There seems to be an obsession in the UK with property, more importantly owning your own home. Some feel that renting is seen as throwing your money down the swanny, at least that’s what my parents always told me. Having worked in property for as long as I have and having personally experienced both renting and owning, I’ve seen the perks of both types of tenure.
Renting has its benefits such as freedom and flexibility of moving on short notice, subject to certain contractual obligations. There is also the added benefit of not having to lay out for any maintenance issues as these should be covered by the landlord and with the increased legislation, I expect the condition of Private Rental Sector to continue to improve.
However, as long as they rent, and don’t own, they will not be able to take advantage of the fantastic capital growth potential that York property has to offer.
Funnily enough, we’ve not always had this obsession with property ownership. I used the below graph in a previous article a few months ago but feel it is very relevant here also. It represents the percentage of households by tenure in England over a 90-year period.
Just over 100 years ago, the most common type of tenure was private renting, with only circa 23% of properties being owned. The turning point which saw the rise of property ownership was around the early 50’s to 80’s where property ownership started to become more prevalent, in no uncertain terms, down to inflation at this time driving property prices skyward.
Let’s not forget the added incentives over the years to owning your own home i.e. the council house Right to Buy introduced in the 80’s, changes to mortgage interest and tax relief in the 90’s as well as the most recent Help to Buy scheme.
I digress, in last week’s article I pointed out that according to Payscale.com, the average salary in York is £24,383. I think we can all agree that the most common type of properties First Time Buyers will aim for is Flats and Terraced Houses. According to the Land Registry, as at January 2019, the average price of a York flat is £170,400 and terraced houses, £218,400, the average of the two, equating to £194,400. If we divide the average of these two types of properties, by average earnings, arguably, First Time Buyers are expected to cover the price of their first property 7.97 times over.
We must note that the above doesn’t take into consideration certain points such as that there are perhaps more professional couples buying their first home as opposed to single individuals and not forgetting the ability to rely on leverage, (one of the most compelling tools available to property owners over other asset classes). As interest rates are at an all time low, this has a knock-on effect with mortgage lenders able to offer more competitive rates, something which is further exacerbated by the increasing levels of competition within the mortgage lending sector over the years. With the introduction of the Help to Buy Scheme, couples need a 5% deposit with competitive rates, it actually works out cheaper to own than to rent in York.
So whilst there is an argument to say that it is too expensive for First Time Buyers to get on the Housing Ladder, I question whether there is a shift in consumer behaviour to owning your own home and a preference to Private Renting.
Whatever the reason, I’m super-excited about what’s going on in the York property market and if are looking to get a foot on the property ladder, give me a call and let me see how I can help.
If you just want a fireside chat on York property, let me know the pub and time and I’ll get the first round in!