Tuesday, 23 August 2016

Population in the Harlow area set to rise to 100,800 by 2036

Harlow faces a predicament. The population is growing and the provision of new housing isn’t keeping up. With the average age of a Harlow person being 38.2 years (compared to the East of England average of 40.2 years old and the national average of 39.4 years of age), the population of Harlow is growing at an alarming rate. This is due to an amalgamation of longer life expectancy, a fairly high birth rate (compared to previous decades) and high net immigration, all of which contribute to housing shortages and burgeoning house prices.

My colleagues and myself work closely with Durham University and they have kindly produced some statistics specifically for the Harlow Council area. Known as the UK’s leading authority for such statistics, their population projections make some startling reading…

For the Harlow Council area ... these are the statistics and future forecasts

2016 population  86,134
2021 population  90,087
2026 population  93,884
2031 population  97,396
2036 population  100,873

The normal ratio of people to property is 2 to 1 in the UK, which therefore means...

We need just over 7,000 additional new properties to be built
in the Harlow Council area over the next 20 years.

Whilst focusing on population growth does not tackle the housing crisis in the short term in Harlow, it has a fundamental role to play in long-term housing
development and strategy in the town. The rise of Harlow property values over the last six years since the credit crunch are primarily a result of a lack of properties coming onto the market, a lack of new properties being built in the town and rising demand (especially from landlords looking to buy property to rent them out to the growing number of people wanting to live in Harlow but can’t buy or rent from the Council).

Although many are talking about the need to improve supply (i.e. the building of new properties), the issue of accumulative demand from population growth is often overlooked. Nationally, the proportion of 25-34 year olds who own their own home has dropped dramatically from 66.7% in 1987 to 43.8% in 2014, whilst 78.2% of over 65s own their own home. Longer life expectancies mean houses remain in the same hands for longer.

The swift population growth over the last thirty years provides more competition for the young than for mature population.  It might surprise some people that 98% of all the land in the UK is either industrial, commercial or agricultural, with only two percent being used for housing, which means one could propose expanding supply to meet a expanding population by building on green belt – that most Politian’s haven’t got the stomach to tackle, especially in the Tory’ strongholds of the South of England, where the demand is the greatest. People mention brownfield sites, but recent research suggests there aren’t as many sites to build on, especially in Harlow that could accommodate 7,000 properties in the next 20 years.

In the short to medium term, demand for a roof over of one’s head will continue to grow in Harlow (and the country as a whole). In the short term, that demand can only be met from the private rental sector (which is good news for homeowners and landlords alike as that keeps house prices higher).

In the long term though, local and national Government and the UK population as a whole, need to realise these additional millions of people over the next 20 years need to live somewhere. Only once this issue starts to get addressed, in terms of extra properties being built in a sustainable and environmentally friendly way, can we all help create a socially ecological prosperous future for everyone. For more thoughts on the Harlow Property market, please visit the Harlow Property Market Blog

Wednesday, 17 August 2016

Rents in Harlow rise by 3.0% in the last year

I was reading the Sunday Papers, as is my want and, when reading the financial pages, 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 it had risen to the those ‘heady’ levels by 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 Harlow 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, Harlow 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 Harlow tenants have to pay for their Private Rental Properties in Harlow (i.e. not housing association or council tenants) rose by 3.0% throughout 2015, eating into most of the growth.  2015 wasn’t a one off either.  In 2014, rents in Harlow rose by 1.9% (where salaries only rose by only 0.2%) However, it’s not all bad news for Harlow tenants, because in 2013 rents rose by 0.9%, (but salaries rose by 2.2%).

… and it must be noted that the private rents Harlow tenants have had to pay for Harlow property since 2005 are only 18.3% 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.    I know keep mentioning Europe, but some of the highest levels of home ownership are in Romania at 96.1%, Hungary at 88.2% and Latvia at 80.9% (none of them European economic dynamos) and even West European countries like Spain at 78.8% and Greece at 74% (and we know both of those countries are on their knees, riddled with national debt and massive youth unemployment).

At the other end of the scale, whilst 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.  Harlow rents are growing, but not as much as incomes. To buy or not to buy is an enormously difficult decision.   For while buying a Harlow home is a dream for the majority of the 20 and 30 something’s of Harlow 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.

Thursday, 11 August 2016

Harlow Property Values rise by 0.7% month on month

I do like to have a coffee at Esquires Coffee on Water Lane in Harlow. Whilst in there, a suited gentleman approached me and asked if I was the person who wrote the newsletters about the Harlow property market. We ended up having an interesting chat about the local property market, as he was concerned his daughter would never be able to buy her own property, a place in Harlow she herself can call home.

My latest analysis, using the Land Registry and Office of National Statistics, shows that overall, month on month, Harlow property values increased by 0.7%. The year on year figures showed the value of residential property in Harlow has increased by 10% in the year to the end February 2016, taking the average value of a property in the council area to £234,600.

It gets even more interesting when we look at the last few months’ figures and see the patterns that seem to be emerging.

January 2016        - a rise of 0.7%
December 2015  - a rise of 1.1%
November 2015  - a rise of 1.1%

We have talked in many recent articles about the lack of properties being built in Harlow over the last 30 years. This lack of new building has been the biggest factor that has contributed to Harlow property values still being 256.85% higher than in 1995. At the risk of repeating myself, until the Government addresses this issue, and allows more properties to be built, things will continue to get worse as the UK population grows at just under 500,000 people a year (which is a combination of around 226,000 people because of higher birth rates/people living longer and 259,000 net migration) whilst the country is only building 152,400 properties a year – no wonder demand is outstripping supply.

Another reason intensifying the current level of property values in Harlow, is the fact that people aren’t moving home as much as they used to, meaning fewer properties are coming onto the market for sale, so in consequence, there is a lack of choice of property to buy, meaning people thinking of moving are discouraged from putting their property on the market ... thus perpetuating the problem, as the scarcity of possible properties to buy in order to move also deters people from offering their home for sale. This unevenness between demand from would-be purchasers and the number of properties coming on to the market for sale is causing pressures in Harlow (and the rest of the UK).


So what of the future of the Harlow property market and this man’s daughter? I firmly believe the property market in Harlow and the country as a whole is changing its attitude about homeownership. Back in the 1960’s, 70’s, 80’s and 90’s, getting on the property ladder was everything. Since the late 1990’s, we as a country (in particular, the young) have slowly started to change our attitude to homeownership. We are moving to a more European model, where people choose to rent in their 20’s and 30’s (meaning they can move freely and not be tied to a property), then inherit money in their 50’s when their property owning parents pass away, allowing them to buy property themselves ... just like they do in Germany and other sophisticated and mature European counties, meaning his daughter will end up owning property, just later in life than we did. So, whatever the vote on the 23rd of June, if you think about it, we might be more European than we think!