Is this the end for first time buyers in Bournemouth?

The Bournemouth property market is at an all-time high. Coming out of January with the highest property growth of any UK town (2.9% growth compared to the UK average of 0.2%), and property transactions the highest they have been for many years. All the signs point to a great few years of investment and capital growth in and around Bournemouth. But is all of this growth pushing first time buyers out of the market?

I had the pleasure of meeting one of my younger readers of the blog, a university student studying multimedia who wanted to interview me for a TV news project he was doing. Talking about the local property market, in particular how it has changed over the last 20 years, Jack raised some very good questions. Yes, the market growth is certainly great for investors and home owners who have a growing asset, but what effect is this having on people looking to get on the property market – the first time buyers.

Over the last 20 years, the rental sector has changed dramatically. The private rental sector has doubled, and now makes up around 25% of the property market. Add to this 10% of properties belong to the social housing sector, that is a large proportion of the market which is unavailable to the home owner. In number terms, around 42,000 properties out of the 119,000 in the Bournemouth and surrounding areas makes up rental accommodation.

When you look at wage growth over the last few years, there has been a steady rise of around 2.5%-3.5% Compare that with the growth of house prices, around 8% per year, you can see the gap widening. Put this together with tougher lending and higher deposits, it’s getting increasingly difficult to get on the market.

Having said that, is the growth of the rental sector the result of pricing first time buyers out of the market, or is it more because of a change in social and lifestyle choices?

If we go back a generation there was almost an expectation that you would get a job (or a few) save hard for a few years and then leave home to purchase a house. All the luxuries would come later down the line. These habits are changing; everyone wants the latest ‘must have’ and we are spending more and more money on different things. There is no more save hard and go without to get a deposit. People now are starting to prefer to rent, having the flexibility to move, travel and explore the world. I’m not just talking students either, which of course do account for a large proportion of the rental growth in Bournemouth. I spoke recently about the 2,000 jobs created every year from the technology business growth in Bournemouth. Typically young professionals, the majority of these will be renting because it means they can move straight to the new area without any lengthy house purchase delays.

How hard is it to get on the ladder then?

There are a few government schemes available, such as Help To Buy as well as a renewed focus on delivering more affordable homes, albeit mostly in the outer towns of Bournemouth. Getting on the market is absolutely still achievable, but you have to be realistic about it. When we talk about getting on the ladder, you cannot just jump into a 3 bedroom semi-detached house – not unless you have £60,000 deposit plus purchase costs and a great wage to pay off that £200,000 loan.

For students leaving university getting their first job, the average salary is around £22,000. With some strict saving for 2 years, or a little help from the bank of mum and dad, it’s achievable to raise the deposit required for say, a 2 bedroom flat just outside of the town centre which costs around £120k-£130k.

For those determined to get onto the property ladder, it’s hard, very hard. But with some determination it’s achievable. But once you’re on the ladder, it’s so much easier to climb up to that 3 bedroom semi you have always wanted.

No it’s not the end for first time buyers, but it’s certainly just the beginning for property buyers and investors who can see the growth within the Bournemouth property market. Prices will be rising for the foreseeable future, it’s a great time to buy.

I hope you have enjoyed this article. As always, please get in touch if you would like to discuss this article or any others. It’s great when people get in touch for advice and tips on investing in Bournemouth. Why not send an email to luke.marchbanks@belvoir.co.uk or give me a call on 07979123970 for a free, honest, independent chat.

All the best

Luke