The Affordability of Buying Property in Medway

Looking back at the 75th Anniversary of the D-Day landing a few months ago, it reminded me of the huge changes that have happened to Medway and more specifically the Medway property market since WW2. Back in 1946, the average wage in Medway was just over £5 a week and to buy an average car would cost you just under £600, yet this is a property blog, so using Rochester as an example...

The average value of a Rochester property in 1946 was £1,131

In fact, in those 75 years, the average Medway house had doubled in price by 1961, then again in 1971, 1975, 1980, 1988, 2000 and 2006. Now a lot of those increases (especially in the 1970’s) were caused by hyperinflation, yet since the start of the 21st Century inflation has been kept low and since the Credit Crunch (2008/9), whilst property values have been rising, they haven’t been at the rates experienced in the latter half of the 20th Century.

Now what a property sells for is irrelevant, its whether someone can afford it.

Increases in Medway property values have produced huge increases in equity for many Medway homeowners and Medway buy to let landlords, yet on the other side of the coin also making housing unaffordable for other people. The best measure of the affordability of housing is the ratio of Medway property values to Medway average earnings (i.e. salary/wages). The ratio works on the basis the higher the ratio, the less affordable properties are.

In 1997, the average value of a Medway property was 2.9 times higher than the average annual wage in Medway, in 2007 it peaked at 6.6, yet two years later it had dropped to 5.3 and since then has slowly risen to 8.7 times higher!



It can be seen that even though property in Medway became more affordable after the 2007/8 property crash (i.e. the ratio dropped), in subsequent years, with house values rising but earnings/salaries not keeping up, the ratio started to rise. This has meant there has been a decline in affordability of property in Medway over the last five years - so for those on particularly low incomes or with little capital, it unfortunately means that buying a Medway home will never become an option.

Therefore, the demand for private rented properties in Medway will continue to grow as many young Medway people are deciding to rent instead of buy their own house (knowing when their parents pass away, the equity built up in their parents property will be passed down - and then they can buy in their 50’s and 60’s - just like it happens in Germany).



Yet, that is many decades away and with fewer Medway people wanting or able to save up the 5% deposit required by mortgage lenders, more and more people are looking to rent. Tie this in with the subtle shift in attitudes towards renting since the Millennium and less people jumping the on the bottom rung of the property ladder, this has driven rents and demand up in Medway over the last few years. Yet (and it’s an important proviso) the type, location and demands of Medway tenants has changed over that same time frame meaning you can’t just make money from buy to let as easily as falling off a log like you did in the early 2000’s.

One place for more information is my Medway Property Market blog. If you are a landlord or thinking of becoming one for the first time, and you want to read more articles like this about the Medway property market together with regular postings on what I consider the best buy to let deals in Medway, then it is well worth reading. You can also email me at spencer@docksidekent.com
If you are in the area feel free to pop into the office which is based at Station Road, Strood, Kent, ME2 4WQ
Don’t forget to visit the links below to view back dated deals and Medway Property News. 

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