This site uses cookies. For more information, please see our Privacy and Cookie Notice. If you dont agree to our use of cookies, please navigate away from this site now.

News

DECEMBER 05, 2017 | BY Perthshire Property Services
Perth and Kinross Property Owners Are Only Moving Every 14.6 Years (part 1)

A number of City commentators anticipated that in the ambiguity that trailed the Brexit vote, UK (and hence Perth and Kinross) property prices might drop like a stone. The point is – they haven’t.

Considering the average house price in Perth and Kinross is 10.06 times average annual Perth and Kinross salary, it’s true the market for Perth and Kinross’s swankiest and poshest properties looks a little fragile (although they are selling if they are realistically priced) and overall, Perth and Kinross property price growth has slowed, but the lower to middle Perth and Kinross property market appears to be quite strong.

Scratch under the surface though, and a different long-term picture is emerging away from what is happening to property prices. Perth and Kinross people are moving home less often than they once did. Data from the Office of National Statistics shows that the number of properties sold in 2016 is again much lower than it was in the Noughties. My statistics show …

 

Annual Number of Properties Sold in the Perth and Kinross Council area since 2004

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

3,648

3,798

4,148

4,191

2,628

1,988

2,183

1,976

1,974

2,290

2,701

2,906

2,909

 

 

 

Even though we are not anywhere near the post credit crunch (2008 and 2009) low levels of property sales, the torpor of the Perth and Kinross housing market following the 2016 Brexit vote has seen the number of property sales in Perth and Kinross and the surrounding local authority area level off to what appears to be the start of a new long term trend (compared the Noughties).

Interestingly, it was the 1980s which saw the highest levels of people moving home. Nationally, everyone was moving on average every decade. Even though it was during the Labour administration of the late 1970’s where the right to buy one’s council house started, it was the Housing Act of 1980 that that really got council tenants moving, as Thatcher’s Tory government financially encouraged council tenants to buy their council-rented homes – for which countless then sold them on for a profit and moved elsewhere. The housing market was awash with money as banks were allowed to offer mortgages as well as the existing building societies, meaning it made it simpler for Brits to borrow even more money on mortgages and to climb up the housing ladder.

But coming back to today, looking at the property sales figures in the Perth and Kinross area since 2010/11, a new trend of number of property sales appears to have started. Interestingly, this has been mirrored nationally. The reasons behind this are complex, but a good place to start is the growth rate of real UK household disposable income which has fallen from 5.01% a year in 2000 to 1.68% in 2016. Also, things have deteriorated since the country voted to leave the EU as consumer price inflation has risen to 2.7% per annum, meaning inflation has eaten away at the real value of wages (as they have only grown by 1.1% in the same time frame).

With meagre real income growth, it has become more difficult for homeowners to accumulate the savings needed to climb up the housing ladder as the level of saving has also dropped from 4.26% of household income to -1.11% (ie people are eating into their savings).

Next week I will be discussing how these (and other issues) has meant the level of Perth and Kinross people moving home has slumped to once every 14.6 years