I recently read a report by the Yorkshire Building Society that 54% of the country has seen wages rise faster than property prices in the last 10 years. The report said that in the Midlands and North, salaries had outperformed property prices since 2007, whilst in other parts of the UK, especially in the South, the opposite has happened and property prices have outperformed salaries quite noticeably.
I always like to find out what has actually happened locally in Lancaster. To talk of North and South is not specific enough for me. Therefore, to start, I looked at what has happened to salaries locally since 2007. Looking at the Office of National Statistics (ONS) data for Lancaster City Council, some interesting figures came out…
Salaries in Lancaster have risen by 12.65% since 2007 which is interesting when you compare that with what has happened to salaries regionally (an increase of 15.77%) and nationally, an increase of 17.61%. Lancaster salaries though are higher than most of the northwest still due to the key employer’s we have.
Next, I needed to find what had happened to property prices locally over the same time frame of 2007 and today. Net property values in Lancaster are 5.67% higher than they were in late 2007 (not forgetting they did dip in 2008 and 2009). Therefore…
Wages in the Lancaster area have increased at a higher rate than property values to the tune of 6.98% ... meaning, Lancaster is in line with the regional trend
All this is important, as the relationship between salaries and property values is the basis on how affordable property is to buyers. It is also vitally relevant for Lancaster landlords as they need to be aware of this when making their buy-to-let plans for the future. If more Lancaster people are buying, then demand for Lancaster rental properties will drop (and vice versa).
The issue of ‘property-affordability’ is a great indication of the future direction of the Lancaster property market. Mortgage rates also need considering as does, of course, buyers disposable income.
On the face of it, the change between 2007 and 2017 in terms of the ‘property-affordability’ hasn’t been that great. However go back another 10 years and property prices where on average 3.5 times annual wages. In 2016 it reached 7.7 times.
As a tenant to pay your rent and save money for a deposit at the same time is difficult, meaning for many Lancaster people, home ownership isn’t a realistic goal.
Earlier in the year, the Tories released proposals to combat the country’s ‘broken’ housing market, setting out plans to make renting more affordable, while increasing the security of rental deals and threatening to bring tougher legal action to cases involving bad landlords.
This is all great news for Lancaster tenants and decent law-abiding Lancaster landlords (and indirectly owner occupier homeowners).
Despite salary growth, the demand for decent high-quality rental property keeps growing. Renting is now a lifestyle choice for many.
If you want to chat about this, give me call on 01524 843322. Pick my brain. Many other Lancaster landlords call for advice. I look forward to hearing from you.