John Halman is Managing Director of Gascoigne Halman, an estate agent with seventeen offices in South Manchester and is the North West Regional Residential Spokesman for the Royal Institution of Chartered Surveyors.
At long last we have some brighter news from the economy with the recent announcement of a return to growth for the third quarter. Nobody is being bullish, recognising that it will take a little time for the economy to return to full health but, nevertheless, the recent growth and employment figures are a respite from the economic news we have had to endure over the last two or three years.
The recession has brought about a change for many people in the way we view our housing, but I wonder for how long? The rental market has been attracting ever more tenants with the majority of properties being let within a matter of days, if not hours. As a consequence we have seen a steady growth in rental values, but I wonder who is better off – the renter or the buyer?
This increase in the number of rental transactions should be set against the number of housing transactions. Nationally they are estimated to be at 580,000 in 2012 compared to 620,000 in 2011 and a staggering 1.6 million in 2007. It is now estimated that up to 20% of all households are in the private rental sector. A recent survey of Home Sale Network agents suggested that three quarters believe that the buyer is currently getting a better deal than the tenant with rents now offering substantially less value for money than mortgage repayment.
In our own areas of South Manchester, Cheshire and the High Peak we have seen a steady market during the course of 2012, albeit with a flat number of housing transactions. According to the latest Land Registry figures September showed average prices growing by 0.3% and 0.2% respectively in Cheshire East and Cheshire West making them almost level with their position last year. The rise in rents should also be compared to mortgage payments where the Halifax say that in 2007 it took up 40% of the average home owners take home pay whereas today this is only 26%. The reduction in the number of housing transactions would therefore seem to be less about affordability and more about a lack of confidence.
Many agents like us are currently speaking to a large number of people who want to move house but a combination of the gloomy outlook portrayed by the statistics together with the shortage of finance has resulted in them hanging fire.
The consequence is likely to be a release of considerable pent up activity at some stage in the future and it may just be that the better economic news that we have received recently will stimulate the market over the coming months and bring about the first increase in the number of transactions for some time. Whatever the outcome, the inexorable rise of property rents must eventually bring about a swing of the pendulum where more of those people who find themselves as tenants at present will elect to change their housing payments into a mortgage repayment rather than simply rent.