In this week’s article on the Bexhill property market we talk about the affordability of buying a home in Bexhill since 1997 and how these changes have meant the demand for private rental properties in Bexhill will continue to grow for the foreseeable future.
The Affordability of Buying Property in Bexhill
Looking back at the 75th Anniversary of the D-Day landing a few months ago, it reminded me of the huge changes that have happened to Bexhill and more specifically the Bexhill property market since WW2. Back in 1946, the average wage in Bexhill was just over £5 a week and to buy an average car would cost you just under £600, yet this is a property blog, so…
The average value of a Bexhill property in 1946 was £1,201
In fact, in those 75 years, the average Bexhill house had doubled in price by 1961, then again in 1971, 1975, 1980, 1988, 2000 and 2006. Now a lot of those increases
(especially in the 1970’s) were caused by hyperinflation, yet since the start of the 21st Century inflation has been kept low and since the Credit Crunch (2008/9), whilst property values have been rising, they haven’t been at the rates experienced in the latter half of the 20th Century.
Now what a property sells for is irrelevant, its whether someone can afford it.
Increases in Bexhill property values have produced huge increases in equity for many Bexhill homeowners and Bexhill buy to let landlords, yet on the other side of the coin also making housing unaffordable for other people. The best measure of the affordability of housing is the ratio of Bexhill property values to Bexhill average earnings (i.e. salary/wages). The ratio works on the basis the higher the ratio, the less affordable properties are.
In 1997, the average value of a Bexhill property was 5.8 times higher than the average annual wage in Bexhill, in 2008 it peaked at 10.6, yet one year later it had dropped to 9.2 and since then has slowly risen to over 12 times higher!
Even though property in Bexhill became more affordable after the 2007/8 property crash (i.e. the ratio dropped), in subsequent years, with house values rising but earnings/salaries not keeping up, the ratio started to rise.
This has meant there has been a decline in affordability of property in Bexhill over the last five years – so for those on particularly low incomes or with little capital, it unfortunately means that buying a Bexhill home will never become an option.
Therefore, the demand for private rented properties in Bexhill will continue to grow as many young Bexhill people are deciding to rent instead of buy their own house (knowing when their parents pass away, the equity built up in their parents property will be passed down – and then they can buy in their 50’s and 60’s – just like it happens in Germany).
Yet, that is many decades away and with fewer Bexhill people wanting or able to save up the 5% deposit required by mortgage lenders, more and more people are looking to rent. Tie this in with the subtle shift in attitudes towards renting since the Millennium and less people jumping the on the bottom rung of the property ladder, this has driven rents and demand up in Bexhill over the last few years. Yet (and it’s an important proviso) the type, location and demands of Bexhill tenants has changed over that same time frame meaning you can’t just make money from buy to let as easily as falling off a log like you did in the early 2000’s.
If you are an existing landlord with us (or even another agent in Bexhill) or someone thinking of becoming a first time Bexhill landlord looking for advice and opinion and what (or not to buy in Bexhill), one source of information is the Bexhill Property Blog just click on bexhillpropertyblog.com – or drop me an email or phone call and let’s start a conversation – I don’t bite and I don’t do hard sell … and maybe, just maybe, I could help you get better returns from your property portfolio. My name is Patrick Stappleton, Author of the Bexhill Property blog. END
THE STATS. They come from the lovely Office of National Stats and they are for your local Council. The 1946 value is taking the ZPG current value of a property today in Bexhill and then taking it back 10 years to allow the seismic change in the UK figures, then applying the national change from 1946 to 2008 …