I had the most interesting chat with a local Solihull
landlord the other day about my thoughts on the Solihull property market. The
subject of the affordability of renting in Solihull came up in conversation and
how that would affect tenant demand. Everyone wants a roof over their head, and
since the Second World War, owning one’s home has been an aspiration of many
Brits. However, with rents at record
highs many are struggling to save enough for a house deposit.
Let’s be honest, it’s easy to get stuck in a cycle of paying
the rent and bills and not saving, but even saving just a small amount each
month will sooner or later add up.
George Osborne announced such schemes as the upcoming Help to Buy ISA , where the Government will top up a first time
buyers deposit.
Therefore, I thought I would do some research into the Solihull
property market and share with you my findings.
Solihull tenants spend on average just over a third of their salary to
have a roof over their head. According
to my latest monthly research, the average cost of renting a home in Solihull
is £1,056 per month. When the average
annual salary of a Solihull worker stands at £32,503 per year, that means the
average Solihull tenant is paying 38.9% of their salary in rent.
You see one the reasons for rents being so high is property
prices being high. As I have mentioned
before, there is a severe lack of new properties being built in Solihull. It’s the classic demand vs supply scenario where
demand has increased, but the number of houses being built hasn’t increased at
the same level. Also Solihull people
aren’t moving home as often as they did in the 80’s and 90’s, meaning there are
fewer properties on the market to buy.
If you recall, a few weeks ago I said back in Spring 2008, there were
over 1,240 properties for sale in Solihull and since then this has steadily
declined year on year, so now there are only 356 for sale in the town.
So, the planners in Solihull haven’t allowed enough
properties to be built in the town and existing Solihull homeowners are not
moving home as much as they used to, thus creating a double hit on the number
of properties to buy. This is a long
term thing and the continuing diminishing supply of housing has been happening
for a number of decades and there simply aren’t enough properties in Solihull
to match demand, these are the reasons houses prices in Solihull have remained
quite buoyant, even though economically, over the last 5 years it was one of
the worst on record for the country and the East Midlands region as a whole.
With fewer people able to save up the deposit required by
mortgage lenders, more and more people are continuing to rent. This delay in moving up the property ladder
has driven rents across the UK up as more people were seeking rental properties.
It is often said that more people in central Europe rent for longer or never own their own property.
The last two census in 2001 and 2011 show that proportionally the percentage of
people who own their own home in Britain is slowly reducing and as a country,
we are becoming more and more like Germany. That isn’t a bad thing as Germany
is considered to have a more successful economy, one of the main stays often
quoted is because they have a much more flexible and mobile workforce, (which
renting certainly gives) and from that they have a higher personal income than
in the UK.
Therefore, if we are turning into a more European model and
the youngsters of Solihull and the Country have changed their attitudes, demand
for rental properties will only and can only go from strength to strength, good
news for Solihull tenants as wages will start to rise and good news for Solihull
landlords, especially as property values in Solihull are now 4.9% higher than
year ago!
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