As I mentioned recently, the average house price in Rotherham is 5.39 times the average annual Rotherham salary. This is lower than the last peak of 2008, when the ratio was 5.42. A number of commentators anticipated that in the ambiguity that trailed the Brexit vote, UK (and hence Rotherham) property prices might drop like a stone. The point is this… they haven’t.
It is true the market for Rotherham’s swankiest and poshest properties looks a little fragile (although they are selling if they are realistically priced) and overall, Rotherham property price growth has slowed, but the lower to middle Rotherham property market appears to be quite strong.
A different long-term picture
Scratch under the surface though, and a different long-term picture is emerging away from what is happening to property prices.
Rotherham people are moving home less often than they once did. Data from the Office of National Statistics shows that the number of properties sold in 2016 is again much lower than it was in the Noughties. My statistics show…
Even though we are not anywhere near the low post credit crunch levels of property sales, the torpor of the Rotherham housing market following the 2016 Brexit vote has seen the number of property sales in Rotherham and the surrounding local authority area level off to what appears to be the start of a new long term trend (compared to 2000-2009).
Interestingly, it was the 1980s that saw the highest levels of people moving home.
During the 1980s, across the nation the average was that everyone would move house once a decade. Even though it was during the Labour administration of the late 1970s where the right to buy one’s council house started, it was the Housing Act in 1980 that that really got council tenants moving, as Thatcher’s Tory government financially encouraged council tenants to buy their council-rented homes – for which countless then sold them on for a profit and moved elsewhere.
The housing market was awash with money as banks were allowed to offer mortgages as well as the existing building societies, meaning it made it simpler for Brits to borrow even more money on mortgages and to climb up the housing ladder.
A new trend
However, it is clear that a new trend of the number of property sales appears to have started. Looking at the figures in the Rotherham area since 2010/11 this is obvious.
Interestingly, this has been mirrored nationally.
The reasons behind this are complex, but a good place to start is the growth rate of real UK household disposable income, which has fallen from 5.01% a year in 2000 to 1.68% in 2016.
Also, things have deteriorated since the country voted to leave the EU as consumer price inflation has risen to 2.7% per annum, meaning inflation has eaten away at the real value of wages (as they have only grown by 1.1% in the same time frame).
With meagre real income growth, it has become more difficult for homeowners to accumulate the savings needed to climb up the housing ladder as the level of saving has also dropped from 4.26% of household income to -1.11% (i.e. people are eating into their savings).
Next week I will be discussing how these (and other issues) have meant the level of Rotherham people moving home has slumped to once every 19.5 years.