The good old days of the 1970’s and 1980’s eh … with such highlights
lowlights as 24% inflation, 17% interest rates, 3 day working week, 13%
unemployment, power cuts ... those were the days (not)… but at least people
could afford to buy their own home. So why aren’t the 20 and 30 something’s
buying in the same numbers as they were 30 or 40 years ago?
Many people blame the credit crunch and global recession of
2008, which had an enormous impact on the Southampton (and UK) housing market.
Predominantly, the 20 something first-time buyers who, confronting a
problematic mortgage market, the perceived need for big deposits, reduced job
security and declining disposable income, discovered it challenging to assemble
the monetary means to get on to the Southampton property ladder.
However, I would say there has been something else at play
other than the issue of raising a deposit - having sufficient income and rising
property prices in Southampton. Whilst these are important factors and barriers
to homeownership, I also believe there has been a generational change in
attitudes towards home ownership in Southampton (and in fact the rest of the
Country).
Back in 2011, the Halifax did a survey of thousands of
tenants and 19% of tenants said they had no plans to buy a home for themselves.
A recent, almost identical survey of tenants, carried out by The Deposit
Protection Service revealed, in late 2016, that figure had risen to 38.4%, with
many no-longer equating home ownership to success and believing renting to be
better suited to their lifestyle.
You see, I believe renting is a fundamental part of the
housing sector, and a meaningful proportion of the younger adult members of the
Southampton population choose to be tenants as it better suits their plans and
lifestyle. Local Government in Southampton (including the planners – especially
the planners), land owners and landlords need an adaptable Southampton residential
property sector that allows the diverse choices of these Southampton 20 and 30
year olds to be met.
This means, if we applied the same percentages to the
current 61,713 Southampton tenants in their 25,247 private rental properties, 23,698
tenants have no plans to ever buy a property – good news for the landlords of
those 9,695 properties. Interestingly, in the same report, just under two
thirds (62%) of tenants said they didn’t expect to buy within the next year.
.. but does that mean the other third will be buying in Southampton
in the next 12 months?
Some will, but most won’t … in fact, the Royal Institution
of Chartered Surveyors (RICS) predicts that, by 2025, that the number of people
renting will increase, not drop. Yes, many tenants might hope to buy but the
reality is different for the reasons set out above. The RICS predicts the number of tenants
looking to rent will increase by 1.8 million households by 2025, as rising
house prices continue to make home ownership increasingly unaffordable for younger
generations. So, if we applied this rise
to Southampton, we will in fact need an additional 10,820 private rental properties
over the next eight years (or 1,353 a year) … meaning the number of private
rented properties in Southampton is projected to rise to an eye watering 36,067
households.
If you are looking for an agent that is well established, professional and communicative, then contact us to find out how we can get the best out of your investment property.
Email me on brian.linehan@belvoirlettings.com or call on 023 8001 8222.
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Twitter, https://twitter.com/sotonbelvoir
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Great blogs buddy……… this will definitely assist me.
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