Wednesday, 28 February 2018

Loughborough Home Owners Only Moving Every 16 Years


As I mentioned in a previous article, the average house price in Loughborough is 6.61 times the average annual Loughborough salary. This is higher than the last peak of 2008, when the ratio was 6.15. A number of City commentators anticipated that in the ambiguity that trailed the Bexit vote, property prices in the UK (and hence Loughborough) might drop like a stone. The point is - they haven't. 

Now it’s true that the market for Loughborough’s swankiest and poshest properties looks a little fragile (although they are selling if they are realistically priced) and, overall, Loughborough property price growth has slowed but the lower to middle Loughborough property market appears to be quite strong.

Scratch under the surface though, and a different long-term picture is emerging away from what is happening to property prices. Loughborough people are moving home less often than they once did. Data from the Office of National Statistics shows that the number of properties sold in 2016 is again much lower than it was in the Noughties. This is what the statistics show:

The Total Number of Property Sales Per Annum in Loughborough 
and the Charnwood Borough Council Area Since 1995 
1995 
1996 
1997 
1998 
1999 
2000 
2001 
2002 
2003 
2004 
2005 
2,604 
3,103 
3,365 
3,190 
3,280 
3,143 
3,400 
3,635 
3,471 
3,609 
2,963 











2006 
2007 
2008 
2009 
2010 
2011 
2012 
2013 
2014 
2015 
2016 
3,988 
3,939 
2,048 
2,198 
2,080 
2,157 
2,257 
2,595 
3,027 
2,901 
3,028 


Even though we are not anywhere near the post credit crunch (2008 and 2009) low levels of property sales, the torpor of the Loughborough housing market following the 2016 Brexit vote has seen the number of property sales in Loughborough and the surrounding local authority area level off to what appears to be the start of new long term trend (compared the Noughties). 

Interestingly, it was the 1980s that saw the highest levels of people moving homeNationally, everyone was moving on average every decade. Even though it was during the Labouadministration of the late 1970’s where the right to buy one's council house started, it was the Housing Act of 1980 that really got council tenants moving, as Thatcher’s Tory government financially encouraged council tenants to buy their council-rented homes - for which countless then sold them on for a profit and moved elsewhere. The housing market was awash with money as banks were allowed to offer mortgages as well as the existing building societies, meaning it made it simpler for Brits to borrow even more money on mortgages and to climb up the housing ladder.  

But coming back to today, looking at the property sales figures in the Loughborough area since 2010/11, a new trend of number of property sales appears to have startedInterestingly, this has been mirrored nationally. The reasons behind this are complexbut a good place to start is the growth rate of real UK household disposable income, which has fallen from 5.01% a year in 2000 to 1.68% in 2016Also, things have deteriorated since the country voted to leave the EU as consumer price inflation has risen to 2.7% per annum, meaning inflation has eaten away at the real value of wages (as they have only grown by 1.1% in the same time frame) 

With meagre real income growth, it has become more difficult for homeowners to accumulate the savings needed to climb up the housing ladder as the level of saving has also dropped from 4.26% of household income to -1.11% (i.e. people are eating into their savings). 

Next week I will be discussing how these (and other issues) has meant the level of Loughborough people moving home has slumped to once every 16 years. 

If you would like to discuss the Loughborough property market or chat about any potential investment please feel free to call us on 01509 260777 or email me j.lee@belvoir.co.uk



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