My
parents bought their first house in the 1960’s, they were in their early 20’s.
Interestingly, looking at some research by the Post Office from a few years
ago, in the 1960’s the average age people bought their first house was 23. By
the early 1970s, it had reached 27, rising to 28 in the early 1980’s.
This
year alone, 1,464 people in Chelmsford will turn 28 and 1,335 in 2017... and
dare I say 1,272 in 2018... year in year out the conveyor belt carries on...
where are the Chelmsford youngsters going to live?
Ask
a Chelmsford ‘twenty something’ and they will say they do not expect to buy
until they are in their mid thirties - seven years later than the 1980’s. Some
people even say they will never be able to buy a property and the newspapers
have labelled them ‘Generation Rent’ as they are people born in the 1980s who have no hope of getting on the property ladder.
One of the major problems facing young Chelmsford people is the large deposit
needed to get a mortgage... or is it?
The
average price paid for an apartment in Chelmsford over the last 12 months has
been £181,600 meaning our
first time buyer would need to save £9,080 as a deposit (as 95% mortgages have
been available to first time buyers since 2010) plus a couple of thousand for
solicitors and survey costs. A lot of money, but people don’t think anything
today of spending a couple of thousand pounds to go on holiday; the latest
iPhone upgrade or the latest 4K HD television. That amount could soon be saved
if these ‘luxuries’ were withheld over a couple of years but attitudes have
changed.
Official
figures, from the Office for National Statistics, show the average male in Chelmsford
with a full-time job earns £643.60 per week whilst the average female salary is
£501.80 a week, meaning, even if one of them worked part time, they would still
comfortably be able to get a mortgage for an apartment.
I
was reading a report/survey commissioned by Paragon Mortgages from the autumn of
last year. The thing that struck me was that when tenants were asked about
their long term housing plans, some 35% of participating tenants intend to
remain within the rental sector and 24% intended to buy a house in the future,
with the proportion of respondents citing the “unaffordability” of housing as
the reason for renting privately increasing from 69% to 74%.
However,
time and time again, in the starter home category of property (ie apartments),
nine times out of ten the mortgage payments to buy a Chelmsford property are
cheaper than having to rent in Chelmsford. It is the tenant’s perception that
they believe they can’t buy, so choose not to. Renting is now a choice. Tenants
can upgrade to bigger and better properties and move up the property ladder
quicker than their parents or grand parents (albeit they don’t own the
property). Over the last decade, culturally in the UK, there has been a change
in the attitude to renting so, unless that attitude changes, I expect that the
private rental sector in Chelmsford (and the UK as a whole) is likely to remain
a popular choice for the next twenty plus years. With demand for Chelmsford rental
property unlikely to slow and newly formed households continuing to choose the
rental market instead of purchasing a property. I also forecast that renting
will continue to offer good value for money for tenants and recommend landlords
pursue professional advice and adopt a realistic approach to rental increases
to ensure that they are in line with inflation and any void periods are curtailed.
One such place for advice, comment and opinion is the Chelmsford Property Blog www.chelmsfordpropertyblog.co.uk
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