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.