Friday 1 June 2018

How Affordable is Stamford Property for Average Working Families?


If the supply of new properties is limited and demand continues to soar, the values of existing properties will continue to remain high and stay unattainable for many.  Looking at some recent government statistics, the ratio of the lower quartile house prices to lower quartile gross annual salaries in South Kesteven District Council (SKDC) has hit 8.73 to 1. 

If we systematically ordered every property in SKDC by their value, the average value of the lower quartile properties (i.e. lowest 25%) would be £148,000. If we then did the same calculation to salaries in the same council area, the average of the lowest quartile (lowest 25%) the average salary of the lowest 25% is £16,958 pa, thus dividing one with the other, we get the ratio of 8.73 to 1.

Assuming there is one wage earner in the house, the chances of a Stamford working family being able to afford to buy their own home (when it’s over 8 times their annual salary), is very slim indeed. The current affordability crisis is the unavoidable outcome of the accumulative effect in the failure to build enough homes to keep up with demand. Nevertheless, improving affordability is not a case of just constructing more homes. The council needs to ensure more properties are not only built, but built in the right locations, of the right type and at the right price to ensure the needs of these lower income working families are met, because at the moment, they presently have few options apart from the private rental sector.

Looking at historical data of the ratio, it can be seen that this has been an issue since the early 90’s to mid 2000’s. However, those on the bottom rung of the ladder (in the lower quartile of wage earners) used to be housed by the local authority. However, the vast majority of council houses were sold off in the 1980’s meaning there are much fewer council houses today to house this generation.




Many of the lower quartile working class families were given a lifeline to buy their own homes in middle 2000’s with 100% mortgages, but the 2009 credit crunch ended that opportunity. It is cheaper to buy than to rent, but securing the 5% deposit is the biggest challenge. Unless the government allows 100% mortgages again, demand for rental properties will continue to outstrip supply.

Long term, I suggest local communities hold their local politicians to account to ensure the affordability of housing and the extent to which they work with private developers and housing associations. In addition, they must be encouraged to use the planning tools at their disposal in safeguarding the local community, thereby effectively realising the required level of new households. SKDC could designate certain parcels of residential building land for private rented development only, eliminating the opportunity of the land being bought to develop large executive homes, which does not solve the current problem.

Short term, demand for rental properties will continue to grow, keeping house prices high and rents high.


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