Sussex Property Market View
Home Ownership Trends
I have been following with interest a recent thread on the Horsham Facebook page regarding the availability and affordability of homes in the area for first time buyers. A number of comments showed that young people and families in the area are renting rather than buying, whilst one commented that her grandparent purchased their Horsham home for £13,000 and it is now worth £500,000.
This thread and its comments from local people has got me looking into the property figures in more depth to establish what the current market looks like in the local area and I would like to share my findings with you.
It is no secret that we are an ageing population – increasing state pension ages is a sign that we are all now living longer. Someone who is currently 20 will be retiring at age 68 now according to the Government. As the age of the population changes we are starting to see a shift in home ownership as more people are now renting their homes.
This shift can be seen at a local level. At the start of the millennium there were 50,037 homes in Horsham District, 78% of these were privately owned, either outright or with a mortgage. This is real shift from the end of the Second World War where just a quarter of people owned their own home. After the war, people started to aspire to own their own home and home ownership started to grow to the levels we see today. However, is this level now starting to drop? Fast forward ten years from the millennium and there are more homes in the District at 54,923, however ownership has dropped to 74%.
Comparing the number of rental properties over the course of 10 years shows a different story, with a huge increase in the number of privately rented homes jumping from just 3799 homes to 6480 homes. This is an increase of over 70% showing just how many people are now tenants; renting has become a much more accepted way of living than it was back in the boom of the 1980s when people were almost considered second class citizens if they rented.
With the average property selling price standing at £370,000 year to date, compared to £268,520 ten years ago and the mortgage lending criteria tightened up, more people than ever are renting their home. Obtaining a 95% mortgage is hard work, although it can be done and on this basis, a brand new two bedroom, two bathroom apartment in the centre of Horsham at £265,000 would require a deposit of £13,250.
However, society is changing. We are becoming a nation of ‘want it now’ without the patience and willingness to make sacrifices to get what we want. With reduced pressure from parents and peers to purchase a home, many people are feeling it is not worth the effort of going without the latest technology or the best holidays to save for a deposit, particularly as renting is seen as a much more acceptable way of living now.
So, with fewer and fewer people able or less inclined to save up the level of deposit required to purchase their own home, they are choosing to rent properties instead. With these people delaying purchasing their own property and more people renting, the cost of renting has been driven up as supply drops with rents rising 7% in the South East over the last year alone.
So, the demand for rental properties is increasing and will continue to do so. With more and more of the home owners in the District reaching retirement age and paying off their own mortgages and being given the option to use pension funds to buy rental properties, we will continue to see the number rental properties grow to meet the increasing demand. Landlords now have a vast choice of buy to let products available to them - with rental yields currently averaging almost 5% and property prices continuing to rise, now is the time to take that step into property investment or increase your current property portfolio.
Posted on 1 February 2016
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With these updates, I follow the property market across Sussex and pass all our knowledge and findings on to you, the buyers, sellers, tenants and landlords of Sussex.
If you are thinking of buying a property for rental and would like to discuss this or if you see a property for sale and would like an opinion on the rental return and investment potential, email me at firstname.lastname@example.org or call me on 01903 742354.