investing in the Burton property market for the first time.
As my regular readers will know, the most important consideration you will make before investing in property is the balance between annual return and capital growth. However, what affects those two things (yield and capital growth) in Burton are very varied and complex. The quantity of property and whether property is owner occupied, social housing or private renting has a big difference on yield and capital growth.
The growth in home ownership in Burton, which started in the 1950’s, continued through the 1960s and, by 1971, the proportion of owner occupiers was equal to those renting. By 1981, 62% of Burton households were owner occupied and, for the first time, the proportion of rentals was less than home owners but by 1991, it reached 71%.
Roll into the 21st Century and in 2001, there was a slight increase in the tenure structure in Burton, as owner occupation increased to 75.3%. The significant change over the decade (1991 to 2001) was within the rental sector, where the proportion of households privately renting increased for the first time since 1918. 6.9% of households were privately renting in 2001 in Burton, while those socially renting had decreased to 14%.
Between 2001 and 2011, the number of households in Burton rose from 42,717 to 47,251, an increase of 10.6%. but the percentage of households that were owner occupiers in Burton dropped significantly to 69.6% (from the previously quoted 75.3% in 2001).
However, that doesn’t tell the full story, because whilst there was a significant drop in the percentages (75.3% to 69.6%), the actual numbers tell a completely different tale. Of the 32,206 households in Burton that were owner occupied in 2001, that figure increased to 32,879 households being owner occupied .. so why if the number of homeowner households had gone up, why the huge drop in percentages?
In 2001, 2,968 houses were privately rented (6.9%) in Burton, but roll on another ten years and there are 6,519 households in Burton that are privately rented (13.8%). The rapid increase in the number of households privately renting in Burton could be linked to the decline in the number of households getting on the housing ladder, usually by way of a mortgage. This is mainly because of the increasing difficulty for first time buyers being able to raise deposits for a mortgage, which haven’t been helped by high property prices.
The average Burton house price for those who were first time buyers increased by 91.3% between 2001 and 2011. This meant larger deposits which are linked to the house price, were required. Also tighter lending requirements, especially in the wake of the recent credit crunch meant a larger percentage of the house value was required as a deposit, as 100% mortgages became a thing of the past.
Finally, declining wage growth and rising inflation over the period exerted pressure on household spending and eroded the value of savings. While in 2001 the average house price in Burton was four and half times the average gross wage, by 2011 the average Burton house price was seven times larger than the average wage. This meant households needed to save for a longer period in order to provide a deposit.
Having this knowledge of the Burton property market to hand enables me to give to my landlords the best advice on what (or not) to buy for buy to let. Irrespective of you are a landlord with another agent or someone who is thinking of dipping their toe in the water for the first time as a buy to let landlord, if you want to pick my brains on any matter to do with the Burton property market, please feel free to pop through the door of our offices on the High Street or call me on 07973 666229.
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