How conservation and overpopulation are affecting Medway house prices

The UK, along with the rest of the world, is suffering from a longstanding problem of a rapidly increasing population – this grew from 58.89 million people in 2000 to 64.1 million in 2016. A pleasant place to reside and with a good healthcare system, economy and civil rights the UK is always a hotspot for migration. As life expectancies continue to increase in this island-country, and with UK net migration at a record 360,000 last year, more homes will be needed to satisfy demand.

However only 156,140 homes were built last year, well below the government target of 200,000 new homes a year. Construction in London actually slowed down and dropped by 9% to 25,994. The industry is also suffering from a bottleneck caused by a lack of skilled and qualified small builders. The lack of supply and increasing demand has ensured that property prices will continue to increase in the long term even if there is another economic crisis.

The protected Green Belt surrounding London has contributed to the problem with its severe planning restrictions stifling the number of new homes coming on the market. I’m not saying this is bad thing, as we don’t want the capital and its environs to end up as a concrete jungle, but this conservation measure has pushed London prices up as well as surrounding areas, such as Sevenoaks and Reading.


View the interactive map of the Green Belt here

Have a look at this map of the Green Belt; where do you think people priced out of the capital can go? Considering the HS1 rail link can get those in Dartford, Gravesend, Medway and Maidstone into London very quickly, they seem likely choices. So investing in property here will pay off in the long term, both in terms of increased tenant and purchaser demand, if you are willing to hold.

A trick to find the affordability of an area is to find the ratio of the average salary to the average house price. Average house values in London stand at £638,880; that’s nearly 19 times more than London average salary of £34,320. Meanwhile, average Medway house prices reside at £232,166, while average salaries in the South East were £28,704 (Medway was £26,312), which means that property prices here are on average eight times people’s salaries; this is a much more reasonable figure. Keep in mind that population will almost certainly keep on growing, and this ratio will therefore undoubtedly rise as the demand outstrips supply. So, in general, the longer you hold off on an investment, the less affordable it will become.

As you will know if you follow my Medway property blog, Rochester was a top performer for rental yields and capital growth in 2015. But why do I think Medway is underpriced in comparison to other hotspots around the country? Let’s take a deeper look into the figures:

Area Percentage rise over 10 years Current Average Values
Central London
61.69%
£1,364,880
London
54.56%
£638,490
Reading
40.87%
£408,061
Crawley
36.85%
£307,132
Sevenoaks
35.16%
£626,480
Chelmsford
35.03%
£344,372
Gillingham
33.07%
£229,958
Chatham
31.69%
£215,649
Rochester
30.77%
£250,892
Aylesbury
30.64%
£338,814
Maidstone
27.88%
£302,797

Strong growth has been seen in other areas surrounding the commuter belt, but Medway is lagging behind at the bottom with Maidstone and Aylesbury. Sevenoaks and Reading have now become unaffordable for a lot of people due to their average prices growing to become similar to greater London’s.

Looking at these figures, I believe that buyers will increasingly turn to Medway and Maidstone, especially considering the strong high speed rail links running through the Medway towns, in turn driving up rental prices as well as house prices – so now looks a good time to invest!

Don’t forget about the new Thames Crossing that I posted about the other week, you can read more about that here.

Thanks for reading the Medway Property News blog. Let me know your thoughts on what’s happening with Medway house prices! You can email me on hasan@bullfinchproperties.co.uk.

Need to talk to a Medway property expert? Give me a call – 07944 726676.

Read more at the Medway Property News blog.

One comment

  1. Hi admin,
    I read your blog, its really good.
    I am seeing that you are selling home. I have also a site related to you.
    Do you know how to be ready to become a homeowner? What are the costs of owning a home?

    rent a house

    Your regards
    Alfaj Ripon

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s