I was reading the Sunday Papers, as is my want
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 the 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 Chelmsford 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, Chelmsford 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 Chelmsford
tenants have to pay for their Private Rental Properties in Chelmsford (i.e. not housing association or council
tenants) rose by 3.0% throughout 2015, eating into most of the growth. 2015 wasn’t a one off either. In 2014, rents in Chelmsford rose by 1.9%
(where salaries only rose by only 0.2%) However, it’s not all bad news for Chelmsford
tenants, because in 2013 rents rose by 0.9%, (but salaries rose by 2.2%).
… and it must be noted that the private rents Chelmsford
tenants have had to pay for Chelmsford property since 2005 are only 18.3%
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’s a
choice. Gone are the days where owning
your own property was a guaranteed path to wealth, affluence and prosperity. I
know
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% homeownership, 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. Chelmsford rents are growing, but not as much
as incomes. To buy or not to buy is an enormously
difficult decision. For while buying a Chelmsford home is a dream
for the majority of the 20 and 30 something’s of Chelmsford 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.
For more articles about the Chelmsford property market, visit www.chelmsfordpropertyblog.co.uk
