Friday, 24 April 2015

70% of New Households Will Be One Person Households in 2026

Here's two new housing market predictions that I thought may interest you and will very probably impact on the Sunderland rental market in the future...

1. 70% of New Households Will Be One Person Households in 2026

Official projections suggest that the number of households in England will rise to 26 million by 2026 - an increase of between 220,000 and 225,000 new households each year

It's predicted that around 70% of these new households will be one person households - that's 154,000 more one person households each year

With just under 120,000 households currently in Sunderland representing 0.54% of the total number of households in England, assuming the increase is spread equally across the England that would equate to an increase of 20,000 households to 140,000 households in Sunderland by 2026


Clearly the growth in households is unlikely to be spread evenly throughout England, with the South East likely to experience significantly more of an increase than in the North East but even if Sunderland experienced just 50% of the predicted increase in households that would still need over 900 new properties to be built each year to cope with demand! 

It does also mean that whilst Sunderland currently has an oversupply of 2 bedroom flats and apartments, if the predictions on the increase in one person households are true, demand may increase to such an extent that this oversupply is no longer a problem (as a one person household doesn't necessarily just want one bedroom...)

2. The average age of a first time buyer is now around 33 years old and the average deposit is £26,000

Many of those new households are not going to be able to access property ownership using the traditional mortgage market route to first-time buying...so more than likely they will end up renting...

The size of deposit has doubled since 2007 when it averaged £13,000 or 37% of annual income, to £26,000 which equates to 79% of annual income (Source: CML Regulated Mortgage Survey)

Sunderland is one of the more affordable places to live in the UK with an affordability ratio of 1 to 4.1 (calculated as the ratio of the average Sunderland sold price of £85,092 to the average salary of £20,644) so with this in mind Sunderland may not be as badly affected by this prediction as some of the more expensive areas in the Southeast

That said, saving up a 5% deposit on their first home may be still beyond the reach of many Sunderland residents (especially if as the first prediction suggest, people are buying on their own rather than as a couple) given this would still require savings of over £4,000 and that's not including moving & legal expenses, mortgage arrangement fees etc

I thought I'd share these two predictions as they do offer a glimmer of positivity to counter the current Landlord-bashing trend that seems to be all the rage at the moment 

I'd hope that Landlords could take the long term view and see that once the political interference has calmed down a little, they can take reassurance in that the long term prospects from property investment in Sunderland remain good, as more people are renting and will continue to rent (very probably for their whole lives) and given the acute shortage of housing to cope with anticipated demand, the value of their property investments are likely to rise

For a frank, no obligation chat about any aspect of the Sunderland property market give me a call on 0191 567 8577 or email neil.whitfield@belvoirlettings.com

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