During my school years, my parents seemed to move every
other year (or it seemed that way). In reality, we moved four times before I
left home. From research I have carried
out recently it shows that things have changed considerably in Solihull over
the last few decades, and interestingly, the trend is getting worse.
There are 50,798 properties in Solihull; however, after we
remove the 3,834 council houses, 5,242 privately rented houses and 364 houses
where the occupants are living rent free, which leaves 41,358 properties owned
by Solihull residents, with a mortgage or shared ownership. This means 81.4% of
the properties in Solihull are occupied by the owner above the national average
which is interestingly is 64.2%. The
number of people who have sold and moved house in Solihull, over the last 12
months, has only been 2,114. These figures suggest that homeowners of Solihull
are only moving on average every 19 years.
Influencing factors for this change in behaviour include the
cost of moving house which has risen over the last twenty years and with many
re-mortgaging their properties in the mid 2000’s before the price crash of
2008, there is a reluctance or inability amongst a minority of homeowners to
finance a home sale/purchase, due to the lack of remaining equity.
However, the biggest influence has been the change in house
price inflation. Back in the 1970’s and 1980’s, house prices were doubling
every 5 to 7 years. Even in Greater London, with its stratospheric property
price increases over the last few years, it has taken 13 years (since August
2002 to be exact) for property values to double to today’s levels.
This change in moving trend, in a relatively low inflation property
market such as Solihull is now experiencing, is significant because the long
term consequences of sustained low house price growth is the lack of ability to
reduce mortgage debt as opposed to when property price inflation is higher and
the ratio of equity to debt is greater. Solihull homeowners cannot currently
rely on inflation to reduce their debt in real terms as they did in say the 1970’s
and 1980’s.
So what does this all mean for Solihull buy to let
landlords? Well for the same reasons existing Solihull homeowners aren’t moving
and the appeal to rent is increasing.
Fewer ‘twenty somethings’ are buying their first home, Solihull youngsters
may aspire to own their own home, but there isn’t the social pressure today
from their peers and parents to buy their first property as soon as they reach
their early 20’s. Plus the memory of the
2008 housing crisis and the belief the hard times aren't completely over. I also believe that the UK society has
changed, with the younger generation wanting prosperity and happiness, but
wanting it all now, without any sacrifice, extra hard work and patience that is
required. As a society, we expect things
instantly, and if it doesn’t come easy or quick enough, is it really worth the
effort to save for the deposit? Why go without holidays, the newest iPhone,
socialising four times a week and the fancy satellite package whilst saving for
that 5% deposit if there is no longer a social stigma in renting or pressure to
buy as there was a generation ago?
Even though,
in real terms, property prices are 5% cheaper than they were ten years ago
(when adjusted by inflation) 10.3% of Solihull
properties are privately rented, nearly double it was twenty years ago. As a
result, the demand for rental properties continues to grow, which can only mean
those wishing to invest in the buy to let market, over the long term, are on to
a good thing? For advice and opinion on the Solihull Buy to Let property
market, please email me jane.morcom@centrickproperty.co.uk
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