I recently
read a report by the Yorkshire Building Society that 54% of the country has
seen wages (salaries) rise faster than property prices in the last 10 years.
The report said that in the midlands and
the north, salaries had outperformed property
prices since 2007, whilst in other parts of the UK, especially in the south, the opposite has happened and property
prices have outperformed salaries quite noticeably.
As regular readers of my blog know, I always like to find out what has actually happened locally. To talk of North and South is not specific enough for me. Therefore, to start, I looked at what has happened to salaries locally since 2007. Looking at the Office of National Statistics (ONS) data for South Kesteven District Council (SKDC), some interesting figures came out...
|
|
SKDC
|
East Midlands
|
Nationally
|
|
2007
|
£22,948
|
£22,360
|
£23,920
|
|
2008
|
£24,898
|
£23,410
|
£24,960
|
|
2009
|
£23,967
|
£23,930
|
£25,506
|
|
2010
|
£25,548
|
£24,430
|
£26,088
|
|
2011
|
£24,851
|
£24,346
|
£26,010
|
|
2012
|
£25,631
|
£24,778
|
£26,432
|
|
2013
|
£26,624
|
£25,116
|
£26,931
|
|
2014
|
£25,490
|
£25,152
|
£27,097
|
|
2015
|
£24,716
|
£25,532
|
£27,508
|
|
2016
|
£24,352
|
£26,088
|
£28,132
|
Salaries in SKDC have risen by 6.12%
since 2007 (although it’s been a bit of a rollercoaster ride to get
there!). That’s interesting in
comparison to what’s happened with salaries regionally (an increase of 16.67%)
and nationally, an increase of 17.61%.
Next, I needed to find what had
happened to property prices locally over the same time frame of 2007 and today.
Net property values in SKDC are
12.87% higher than they were in the middle of 2007 (not forgetting the dip in
2008 and 2009). Therefore…
Property values in
the Stamford area have increased at a higher rate than wages to the tune of
6.75% ... meaning, Stamford has bucked
the regional trend
All of this is important, as the
relationship between salaries and property values is the basis on how
affordable property is to first time buyers (and second, third etc.). It is also crucial for landlords as they need
to be aware of this when making their buy-to-let plans for the future. If more Stamfordians are buying, then demand
for Stamford rental properties will drop (and vice versa).
As I have discussed in a few articles
on my blog recently, this issue of ‘property-affordability’ is a great
bellwether to the future direction of the Stamford and Rutland property market.
Now of course it isn’t as simple as
comparing salaries and property prices, as that measurement disregards issues
such as low mortgage rates and the diminishing proportion of disposable income
that is spent on mortgage repayments.
On the face of it the change between 2007 and 2017 in terms of the
‘property-affordability’ hasn’t been that
great. However, look back another 10
years to 1997, and that tells a completely different story. Nationally, the affordability of property more
than halved between 1997 and today. In
1997, house prices were on average 3.5 times workers’ annual wages, whereas in
2016 workers could typically expect to spend around 7.7 times annual wages on
purchasing a home.
David Crooke, Owner and MD
UPP Property Agents, Sales & Lettings
Tel: 01780 484 554
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