Last Sunday it was announced UK inflation had increased to its highest
level in a year. Inflation, as calculated by the Government’s Consumer Prices
Index, rose by 0.3% over the last 12
months. The report said the rise was due
to smaller falls in supermarket and petrol prices than a year ago. If you recall,
in early 2015, we had deflation where prices were dropping!
So what does this
mean for the Melton Mowbray property market ... especially the tenants?
Back in November, the Office of National
Statistics stated average wages only rose by 1.8% year on year, so when
adjusted for inflation, Melton Mowbray people are 1.5% better off in ‘real’
terms. Great news for homeowners, as their
mortgage rates are at their lowest ever levels and their spending power is
increasing, but the news is not so good for tenants.
The
average rent that Melton Mowbray tenants have to pay for their Private Rental
Properties in Melton Mowbray (i.e. not
housing association or council tenants) rose by 2.4% throughout 2015,
eating into most of the growth. 2015
wasn’t a one off either. In 2014, rents
in Melton Mowbray rose by 1.3% (where salaries only rose by only 0.2%) However,
it’s not all bad news for Melton Mowbray tenants, because in 2013 rents rose by
1.0%, (but salaries rose by 2.2%).
… and it must
be noted that the private rents Melton Mowbray tenants have had to pay for Melton
Mowbray property since 2005 are only 15.0% higher, not even keeping up with
inflation, which over the same time frame, rose at 27.8% (although
salaries were only 22.3% higher over the same time period)
More and more,
talking to 20 and 30 somethings who
rent – it’s a choice. Gone are the days
where owning your own property was a guaranteed path to wealth, affluence and
prosperity.
We in the UK
stand at 64.8% homeownership, in Europe’s powerhouses, only 52.5% of Germans
own a home and only 44% of Swiss people are homeowners. Looks like eating chocolate, sauerkraut,
renting and good economic performance go hand in hand. Yet, joking aside, home ownership has not always
been the rule in the UK. In 1918, only 23% of people were homeowners,
with no council housing, meaning in fact, 77% were tenants.
Tenants have choice, flexibility to
move, they don’t have massive bills when the boiler blows up, it’s a choice. Melton Mowbray rents are growing, but not as
much as incomes. To buy or not to buy
is an enormously difficult decision. For while buying a Melton Mowbray home is a dream
for the majority of the 20 and 30 something’s of Melton Mowbray have, it might
not leave them better off in the long run and it isn’t necessarily the best
option for everyone. That is why, demand
for renting is only going in one direction – upwards.
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