Talking to an elderly relative recently, he reminded me that
in his day you could have bought a property for the same price as a decent
second hand car today! What’s more, his
father was buying property for the same price as a decent 50 inch LCD TV!
Now of course, these are only headline prices and we have had
wage growth and inflation. Interestingly,
since the Second World War, property values in Warrington doubled in 1961,
1971, 1975, 1980, 1988, 2000 and 2006.
House prices now
Looking more recently, since the start of the Millennium,
these increases in property values have generated large increases in equity for
many homeowners, but on the other side of the coin also making housing
unaffordable for other people.
It might interest readers to note that most of Europe
experienced sharp increases in property values in the early 2000s, with only
Spain beating us – although we know what has happened to the Spanish property
market over the last few years! In the
2000s, the British situation was different in two regards.
First, the property value
boom started earlier and saw more sustained increases.
Second, the regional pattern
was fairly uniform.
What about more recent
changes to values?
However, since 2010, the regional pattern has been completely
different in the UK. Compared with the
last property boom in 2007, average property values today in England and Wales
are 1.2% higher, whilst in Greater London they are 35.7% higher. In Warrington
they are 4.17% higher.
The London property market has been like a different
country.
Looking specifically at Warrington, it has continued to
become more difficult for first time buyers to get on the housing ladder. The best measure of the affordability of
housing is the ratio of Warrington
Property Prices to Warrington
Average Wages.
The higher the ratio, the less affordable properties
are.
Ratio of Wages to House Prices
1997 3.04 to 1
(i.e. the average value of a Warrington property was 3.04 times higher than the
average annual wage in Warrington)
2000 3.79 to 1
2002 4.31 to 1
2003 5.26 to 1
2007 6.83 to 1
2009 4.12 to 1
2012 6.23 to 1
Today 8.12 to 1
You can see quite clearly, despite the improvement just after
the 2007 property crash, in subsequent years Warrington house prices rose, but wages
did not follow suit. Hence, the ratio started to rise.
This has meant there has been deterioration in affordability
of property in Warrington over the last couple of years. This is one of the many reasons why the younger generation is deciding more and more
to rent instead of buy their own house.
The local Council sold off council houses in the Thatcher years.
So, for many on low incomes or with little capital, owning a home has
simply never been an option.
The increase in the renting
market
With fewer people able to save up the deposit required by
mortgage lenders, more and more people are looking to rent, this has resulted
in a change in attitudes towards renting over the last decade. The delay
in moving up the property ladder has driven rents up in Warrington over the
last few years, as more people are seeking properties to rent. All these
things have combined to make the demand for rental property in Warrington
rise.
If you are a landlord or thinking of becoming one for the
first time and you want to read more articles like this about the Warrington
Property Market, together with regular postings on what I consider the best buy
to let deals in Warrington (out of the many of properties on the market,
irrespective of which agent is selling it) then feel free to get in touch!
