No matter how many property developments are thrown at a future Tameside, living in the present depicts a lack of houses available. Add in to the equation a heightened number of first time buyers looking to get their foot onto the property ladder, mixed with an increased divorce rate separating households into more than one property, it means that property values will only continue to get higher and out of reach for the average working Tameside family, thus increasing the demand for rental properties.
After doing some research and finding some statistics released by the Government, the ratio of the lower quartile house prices to lower quartile gross annual salaries in Tameside has hit 5.73 to 1.
But what does this mean for Tameside landlords and homeowners and why exactly does it matter?
Well, if we take and order every property in Tameside by the value of those properties, the average value of the lower quartile properties (i.e. lowest 25%) would be £102,500. If we then did the same and ordered everyone’s salary in the same council area, the average of the lowest quartile (lowest 25%), the average salary of the lowest 25% is £17,889, thus dividing one with the other, we get the ratio of 5.73 to 1.
Regular readers of my blog will have seen my previous article where I deduced that an average Tameside property costs five times the average salary, which means that providing each home only has one wage earner in the property, the chances of a Tameside working family being able to afford their own home is slim, increasing the demand for rental properties in the borough.
The current existing affordability crisis of people wanting to buy their own home is the unavoidable outcome of decade on decade failure to sustain enough development for constructing new homes in Tameside, which in turn means there is simply not enough homes to match demand. Nevertheless, improving the affordability of properties in Tameside is not just simply down to building new homes. The council needs to ensure more properties are not only built and at a sustainable rate of development, but there needs to be a fine line matched of being able to build the right type and in the right locations to attract the lower-income working families, whilst refraining from over-stretching the current demands for local resources such as doctors, dentists and schools.
Looking at the historic nature of the ratio, it can clearly be seen in the graph below that this has been an issue for aspiring homeowners since the early to mid-2000’s.
Taking at look at the historical data however, those in the lower quartile of wage earners used to be housed by the local authority instead of buying. However, the vast majority of council houses were sold off in the 1980’s, meaning there are much fewer council houses today to house this generation.
A lifeline was given to many of the lower quartile working-class families to buy their own homes in middle 2000’s with 100% mortgages, but that fell apart courtesy of the credit crunch at the height of 2009. The difficulty for finding the 5% deposit is the challenging issue for these Tameside working-class families. So unless the Government magically allow 100% mortgages back, (and let’s face it, it’s hardly one of their biggest priorities when the Government is practically falling apart at the moment) the fact is, demand for rental properties will outstrip supply.
Great news for landlords of course, which heightens further after a flurry of recent reports highlighting Manchester as one of the best spots in the entire of the UK for average yields and yield growth.
So whilst renting in Tameside is becoming the safer option for these lower quartile working-class families, the number of rental properties needs to increase in order to meet the demand. So if you are a landlord or property in a position to help with this demand or are looking to do your part, get in touch and regardless of any of your current management agents, I’ll be more than happy to chat about sourcing you the best property to meet the increasing rental growth demand.