Do you remember the good old days of the 1970’s and 1980’s? The new generation may be surprised to learn certain facts such as the days when we had 24% inflation, 17% interest rates, a 3 day working week, 13% unemployment and power cuts! But hey…at least people could afford to buy their own home! So why aren’t the 20 and 30 year old’s buying in the same volume as they were 30 or 40 years ago?
A number of people blame the credit crunch and global recession of 2008, which had an enormous impact on the Walsall (and UK) housing market. For the most part, the 20-something first-time buyers who, faced with a tricky mortgage market, the perceived need for big deposits, reduced job security and diminishing disposable income, discovered it simply too challenging to get on to the Walsall property ladder.
However, my thoughts are that there are other factors at play other than the issue of raising a deposit – having adequate income and rising property prices in Walsall. Whilst these are important factors and obstacles to home-ownership, I also believe there has been a generational change in attitudes towards home-ownership in Walsall (and in fact the rest of the UK).
In 2011, the Halifax did a survey of thousands of tenants and 19% of tenants said they had no plans to buy a home for themselves. A similar survey of tenants, carried out by The Deposit Protection Service publicized, in late 2016, that figure had risen to 38.4%. It seems that many no-longer equate home-ownership to achievement and believe renting to be better suited to their lifestyle.
I believe renting is an essential part of the housing sector, and a significant proportion of the younger adult members of the Walsall population choose to be tenants as it better suits their plans and lifestyle. Local Government in Walsall (including the planners – especially the planners), land owners and landlords need an flexible residential property sector that allows the diverse choices of these Walsall based 20 and 30 year olds to be met.
If we applied the same percentages to the current 20,380 Walsall tenants in their 12,615 private rental properties, 7,826 tenants have no plans to ever buy a property – good news for the landlords of those 4,844 properties. Interestingly, in the same report, just under two thirds (62%) of tenants said they didn’t expect to buy within the next year.
Ok, so what does that mean about the other third? Will they be buying in Walsall in the next 12 months?
The short answer is, some will but most won’t. In fact, the Royal Institution of Chartered Surveyors (RICS) predicts that, by 2025, the number of people renting will increase, not drop. Yes, many tenants might have aspirations to buy, but the reality is different for the reasons set out above. RICS predicts the number of tenants looking to rent will increase by 1.8 million households by 2025, as increasing house prices continue to make home-ownership progressively more unaffordable for younger generations. So, if we applied this increase to Walsall, we will in fact need an additional 5,624 private rental properties over the next eight years (or 703 a year), meaning the number of private rented properties in Walsall is projected to rise to an eye watering 10,468 households.
If you are thinking of entering the Walsall Property Market then get in touch. I don’t bite and I certainly can’t charge you for my opinion…I’ll always tell you what you need to hear and if you are anywhere near the office in Orchard Road feel free to pop in (do make an appointment first as I’m usually out).
Phone: 01922 311016