Affordability of Housing in Warrington

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!

Email me on manoj@hamletwarrington.co.uk or call on 01925 235338. If you are in the area feel free to pop into the office we are based on 6 Bankside, Crosfield St, WA1 1UP. There is plenty of free parking and the kettle is always on.

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