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The Affordability of Buying Property in Oakham

Looking back at the 75th Anniversary of the D-Day landing a few months ago, it reminded me of the huge changes that have happened to Stamford and Rutland and more specifically the Oakham property market since WWII.  Back in 1946, the average wage in Oakham was just over £5 a week and to buy an average car would cost you just under £600, yet this is The Stamford and Rutland Property Blog, so... 

The average value of an Oakham property in 1946 was £1,510

In fact, in those 75 years, the average Oakham house price had doubled in price by 1961, then again in 1971, 1975, 1980, 1988, 2000 and 2006.  Now a lot of those increases (especially in the 1970’s) were caused by hyperinflation, yet since the start of the 21st century, inflation has been kept low and since the Credit Crunch (2008/9), whilst property values have been rising, they haven’t been at the rates experienced in the latter half of the 20th century.

Now what a property sells for is irrelevant, it’s whether someone can afford it…

Increases in Oakham property values have produced huge increases in equity for many Oakham homeowners and Oakham buy-to-let landlords, yet on the other side of the coin also making housing unaffordable for other people. The best measure of the affordability of housing is the ratio of Oakham property values to Oakham average earnings (i.e. salary/wages). The ratio works on the basis the higher the ratio, the less affordable properties are.

In 1997, the average value of an Oakham property was 5.3 times higher than the average annual wage in Oakham, in 2008 it peaked at 9.7, yet one year later it had dropped to 7.7.  Since then it has slowly risen, at one point reaching 10.3 and currently sits at 9.8 times higher.

It can be seen that even though property in Oakham became more affordable after the 2007/8 property crash (i.e. the ratio dropped), in subsequent years, with house values rising but earnings/salaries not keeping up, the ratio started to rise.  This has meant there has been a decline in affordability of property in Oakham over the last five years - so for those on particularly low incomes or with little capital, it unfortunately means that buying an Oakham home will rarely become an option.

Therefore, the demand for private rented properties in Oakham will continue to grow as many young Oakham people are deciding to rent instead of buy their own house (knowing when their parents pass away, the equity built up in their parents property will be passed down - and then they can buy in their 50’s and 60’s - just like it happens in Germany).

Yet, that is many decades away and with fewer Oakham people wanting or able to save up the 5% deposit required by mortgage lenders, more and more people are looking to rent.  Tie this in with the subtle shift in attitudes towards renting since the Millennium and less people jumping the on the bottom rung of the property ladder, this has driven rents and demand up in Oakham over the last few years.  Yet (and it’s an important proviso) the type, location and demands of Oakham tenants has changed over that same time frame meaning you can’t just make money from buy-to-let as easily as falling off a log like you did in the early 2000’s.

If you're considering selling your home or buying in Stamford and Rutland, please call me for a chat, we're here to help you!