The
average value of a Stoke-on-Trent property in 1946 was £690
In fact, in those 75 years, the average Stoke-on-Trent
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 Stoke-on-Trent property values
have produced huge increases in equity for many Stoke-on-Trent homeowners and Stoke-on-Trent
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 Stoke-on-Trent property values to Stoke-on-Trent 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 Stoke-on-Trent
property was 2.4 times higher than the average annual wage in Stoke-on-Trent,
in 2005 it peaked at 4.4, yet three years later it had started to drop to 3.8
in 2011. Since then has slowly risen back to 4.4 times higher.
It can be seen that even though property in Stoke-on-Trent
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 Stoke-on-Trent over the last five years
- so for those on particularly low incomes or with little capital, it
unfortunately means that buying a Stoke-on-Trent home will never become an
option.
Therefore, the demand for private rented
properties in Stoke-on-Trent will continue to grow as many young Stoke-on-Trent
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 Stoke-on-Trent 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 Stoke-on-Trent over the
last few years. Yet (and it’s an important proviso) the type, location and
demands of Stoke-on-Trent 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 Stoke-on-Trent) or
someone thinking of becoming a first time Stoke-on-Trent landlord looking for
advice and opinion and what (or not to
buy in Stoke-on-Trent), one source of information is the Stoke-on-Trent
Property Blog http://stokeontrentproperty.blogspot.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.
