Rents in Solihull rise by 1.8% in the last year

I read recently in the financial pages that UK inflation has increased to its highest level in a year. Inflation, as calculated by the Government’s Consumer Price Index (CPI), rose by 0.3% over the last 12 months.  The report explained that it had only reached those ‘heady’ levels as a result of the small falls in supermarket and petrol prices than a year ago. If you recall in early 2015, we had deflation where prices were dropping!

So what does this mean for the Solihull property market ... especially the tenants?

Back in November the Office of National Statistics stated that average wages only rose by 1.8% year on year, so when adjusted for inflation, Solihull people are 1.5% better off in ‘real’ terms.   Great news for homeowners, as their mortgage rates are at their lowest ever levels and their spending power is increasing, but the news is not so good for tenants.

The average rent that Solihull tenants pay for their private rental properties in Solihull (i.e. not housing association or council tenants) rose by 1.8% throughout 2015, eating into most of the growth.  2015 wasn’t a one off either, in 2014 rents in Solihull rose by 1.3% (where salaries only rose by only 0.2%). However, it’s not all bad news for Solihull tenants, in 2013 rents rose by 1.0%, with salaries rising to 2.2%.

It should be noted that the private rents Solihull tenants have been paying for property in Solihull since 2005 are only 15.1% higher, not even keeping up with inflation. Over the same time frame inflation rose to 27.8% (although salaries were only 22.3% higher over the same time period)

Gone are the days where owning your own property is a guaranteed path to wealth, affluence and prosperity. I know I keep mentioning Europe, but some of the highest levels of home ownership are in Romania at 96.1%, Hungary at 88.2% and Latvia at 80.9% (none of them European economic dynamos) and even West European countries like Spain at 78.8% and Greece at 74% (countries which we are all aware are on their knees, riddled with national debt and massive youth unemployment).

At the other end of the scale whilst in the UK homeownership stands at 64.8%, it only stands at 52.5% in Germany and only 44% of Swiss people are homeowners. Interestingly historically home ownership was not always the rule in the UK, in 1918, only 23% of people were homeowners, with no council housing, meaning in fact, 77% of the UK residents were tenants.

Tenants have a choice: flexibility to move and not to be lumbered with huge bills when the boiler breaks, is a choice.  Solihull rents are growing, but not as much as incomes. To buy or not to buy is an enormously difficult decision.  While buying a Solihull home is a dream for the majority of the 20 and 30 something’s, it might not leave them better off in the long run and it isn’t necessarily the best option for everyone.  That is why, demand for renting is only going in one direction -upwards.