As my regular readers will know, the most important consideration you will make before investing in property is the balance between annual return and capital growth. However, what affects those two things in Chelmsford are very varied and complex. The quantity of property and whether property is owner occupied, social housing, or private renting has a big difference on yield and capital growth.
In 2001, owner occupation of property in Chelmsford was 79%. The significant change over the decade (2001 to 2011) was within the rental sector, where the proportion of households privately renting increased from 5.8% to 11%, whilst those socially renting had decreased from 27% to 13%.
However, that doesn’t tell the full story, whilst there was a significant drop in the percentages (79% to 74%), the actual numbers tell a completely different tale. Of the 64,564 households in Chelmsford that were owner occupied in 2001, that figure had actually increased to 69,667 households being owner occupied, so why the huge drop in percentages?
In 2001, 3,779 houses were privately rented (5.8%) in Chelmsford but roll on another ten years and there are 7,621 households in Chelmsford that are privately rented (11%). The rapid increase in the number of households privately renting could be linked to the decline in the number of households getting on the housing ladder, usually by way of a mortgage. This is mainly because of the increasing difficulty for first time buyers being able to raise deposits for a mortgage, which hasn’t been helped by rising property prices. The average Chelmsford house price increased by 89% between 2001 & 2011. This has meant larger deposits, which are linked to the house price, were required. Also tighter lending requirements, especially in the wake of the recent credit crunch meant a larger percentage of the house value was required as a deposit, as 100% mortgages became a thing of the past.
Finally, declining wage growth and rising inflation over the period exerted pressure on household spending and eroded the value of savings. This means that households have needed to save for a longer period in order to provide a deposit.
If you would like to discuss anything further then please pop in and see me at our office on Duke Street, send me an email firstname.lastname@example.org or call me directly on 01245 330500