I was reading the Sunday Papers and, when reading the financial pages, it was announced UK inflation had increased to its highest level in a year. Inflation, as calculated by the Government’s Consumer Prices Index, rose by 0.3% over the last 12 months.  The report said it had risen to those ‘heady’ levels by smaller 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 Locks Heath property market… especially the Tenants?

Back in November, the Office of National Statistics stated average wages only rose by 1.8% year on year, so when adjusted for inflation, Locks Heath 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 Locks Heath Tenants have to pay for their Private Rental Properties in Locks Heath (i.e. not housing association or council tenants) rose by 2.9% throughout 2015, eating into most of the growth.  2015 wasn’t a one off either.  In 2014, rents in Locks Heath rose by 2.2% (where salaries only rose by only 0.2%) However, it’s not all bad news for Locks Heath Tenants, because in 2013 rents rose by 1.8%, (but salaries rose by 2.2%).

It must also be noted that the private rents Locks Heath Tenants have had to pay for Locks Heath property since 2005 are only 20.0% higher, not even keeping up with inflation, which over the same time frame, rose at 27.8% (although salaries were only 22.3% higher over the same time period).

More and more, talking to ’20 and 30 somethings’ who rent – it is a choice.  Gone are the days where owning your own property was 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% (and we know both of those countries are on their knees, riddled with national debt and massive youth unemployment).

At the other end of the scale, whilst we in the UK stand at 64.8% home ownership, in Europe’s powerhouses, only 52.5% of Germans own a home and only 44% of Swiss people are homeowners.  Looks like eating chocolate, sauerkraut, renting and good economic performance go hand in hand!  Yet, joking aside, home ownership has not always been the rule in the UK.   In 1918, only 23% of people were homeowners, with no council housing, meaning in fact, 77% were tenants.

Tenants have choice, flexibility to move, they don’t have massive bills when the boiler blows up, it’s a choice.  Locks Heath rents are growing, but not as much as incomes. To buy or not to buy is an enormously difficult decision.  For while buying a Locks Heath home is a dream for the majority of the 20 and 30 something’s of Locks Heath have, 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.

If you want to read more articles on the Locks Heath property market, whether you are a Locks Heath landlord, Locks Heath homeowner, first time landlord or a first time buyer – then visit the Locks Heath Property Blog HERE.

I occasionally like a drink in the Talisman in Park Gate and whilst I was in there recently a gentleman approached me and asked if I was the person who wrote the blog about the Locks Heath property market. We ended up having an interesting chat about the local property market, as he was concerned his daughter would never be able to buy her own property, a place in Locks Heath she herself can call home.

My latest analysis, using the Land Registry and Office of National Statistics, shows that overall, month on month, Locks Heath property values increased by 1%. The year on year figures showed the value of residential property in Locks Heath has increased by 7.7% in the year to the end February 2016, taking the average value of a property in the council area to £254,100.

It gets even more interesting when we look at the last few months’ figures and see the patterns that seem to be emerging.

• January 2016 – a rise of 0.4%
• December 2015 – a rise of 0.9%
• November 2015 – a rise of 0.7%

We have talked in many recent articles about the lack of properties being built in Locks Heath over the last 30 years. This lack of new building has been the biggest factor that has contributed to Locks Heath property values still being 236.62% higher than in 1995. At the risk of repeating myself, until the Government addresses this issue, and allows more properties to be built, things will continue to get worse as the UK population grows at just under 500,000 people a year (which is a combination of around 226,000 people because of higher birth rates/people living longer and 259,000 net migration) whilst the country is only building 152,400 properties a year – no wonder demand is outstripping supply.

Another reason intensifying the current level of property values in Locks Heath, is the fact that people aren’t moving home as much as they used to, meaning fewer properties are coming onto the market for sale, so in consequence, there is a lack of choice of property to buy, meaning people thinking of moving are discouraged from putting their property on the market … thus perpetuating the problem, as the scarcity of possible properties to buy in order to move also deters people from offering their home for sale. This unevenness between demand from would-be purchasers and the number of properties coming on to the market for sale is causing pressures in Locks Heath (and the rest of the UK).

