During my school
years, my parents seemed to move every other year (or it seemed that
way). In reality, looking back at the house moves, we actually moved
three times before I left home. From research
I have carried out it shows things have changed considerably in
Cheltenham over the last few decades, and interestingly, the trend is
getting worse ... for the removal van people at any rate!
In Cheltenham, there are 51,251
properties. However, after we remove the 6,261 council houses, 10,990
privately rented houses and 543 houses where the occupants live rent
free, that leaves us with 33,457 owned properties (be that 100%
outright, with a mortgage or shared ownership). This means 65.3% of
the properties in Cheltenham are occupied by the owner (the national
average is interestingly 64.2%) but the number of people who have
sold and moved house in Cheltenham, over the last 12 months, has only
been 2,787. This means on these figures, the homeowners of Cheltenham
are only moving on average every 12 years.
These are the reasons. Firstly, the
cost of moving house has risen over the last twenty years. Secondly,
with many remortgaging their properties in the mid 2000’s before
the price crash of 2008, there is a reluctance or inability in a
small minority of homeowners to finance a home sale/purchase, due to
lack of equity. These are both factors driving fewer moves by
existing homeowners.
However, the big effect 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 (August 2002 to be exact) for
property values to double to today’s levels.
This change to a relatively low
inflation Cheltenham property market (i.e. Cheltenham property values
not rising quickly) is significant because the long term consequences
of sustained low house price growth is that it eats into mortgage
debt more slowly than when property price inflation is higher.
Cheltenham homeowners cannot rely on inflation to shrink their debt
in real terms as much as they did in say the 1970’s and 1980’s.
So what does this all mean for
Cheltenham buy to let landlords? Well for the same reasons existing
Cheltenham homeowners aren't moving, less ‘twenty something’s’
are buying their first home as well. Cheltenham youngsters may aspire
to own their own home, but without the social pressure from their
peers and parents to buy their first property as soon people reach
their early 20’s, the memory of the 2008 housing crisis and the
belief the hard times either aren't over or the worst is yet to come,
current and would-be homeowners are warming to the idea of renting.
I
also believe UK society has changed, with the youngster’s wanting
prosperity and happiness; but wanting it all now... instantly...
today... without the sacrifice, work and patience that these things
take. As a society, we expect things instantly, and if it doesn’t
come easy, doesn’t come quick, some youngsters ask if it is 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 for a couple of years, to save for that 5% deposit
if there is no longer a social stigma in renting or pressure to buy
as there was... say... a generation ago?
Even though, in
real terms, property prices are 5% cheaper than they were ten years
ago (when adjusted by inflation), 21.4%
of Cheltenham properties are privately rented (nearly double it was
twenty years ago). As a result, the demand for rental properties
continues to grow from tenants, meaning those wishing to invest in
the buy to let market, over the long term, might be on to a good
thing? For advice and opinion on the Cheltenham Buy To let property
market, please contact me on neil.west@belvoir.co.uk or 01242 221188
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