During my school years, my
parents seemed to move every other year, or it certainly seemed that way! In
reality, looking back at the house moves, we actually moved three times before
I left home. In fact I read on the internet that the average UK person moves 8
times in their life - or every 9 to 10 years. 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 Derby over the last
few decades, and interestingly, the trend is getting worse ... for the removal
van people at any rate!
In Derby, there are 104,777
properties. However, after we remove the 20,289 council houses, 17,504
privately rented houses and 1,213 houses where the occupants live rent free,
that leaves us with 65,771 owned properties, be that 100% outright, with a
mortgage or shared ownership. This means 62.8% of the properties in Derby are
occupied by the owner (the national average is interestingly 64.2%) but the
number of people who have sold and moved house in Derby, over the last 12
months, has only been 4,282. This means on these figures, the homeowners of
Derby are only moving on average every 15.35 years.
There are a couple of reasons
for this. Firstly, the cost of moving house has risen dramatically over the
last twenty years and, secondly, with many remortgaging 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 leading to 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 2012 to be exact) for property values to double to today’s
levels.
This change to a relatively low
inflation Derby property market - Derby 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. Derby home owners 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
Derby buy to let landlords? Well, for the same reasons existing Derby homeowners
aren’t moving, less ‘twenty something’s’ are buying their first home as well. Derby
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 now 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. Why should they 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), 16.7% of Derby 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?