The Affordability of Buying Property in Baldock

269 rectangle.jpg

Looking back at the 75th Anniversary of the D-Day landing a few months ago, it reminded me of the huge changes that have happened to Baldock and more specifically the Baldock property market since WW2. Back in 1946, the average wage in Baldock was just over £5 a week and to buy an average car would cost you just under £600, yet this is a property blog, so…

The average value of a Baldock property in 1946 was £1,618

In fact, in those 75 years, the average Baldock 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 Baldock property values have produced huge increases in equity for many Baldock homeowners and Baldock 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 Baldock property values to Baldock 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 Baldock property was 4.1 times higher than the average annual wage in Baldock, in 2007 it peaked at 8.9, yet two years later it had dropped to 7.3 and since then has slowly risen to 11 times higher!

Baldock 269 Graph.png

It can be seen that even though property in Baldock 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 Baldock over the last five years – so for those on particularly low incomes or with little capital, it unfortunately means that buying a Baldock home will never become an option.

Therefore, the demand for private rented properties in Baldock will continue to grow as many young Baldock 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 Baldock 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 Baldock over the last few years. Yet (and it is an important proviso) the type, location and demands of Baldock 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 Baldock) or someone thinking of becoming a first time Baldock landlord looking for advice and opinion and what (or not to buy in Baldock), one source of information is the Baldock Property Blog or drop me an email or phone call and let’s start a conversation – I do not bite and I do not do hard sell … and maybe, just maybe, I could help you get better returns from your property portfolio.

If you are not ready to talk to us yet…….

 

Get your instant online Lettings valuation

Online Valuation Tool for LANDLORDS & INVESTORS – Do you know the current value of your property? Are you currently charging the correct rent and achieving the best yield or return on your investment?

Use our FREE Online Valuation Tool just for landlords to find out the potential rent and value of your property in just 60 seconds ……..JUST CLICK ON  THE PICTURE BELOW

Online Lettings Val Calculator

 

 

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s