properties in Grantham to match demand, these are
the reasons houses prices in Grantham have remained quite buoyant, even though
economically, over the last 5 years, it was one of the worst on record for the
country and the East Midlands region as a whole.
However,
things might not be all doom and gloom as originally thought, as a recent
Halifax Survey (their Generation Rent
2015 Survey) suggested more and more
people may be long term, if not lifelong tenants. In fact there is evidence in
the report to suggest that the perception of how difficult it is to get on the
housing ladder is vastly different between parents and people aged 20 to
45. It seems from this survey that the state of the UK economy has
shifted priorities quite significantly in quite a short space of
time. With fewer people able to save up the deposit required by mortgage
lenders, more and more people are continuing to rent. This delay in moving up the property ladder
has driven rents across the UK up as more people were seeking rental
properties .
It is
often said that more people in central Europe rent for longer or never own
their own property. The last two census in 2001 and 2011 show that
proportionally the percentage of people who own their own home in Britain is
slowly reducing and, as a country, we are becoming more and more like Germany. That isn’t a bad thing as Germany is
considered to have a more successful economy, one of the main stays, often
quoted, is because they have a much more
flexible and mobile workforce, (which renting certainly gives) and from that,
they have a higher personal income than in the
UK.
Therefore, if
we are turning into a more European model and the youngsters of Grantham and
the Country have changed their attitudes, demand for rental properties will
only and can only go from strength to strength, good news for Grantham tenants
as wages will start to rise and good news for Grantham landlords, especially as
property values in Grantham are now 3.8% higher than year ago!
