Affordability is one of the hottest topics in the property market at the moment. It is more expensive to buy a home now because of rising prices and increases in interest rates. However, there is still a lot of activity. What we want to do today is have a look at how affordability has changed recently. It can help you to decide what type of areas to consider. Plus, if you are thinking about property investment in Lambeth, you’ll find some of the info to be very useful.
What is the biggest change?
New data from Rightmove takes a look at affordability for first time buyers in different areas. The biggest change here is that coastal locations have seen a massive decline in how affordable they are to FTBs. Strong house price growth in these parts of the country was massively ahead of salary growth. As a result, it has become harder for people to buy their first home near the coast.
The top ten areas with the biggest decline in affordability during the pandemic include five locations on or close to the coast. At the very top of the list is the Adur district in West Sussex. It is situated between Hove and Worthing, including smaller towns like Shoreham-by-Sea, Southwick, and Lancing. Before the pandemic it would cost a first time buyer 8.7 times the average salary to buy a home. Now the average asking price is 11.6 times.
The second area with a big decline in affordability is Hertsmere in Hertfordshire. Here the average asking price rose to 11.8 times the average salary. While it is higher than Adur, it rose from 9.6 times, so the overall increase is less.
Across the UK the average first time buyer home will now cost 7.2 times the average salary. This has increased from 6.9 times in 2019. The amount of money FTBs need for a 10% deposit is also up by 17% on average.
Have some places become more affordable?
As we said above, the data has some good news if you are looking at property investment in Lambeth. The area has actually seen an improvement in affordability so it will now cost first time buyers 11.8 times their average salary. This has come down from 13.3 times before the pandemic.
A number of other locations in London and the commuter belt have seen affordability improve. For example, Ealing has fallen from 11.7 times salary to 10.3. Reading is down to 6.8 times from 7.8.
Why the change?
Coastal areas have become less affordable now for a number of reasons. Most notable is the increase in values due to the surge in demand. These spots have become some of the most popular with more people deciding they want to live near the coast to enjoy the great outdoors. It is a direct response to the wave of lockdown restrictions and people deciding city living is not for them anymore. Plus, people who can work remotely now can choose to live where they want, so why not near the sea and beaches?
The problem with affordability in coastal areas is also worse for FTBs because of the competition. They often have to compete with people who are looking to downsize and move or buyers who are taking their second or third step on the ladder. Usually these people are in better positions financially.
Ask us if you are thinking about property investment in Lambeth
Finefair Ltd is a team that can appreciate how great properties are as investments. We work with countless landlords to help them get an excellent income from these assets. At the same time we want to help reduce the workload and the costs you need to pay.
The core of our service is arranging guaranteed rent. These are schemes with local councils that can give easy access to tenants, set monthly incomes with no voids, and savings on management and marketing. As a result, they can be a great alternative to private letting.
So, if you want to look at property investment in Lambeth, we suggest you also consider our services. You can contact us to learn more.
