Ashford House Prices Outstrip Wage Growth by 9.52% since 2007

Are wages failing to keep up with property prices?

 

A recent report by the Yorkshire Building Society stated that 54% of the country saw incomes rise faster than property prices over the last 10 years. The report found that, in the Midlands and North, salaries had outperformed property prices since 2007, whilst in other parts of the UK, particularly the South, the opposite happened with property prices outperforming salaries quite markedly.

As regular readers of my blog know, I always like to find out what has happened locally in Ashford. To talk of North and South is not specific enough for the local market. Therefore I first looked at what has happened to salaries in the Ashford area since 2007. Looking at the Office of National Statistics (ONS) data for Ashford Borough Council, some interesting figures came out…AVERAGE REGIONAL SALARIES YEAR BY YEARAverage Slaries since 2007

Salaries in Ashford have risen by 20.05% since 2007 (although it’s been a bit of a rollercoaster ride to get there!) – interesting when you compare that with what has happened to salaries regionally (an increase of 15.87%) and nationally, an increase of 17.61%.

Next, I wanted to see what had happened to the property prices locally over the same time frame of 2007 and today. Net property values in Ashford are 29.57% higher than they were in late 2007 (not forgetting their dip in 2008 and 09). Therefore…

Property values in the Ashford area have increased at a higher rate than wages to the tune of 9.52% – so Ashford is in line with the regional trend

Changes in AShford house prices and salaries since 2007

All this is important, as the relationship between salaries and property values is the basis on how affordable property is to first (and second, third etc.) time buyers. It is also vitally relevant for Ashford landlords as they need to be aware of this when making their buy-to-let plans for the future. If more Ashford people are buying, then demand for Ashford rental properties will drop (and vice versa).

As I have discussed in a few recent articles in my blog, this issue of ‘property-affordability’ is a great bellwether to the future direction of the Ashford property market. Now of course, it isn’t as straightforward as simply comparing salaries and property prices, as that measurement disregards issues such as low mortgage rates and the diminishing proportion of disposable income that is spent on mortgage repayments.

On the face of it, the change between 2007 and 2017 in terms of ‘property-affordability’ hasn’t been that great. However, look back a further 10 years to 1997, and we can see a rather different story. Nationally, the affordability of property more than halved between 1997 and today. In 1997, house prices were, on average, 3.5 times workers’ annual wages, whereas in 2016 buyers could typically expect to spend around 7.7 times annual wages on purchasing a home.

This issue of a lack of home-ownership has its roots in the 1980’s and 90’s. It can be quite hard as a tenant to pay your rent and save money for a deposit at the same time, meaning for many Ashford people, home ownership isn’t a realistic goal for the near-future. Earlier this year, the Government published proposals to combat the country’s ‘broken housing market’, setting out plans to make renting more affordable, whilst increasing the security of rental deals and threatening to bring tougher legal action to combat bad landlords.

This is all great news for Ashford  tenants and decent law-abiding Ashford landlords (and indirectly owner-occupier homeowners). Whatever has happened to salaries or property prices in Ashford in the last 10 (or 20) years … the demand for decent rental property keeps growing.

If you want a chat about where the Ashford property market is going – please read my other blog posts at www.ashfordpropertynews.co.uk or drop me a quick email, like many other Ashford landlords recently.