How EU Migration has changed the Nottingham Property Market...

The argument of migration and what it does, or doesn’t do, for the country’s economic wellbeing is something that has been hotly contested over the last few years and more so recently. In my article today, I want to talk about what it has done for the Nottingham Property market.

Before we look at Nottingham though, let us look at some interesting figures for the country as a whole. Between 2001 and 2011 971,144 EU citizens came to the UK to live and of those, 171,164 of them (17.68%) have bought their own home. It might surprise people that only 5.07% of EU migrants managed to secure a council house. However, 676,091 (69.62%) of them went into the private rental sector.  This increase in population from the EU has no doubt added great stress to the UK housing market.

Looking at the figures, the housing market as a whole is undoubtedly affected by migration but it has been the private rented housing sector, especially in those areas where migrants come together that is affected the most.  Indeed I have seen that many EU migrants often compete for such housing not with UK tenants but with other EU migrants. In 2001, 3.68 million rented a property from a landlord in the UK.  Ten years later in 2011, whilst EU migration added an additional 676,091 people renting a property from a landlord, there were actually an additional 4.14 million people who became tenants and were not EU migrants, but predominately British!

As a landlord it is really important to gauge the potential demand for your rental property, especially if you are a landlord who buys property in areas popular with the Eastern European EU migrants.  To gauge the level of EU migration (and thus demand), one of the best ways to calculate the growth of migrants is to calculate the number of people who ask for a National Insurance number (which EU members are able to obtain).

Interestingly in Nottingham, migration has risen over the last few years. For example, in 2005 there were 4,692 migrant National Insurance Cards (NIC) issued. However, in 2014 this increased to 6,175 NIC’s. If the pattern of other migrations since WW2 continues, over time there will be an increasing demand for owner occupied property, which may affect the market in certain areas of high migrant concentration. On the other hand over time some households move into the larger housing market, reducing concentrations and pressures.

In essence, migration has affected the Nottingham property market; it couldn’t fail to because of the additional 27,804 working age migrants that have moved into the Nottingham area since 2005. However, it has not been the main influence on the market. Property values in Nottingham today are 11.2% lower than they were in 2005. According to the Office of National Statistics, rents for tenants in the East Midlands have only grown on average by 0.66% a year since 2005.... I would say if it wasn’t for the migrants, we would be in a far worse position when it came to the Nottingham property market. This was backed up by the then Home Secretary Theresa May back in 2012 - more than a third of all new housing demand in Britain is caused by inward migration and there is evidence that without the demand caused by such immigration, house prices would be 10% lower over a 20 year period.

If you want to know more about the Nottingham property market, please pop into our property lounge for a drink or chat or email me on jaclyn.bartlett@centrickproperty.co.uk

Nottingham – The 10 year Time Bomb on Home Ownership

Many people think the British obsession with owning your own home started with Thatcher in the early 1980s, when she allowed council tenants to buy their council houses under the right to buy scheme. However, the growth actually started just after the Second World War. Looking at the country as a whole in 1951 30% of residential property was owner occupied then, every ten years that rose incrementally to 39% by 1961; 51% by 1971; 58% by 1981 and 68.07% by 2001, by 2013/14 the figures dropped to 63% and continue to drop today.

Young adults tend to start to think about settling down and moving out of the family home in their early-mid twenties.  After a couple of years, they will have a choice of either buying their first house (albeit with a mortgage) or decide to privately rent for the long term (the Council House waiting list is measured in decades at the moment!). The ratio of people owning a house with a mortgage verses privately renting is an extremely important guide as to the behaviour of people in respect of their housing needs and what their attitude to renting vs buying is.  With that in mind, within the next ten years, I predict that more people will privately rent in Nottingham compared to those who purchase a property with a mortgage, meaning that the British love affair of property ownership will wane as the decades roll on.

This is a really important change in attitude to the way we live.  Understanding where the demand of tenants is going to come from in the coming decade is just as important as understanding the supply side of the buy to let equation, such as the number of properties built in the town, Nottingham property prices and Nottingham rental prices.

In the Nottingham City Council area as a whole there are 27,300 households that are privately rented via a landlord or letting agency and there are 32,501 households that are owned with a mortgage, so my prediction appears to be outrageous. However, when we look deeper 15,109 of those 32,501 households are 35 to 49 year olds and 8,328 are households of 50 to 64 year olds. I would expect all the 50+ years to be paying their mortgage off as they enter retirement as I would with some of the people in their mid/late 40’s. 

Meanwhile in the 25 to 34 age range (the age group most people bought their first home in the 1970s/80s/90s) only 6,600 of the 16,542 households occupied by those 25 to 34 year olds are owner occupiers with mortgages, 9,942 households are privately rented. This means only 39.8% of 25 to 34 year olds have bought their house (with a mortgage). Twenty years ago, that would have a much higher percentage of between 75% and 85%.

It can be concluded therefore that as the older generation approach retirement and pay their mortgages off, the younger generation; aren’t jumping on the property ladder like they were 20 or 30 years ago. The private rental sector will take up the slack as more and more people need a roof over their head and will rent rather than buy a property. With the new build by local authorities and housing associations nowhere near the number of houses they were building in the 1950s, 60s and 70s, the private landlord appears to have good demand for their rental properties for many decades to come.

This will create a polarisation in the housing market between those, mostly older householders, who own outright and those, mostly younger householders, who rent. Our housing market is very much turning into the European model. However, all is not lost the younger generation will inherit their parents properties, which in turn will enable them to buy albeit later on in life.

If you are a landlord or thinking of become a landlord, and would like advice please email me, Jaclyn.bartlett@centrickproperty.co.uk