The last decade (2010) was a tough one, so does it really matter that we never really got around to giving it a name? Some might say, whatever one calls it, coming to an end is the most fundamental job any teen (and I refer to all humans) could possibly do!
The last two decades have certainly been tumultuous. At least for this decade we have just started we can say, in a few decades time, things like “That style is so ’20s” and fellow humans will essentially know what you are talking about. If you come of age in this decade, you will be a ’20s child and we will discuss ’20s politics and ’20s style and all the things that hadn’t been created on the 31st December 2019; the time that two nameless decades ended and how finally there was something everyone in the UK could agree on: the name of the decade. Hey – it’s a start!
So, what has happened to the local Letchworth property market in the last nameless decade?
The average Letchworth property has risen in value from £229,500 to £385,300 in the last 10 years
Meaning each Letchworth homeowner has seen a profit of £299.62 per week for those last ten years. Rolling the clock back to the start of the last decade January 2010, and the economy were recovering from the Credit Crunch and the worldwide financial crisis. A decade on and things feel a little different. If you bought a Letchworth home over the past 10 years, things have certainly changed.
Letchworth property values rose 67.9% on average over the last decade yet taking inflation into account, they only rose in real terms by 34.8 per cent.
Compare that to a 42.5% rise in the ‘80s, a 13.2% drop in the ‘90s and rise of 62.8% in the 2000s in real terms. So, in real terms after inflation, there has been less of a house price growth in Letchworth in the past decade than the previous one.
On average, 1.12 million homes were sold each year last decade, although that was 26.4% less than the decade before (the noughties) when an average of 1.52 million properties were sold annually.
So, what are the underlying issues in the Letchworth (and wider UK) property market when, in real terms, property is 34.8% more expensive than a decade ago? Whilst the newspapers tell us first time buyers can’t get on the housing ladder and the housing market is in gridlock – what is the problem? Well I am a firm believer in the adage ‘bad news sells newspapers’ because the truth is something completely different as 32.7% of homes last year were bought by first time buyers compared with only 22.8% in 2009.
Yet, there are still issues; mainly a persistent lack of not building enough new homes which curtails the supply and choice of property; but stagnated wages, stiffer mortgage rules and homeowners not moving as much as previous generations are all contributing to the problem. In the UK, the number of homeowners who moved in 2019 was around 14% higher than in 2009, yet this was still just under 50% lower than the average for the noughties. It’s all up and down like a rollercoaster!
My thoughts for the future are based primarily on what will happen to interest rates. Throughout the last decade, the Bank of England base rate was 0.5% at the start and was cut to 0.25% in the Summer of 2016. Even with the increase to its current level of 0.75% in the Summer of 2019, it has made borrowing money on a mortgage very cheap indeed. Now it won’t be as bad as previous times when mortgage rates went up in the 1970’s and 1980’s (with mass repossession). Most borrowers have been stress tested on their affordability to mortgage rates of up to 6% – 6.5%, which would obviously squeeze household disposable incomes yet stop people losing their homes due to repossession.
The 2020’s will be an interesting decade – and if you want to be kept up to date with what is happening in the Letchworth (and wider UK) housing market – follow me and this blog to read similar articles to this one.