Recently 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 the rise was due to 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 Bingham 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, Bingham 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 Bingham tenants have to pay for their private rental properties in Bingham (i.e. not housing association or council tenants) rose by 2.4% throughout 2015, eating into most of the growth. 2015 wasn’t a one off either. In 2014, rents in Bingham rose by 1.3% (where salaries only rose by only 0.2%) However, it’s not all bad news for Bingham tenants, because in 2013 rents rose by 1.0%, (but salaries rose by 2.2%).
… and it must be noted that the private rents Bingham tenants have had to pay for Bingham property since 2005 are only 15.0% 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.
Whilst we in the UK stand at 64.8% homeownership, 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.