My parents bought their first house in the 1950’s, they were in their early 20’s. Interestingly, looking at some research by the Post Office from a few years ago, in the 1950’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, 829 people in Lancaster will turn 28. With how the population is growing it will be 1,023 in 2017 and dare I say 1,465 in 2018 . Year in year out the conveyor belt carries on. Where are the Lancaster youngsters going to live?
Ask a Lancaster ‘twenty something’ and they will say they do not expect to buy until they are in their mid thirties, seven years later than they did in the 1980’s. Some people even say they will never be able to buy a property and the newspapers have labelled them ‘Generation Rent’ as they are people born in the 1980s who have no hope of getting on the property ladder. One of the major problems facing young Lancaster people is the large deposit needed to get a mortgage . Or is it?
The average price paid for an apartment in Lancaster over the last 12 months has been £135,100 meaning our first time buyer would need to save £6,755 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 latest 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, show the average male in Lancaster with a full-time job earns £524.60 per week whilst the average female salary is £422.70 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. The thing that struck me was that when tenants were asked about their long term housing plans, some 35% of participating tenants 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 (i.e. apartments and 2 bed terrace houses), nine times out of ten the mortgage payments to buy a Lancaster property are cheaper than having to rent in Lancaster. 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 grandparents (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 Lancaster (and the UK as a whole) is likely to remain a popular choice for the next twenty plus years. Demand for Lancaster rental property is unlikely to slow and newly formed households are 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.
Do you need any advice on investing in Lancaster? Why not register for our weekly updates or alternatively pop in and see me at my JDG office on Market Street. You can also reach me at john@jdg.co.uk
Thanks for reading
John