Tuesday, 4 August 2015
Why are less Canterbury people moving house?
During my school years (some years ago......), my parents seemed to move every other year (or it seemed that way). In reality, looking back at the house moves, we actually moved four times before I left home. However, whilst my parents kept the removal van people in business whilst I was at school, from research I have carried out it shows things have changed considerably in Canterbury over the last few decades, and interestingly, the trend is getting worse ... for the removal van people at any rate!
In Canterbury, there are 19,850 properties. However, after we remove the 4,089 council houses, 5,955 privately rented houses and 352 houses where the occupants live rent free, that leaves us with 9,454 owned properties (be that 100% outright, with a mortgage or shared ownership). This means 47.6% of the properties in Canterbury are occupied by the owner (the national average is interestingly 64.2%) but the number of people who have sold and moved house in Canterbury, over the last 12 months, has only been 1,261. This means on these figures, the homeowners of Canterbury are only moving on average every 7.49 years.
These are the reasons. Firstly, the cost of moving house has risen over the last twenty years. Secondly, with many re-mortgaging 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 Canterbury property market (i.e. Canterbury 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. Canterbury 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 Canterbury buy to let landlords? Well for the same reasons existing Canterbury homeowners aren’t moving, less ‘twenty something’s’ are buying their first home as well. Canterbury 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), 30% of Canterbury 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 Canterbury Buy To let property market, one source of information is The Canterbury Property Blog www.canterburypropertyblog.com .