My
parents bought their first house in the 1960’s, they were in their early 20’s.
Interestingly,
looking at some research by the Post Office from a few years ago, in the 1960’s
the average age people bought their first house was 23.
By the early 1970s, it
had reached 27, rising to 28 in the early 1980’s.
This
year alone, 156 people in Stamford will turn 28 and 199 in 2017. And, dare I say 222 in 2018. Year in, year out the conveyor belt carries
on, but where are the Stamford youngsters going to live?
Ask
a Stamford ‘twenty something’ and they will say they do not expect to buy until
they are in their mid thirties - seven years later than the 1980’s. Some people
even say they will never be able to buy a property and the newspapers have
labelled them ‘Generation Rent’ as they are people born in the 1980s who have
no hope of getting on the property ladder.
One
of the major problems facing young Stamford people is the large deposit needed
to get a mortgage. Or is it?
The
average price paid for an apartment in Stamford over the last 12 months has
been £153,700. Therefore, our first time
buyer would need to save £7,685 as a deposit (as 95% mortgages have been
available to first time buyers since 2010) plus a couple of thousand for
solicitors and survey costs.
A
lot of money, but people don’t think anything today of spending a couple of thousand
pounds to go on holiday; the latest iPhone upgrade or the latest 4K HD
television. That amount could soon be saved if these ‘luxuries’ were withheld
over a couple of years, but attitudes have changed.
Official
figures, taken from the Office for National Statistics, show the average male
in South Kesteven with a full-time job earns £544.80 per week, whilst the
average female salary is £385.80/wk.
Even if one of them worked part time, they would still comfortably be
able to get a mortgage for an apartment.
I
was reading a report/survey commissioned by Paragon Mortgages from autumn last
year. The thing that struck me was that when tenants were asked about their
long term housing plans, some 35% of participating tenants intend to remain
within the rental sector and 24% intended to buy a house in the future, with
the proportion of respondents citing the “unaffordability” of housing as the
reason for renting privately increasing from 69% to 74%.
However,
time and time again, in the starter home category of property (i.e. apartments),
nine times out of ten the mortgage payments to buy a Stamford property are
cheaper than having to rent in Stamford.
It
is the tenant’s perception that they believe they can’t buy, so choose not to. Renting
is now a choice. Tenants can upgrade to bigger and better properties and move
up the property ladder quicker than their parents or grandparents (albeit they
don’t own the property).
Over
the last decade, culturally in the UK, there has been a shift in the attitude
to renting, bringing residential status more in line with our European
neighbours. So I expect that the private
rental sector is likely to remain a popular choice for the next twenty plus years.
With
demand for good quality Stamford rental property unlikely to slow and newly
formed households continuing to choose the rental market instead of purchasing
a property, I also forecast that renting will continue to offer good value for
money for tenants and recommend landlords pursue professional advice and adopt
a realistic approach to rental increases to ensure that they are in line with
inflation and any void periods are curtailed.
Data
Sourced from: The Post Office, National Census and The Office of National
Statistics -SKDC
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