I was reading the Sunday Papers,
as is my want and, when reading the financial pages, it was announced UK
inflation had increased to its highest level in a year. Inflation, as calculated
by the Government’s Consumer Prices Index, rose by
0.3% over the last 12 months. The report
said it had risen to the those ‘heady’ levels by smaller falls in supermarket
and petrol prices than a year ago. If you recall, in early 2015, we had
deflation where prices were dropping!
So what does this mean for the Grantham
property market ... especially the tenants?
Back in November, the Office of National Statistics
stated average wages only rose by 1.8% year on year, so when adjusted for
inflation, Grantham people are 1.5% better off in ‘real’ terms. Great news for homeowners, as their mortgage
rates are at their lowest ever levels and their spending power is increasing,
but the news is not so good for tenants.
The average rent
that Grantham tenants have to pay for their Private Rental Properties in Grantham
(i.e. not housing association or council
tenants) rose by 2.4% throughout 2015, eating into most of the growth. 2015 wasn’t a one off either. In 2014, rents in Grantham rose by 1.3% (where
salaries only rose by only 0.2%) However, it’s not all bad news for Grantham
tenants, because in 2013 rents rose by 1.0%, (but salaries rose by 2.2%).
… and it must be noted that
the private rents Grantham tenants have had to pay for Grantham property since
2005 are only 15.0% higher, not even keeping up with inflation, which over the
same time frame, rose at 27.8% (although salaries were only 22.3% higher over
the same time period)
More and more,
talking to 20 and 30 somethings who
rent – it’s a choice. Gone are the days
where owning your own property was a guaranteed path to wealth, affluence and
prosperity. I know
keep mentioning Europe, but some of the
highest levels of home ownership are in Romania at 96.1%, Hungary at 88.2% and
Latvia at 80.9% (none of them European economic dynamos) and even West European
countries like Spain at 78.8% and Greece at 74% (and we know both of those
countries are on their knees, riddled with national debt and massive youth
unemployment).
At the other
end of the scale, whilst we in the UK stand at 64.8% homeownership, in Europe’s
powerhouses, only 52.5% of Germans own a home and only 44% of Swiss people are
homeowners. Looks like eating chocolate,
sauerkraut, renting and good economic performance go hand in hand. Yet, joking aside, home ownership has not always
been the rule in the UK. In 1918, only 23% of people were homeowners,
with no council housing, meaning in fact, 77% were tenants.
Tenants have choice, flexibility to
move, they don’t have massive bills when the boiler blows up, it’s a choice. Grantham rents are growing, but not as much as
incomes. To buy or not to buy is an enormously
difficult decision. For while buying a Grantham home is a dream
for the majority of the 20 and 30 something’s of Grantham have, it might not leave
them better off in the long run and it isn’t necessarily the best option for
everyone. That is why, demand for
renting is only going in one direction – upwards.
