Years ago, it seemed that people moved all the time, friends of mine always seemed to be packing up and moving on to their next home. I actually read on the internet that the average UK person moves 8 times in their life – or every 9 to 10 years, however, from research I have carried out it shows things have changed considerably in Chelmsford in recent years, and interestingly, the trend is getting worse!
In Chelmsford, there are 69,667 properties. However, after we remove the 9,120 council houses, 8349 privately rented houses and 770 houses where the occupants live rent free, that leaves us with 51,428 owned properties, be that 100% outright, with a mortgage or shared ownership. This means 73% of the properties in Chelmsford are occupied by the owner (the national average is interestingly 64.2%) but the number of people who have sold and moved house in Chelmsford, over the last 12 months, has only been 2588. This means on these figures, the homeowners of Chelmsford are only moving on average every 19.8 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.
So what does this all mean for Chelmsford buy to let landlords? Well, for the same reasons existing Chelmsford homeowners aren’t moving, less ‘twenty something’s’ are buying their first home as well. Chelmsford 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?
Interestingly, 11.9% of Chelmsford properties are privately rented, double it was ten 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?