Has owning a home become an unattainable dream for the 3,567 Medway 28 year olds?
A typical 1960's house in Essex.
I have spoken on this blog before about how property prices are cyclic and as an example cited the fact that my parents purchased their first house for just a few thousand pounds. In fact, my parents bought their first house in the 1960's when 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, 3,567 people in Medway will turn 28, 3,543 in 2017 and 3,572 in 2018. Year in, year out, the conveyor belt carries on but where are the Medway youngsters going to live?
Ask a Medway twenty something and they will say they do not expect to buy until they are in their mid thirties - seven years later than their 1980’s counterparts. Some people even say they will never be able to buy a property; the media have labelled them Generation Rent - people born of the 1980s who have no hope of getting on the property ladder. One of the major problems facing young Medway people is the large deposit needed to get a mortgage.Or is it?
An early example of Generation Rent?
The average price paid for an apartment in Medway over the last 12 months has been £146,200 meaning our first time buyer would need to save £7,310 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 next 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, shows the average male in Medway with a full-time job earns £613.30 per week whilst the average female salary is £469.60 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. I noticed an interesting point. When tenants were asked about their long term housing plans, some 35% 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 Medway property are cheaper than having to rent in Medway. 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 Medway (and the UK as a whole) is likely to remain a popular choice for the next twenty plus years. With demand for Medway 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 right here at the Medway Property Blog.
Thanks for reading. I also invite you to view my YouTube channel all about the Medway property market. It can be found by clicking HERE.
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Source of my numbers:
Numbers of moving age from the PostOffice
28 year olds – Census
Salaries- Office of national Stats for the Local authority area