A recent report by the Yorkshire Building Society stated 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.
As regular readers of our blog know, we always like to find out what has actually happened locally in Boston. To talk of North and South is not specific enough. Therefore, to start, we looked at what has happened to salaries locally since 2007. Looking at the Office of National Statistics (ONS) data for Boston Borough Council, some interesting figures came out…
Salaries in Boston have risen by 4.4% since 2007 – interesting when you compare that with what has happened to salaries regionally ,an increase of 16.67%, and nationally, an increase of 17.61%.
Next, we needed to find what had happened to property prices locally over the same time frame of 2007 and today. Net property values in Boston are 2.35% higher than they were in the middle of 2007 (not forgetting they did dip in 2008 and 2009). Therefore…
Wages in the Boston area have increased at a higher rate than property values to the tune of 2.05% … meaning, Boston 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 first (and second, third etc.) time buyers. It is also vitally relevant for Boston landlords as they need to be aware of this when making their buy-to-let plans for the future.
If more Boston people are buying, then demand for Boston rental properties will drop, and vice versa.
As we have discussed in a few articles in the blogs recently, this issue of ‘property-affordability’ is a great bellwether to the future direction of the Boston property market. Now of course, it isn’t as simple as comparing salaries and property prices, as that measurement disregards issues such as low mortgage rates and the diminishing proportion of disposable income that is spent on mortgage repayments.
On the face of it, the change between 2007 and 2017 in terms of the ‘property-affordability’ hasn’t been that great. However, look back another 10 years to 1997, and that tells a completely different story. Nationally, the affordability of property more than halved between 1997 and today. In 1997, house prices were on average 3.5 times workers’ annual wages, whereas in 2016 workers could typically expect to spend around 7.7 times annual wages on purchasing a home.
The issue of a lack of homeowner-ship has its roots in the 1980’s and 1990’s. It’s quite hard as a tenant to pay your rent and save money for a deposit at the same time, meaning for many Boston 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 Boston tenants and decent law-abiding Boston landlords. Whatever has happened to salaries or property prices in Boston in the last 10 or 20 years … the demand for decent high-quality rental property keeps growing.
If you are a landlord and are wanting to know a little more about the current demand for rental property, where to invest or indeed the recent changes in legislation or the law which is going to be affecting the EPC ratings then get in touch as we’d love to help you. All of our advice and help is free and given to help you make informed decisions about your investment and portfolio.
Give us a call today on 01205 352019