So what of the future of the Locks Heath property market and this man’s daughter? I firmly believe the property market in Locks Heath and the country as a whole is changing its attitude about home-ownership. Back in the 1960’s, 70’s, 80’s and 90’s, getting on the property ladder was everything. Since the late 1990’s, we as a country (in particular, the young) have slowly started to change our attitude to home-ownership. We are moving to a more European model, where people choose to rent in their 20’s and 30’s (meaning they can move freely and not be tied to a property), then inherit money in their 50’s when their property owning parents pass away, allowing them to buy property themselves … just like they do in Germany and other sophisticated and mature European counties, meaning his daughter will end up owning property, just later in life than we did. So, whatever the vote on the 23rd of June, if you think about it, we might be more European than we think!

If you want to read more articles on the Locks Heath property market, whether you are a Locks Heath landlord, Locks Heath homeowner, first time landlord or a first time buyer – then visit the Locks Heath Property Blog HERE.

Renting used to be a dirty word in the 60’s and 70’s. You either lived in a ‘Rigsby Rising Damp’ style bedsit with wood chip on the wall and a coin operated electric meter or you lived in a council house. In the latter part of the 20^th Century, the British were persuaded that rent payments were ‘wasted money’. However, owning often makes less financial sense than renting and as the rate of home-ownership is starting to drop substantially, as we roll the clock forward to today, there is no stigma at all to renting – everyone is doing it. In fact, of the 41,605 residents of Fareham, 8,789 of you rent your house from either the local authority/social provider (ie council house or housing association) or private Landlords – meaning 21.12% of Fareham people are Tenants.

The idea of home ownership is deeply embedded in the British soul, in fact 32,323 Fareham people live in an owner occupied property (or 77.69%). Housing is at the heart of Government policy, as George Osborne has promised 200,000 new properties a year so first time buyers can buy their first home whilst recently changing the tax laws for buy to let Landlords. To get votes, Thatcher (and everyone since) ran election campaigns promising everybody their own home, and as a country, we seem to equate home-ownership the goal of British life. 

So as more and more people are renting nowadays, are we turning to a more European way of living? Well, I believe, as a country, we are. In fact, home-ownership could be affecting your health! The UK, according to Bloomberg, is only the 21^st healthiest country in the world. Germany is at No.10 and Switzerland at No.4 and home-ownership is at 52.5% and 44% respectively in those countries (in the UK it is 64.8%).

In the Fareham Borough Council area, 73.32% of homeowners who own their house outright said they were in ‘very good’ or ‘good’ health whilst, at the other end of the scale, 6.03% said their health was ‘bad’ or ‘very bad’. Looking at renting, the census splits tenants into two types – 72.91% of Fareham local authority/social Tenants said they were in ‘very good’ or ‘good’ health and 9.01% were in ‘bad’ or ‘very bad’ health …

… whilst ‘private rented tenants’ in Fareham, were the healthiest, as 89.09% of them described themselves in ‘very good’ or ‘good’ health and only 2.82% were in ‘bad’ or ‘very bad’ health. 

I am not suggesting that low home-ownership rates in Switzerland and Germany are directly linked to health, nor, do I expect Brits to all go to Berlin, Interlaken or Düsseldorf and realise how happy people are when they don’t need to worry about all the stresses which accompany home-ownership. The numbers for Fareham do go some way to back up the argument (and they are the same across the whole of the UK). Nonetheless I do think that substantially all of the upside to homeownership in recent years has been a function of monumental rising house prices. Now that’s come to an end, it’s hard to see why anybody would want to buy?

Renting is here to stay in Locks Heath and it’s growing incrementally each year. Even with the new tax rules for Landlords, buy to let is still a viable investment option for most people in the suburb. There has never been a better time to buy buy-to-let property in Locks Heath, but buy wisely. Gone are the days that you would make profit on anything with four walls and a roof. Take advice, take opinion, do your homework. One place to do more homework, to read more articles on the Locks Heath property market like this, is the Locks Heath Property Blog www.thelocksheathpropertyblog.co.uk.