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.