Blog Post

Renting or Buying & The Younger Generation In South Manchester

Jan 19, 2016, 10:10 AM by Tom Simper

rent-or-buy

I had a very interesting chat with a mature couple (in their early/mid 50’s) from Burnage the other day, whilst viewing one of our rental properties. The property wasn’t for them, but their daughter, who wanted a second viewing with her parents to get their approval. Now I know that isn’t the norm, but in this case the parents were going to act as guarantor so they also wanted to be sure it was ok for her. We got chatting about the property market in Levenshulme, Burnage, Withington and Didsbury and how they had bought their first property in the city just after they got married in the late 1980’s when they were in their early/mid 20’s. Anyway, we got chatting about how the younger generation of the UK seem to rent more than buy nowadays and from that the conversation covered a number of similar topics. I want to share the highlights of that conversation with you today.

Their daughter, like many 20 to 30 year olds in South Manchester, desperately wants to own her own property and the parents said he had read in the Telegraph recently, when you compare house prices to earnings, the current 20 to 30 something’s generation have to spend more of their salary in mortgage payments than any previous generation. The demand for private rental sector accommodation in Levenshulme, Burnage, Withington and Didsbury (M19 & M20 Postcode) is huge. There are in fact 10,545 private rental properties in M19 and M20 at the last count, impressive when you consider there are further 6,127 council houses. However, let us not forget 16,689 properties are owner occupied (9,803 with a mortgage).

Let us all be honest, private renting doesn’t have the stigma it had a few decades ago and it might surprise people that even though us Brit’s class ourselves as a nation of homeowners, roll the clock back 100 years and over 75% of people rented their own home (and it was all from private landlords as council housing only started to come in with the ‘homes for hero’s’ after the first World War). It might also surprise you to learn that at the time of the 1971 census, still more people rented than owned their own home.

Looking at the affordability issue, it is in fact cheaper to buy a property than rent, when one looks at starter homes for first time buyers. 95% mortgages have been available to first time buyers for over four years and whilst you could certainly find better properties in better condition in better areas, properties can be bought for as little as £100,000’s in certain areas of Manchester (meaning a modest deposit of £5,000 would be required).

When it came to affordability, I was able to tell them that when they bought their first house in Burnage in 1990, the ratio of house prices to salary was 4.1 to 1 ... and today’s ratio is 4.85 to 1!

I said I believed there had been a cultural attitude change towards renting property in Britain and that this quiet revolution was likely to be permanent. In the 60’s, 70’s and 80’s, saving for the deposit was everything and buying a house was everything. The younger generation today have far much more disposable income today than people had in the Callaghan and Thatcher years, but choose to spend it upgrading their mobile phones every 12 months, the newest tablet or PC, a newest 50” plasma LCD TV and two sun drenched holidays a year, than go without and save for a deposit.

Yes, there are horror stories of tenants living in rat infested properties with landlords who charge massive rents and don’t repair their properties. But that is very much the exception as most tenants rent homes of a quality they couldn’t ever to afford to buy. Twenty years ago, if you said you rented a property, you were considered the lowest of the low ... but now it’s the norm.

So with mortgage affordability being well within the bounds of most first time buyers, the level of deposit required for a 95% being surprisingly modest (starting off at c.£5,000 in Manchester as mentioned above) until we change our attitudes, the UK housing market is slowly but surely turning into a more European model, where people rent for long periods of their life, then eventually inherit their parents properties and subsequently become homeowners themselves, albeit later in life.

Hence, I cannot see the demand for decent, high quality rental properties ever dropping in the next 10 to 20 years, but only ever increasing as the population continues to soar. Just make sure you buy the right property, at the price, in the right location. If you want any advice then please feel free to contact me on either [email protected] or 0161 257 2441.

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