With inflation predicted to hit 5% next year, mortgage rates anticipated to rise, fuel bills anticipated to rise by almost 30% and food bills potentially rising by 1.5% – 2.5% during 2022, the cost of living is rapidly increasing.
I have read how wages have increased by around 5.6% in August 2021 compared to the same period last year, however am unsure on how the pandemic may have skewed this figure.
With these increases to the cost of living eating further into the money left in people’s pockets at the end of the month, it means that there is less and less money available to save for a house deposit and therefore the dream of home ownership is moving even further away. This is coupled with rising house prices vastly outstripping the increase in wages!
When we look at first time buyer statistics, the average first time buyer is aged 34 and this has increased from 28 in 2007. Not only this, but 55% of 25-34 year olds are now renting compared to 35% in 1998 (a 57% increase).
In addition to this, we regularly see headlines like ‘rental demand at al all time high’, ‘rental demand xx% up on the previous year’ etc. So, what does this mean for the Gillingham property market?
How Hot Is The HMO Market?
When we look at Gillingham, I know from experience how hot the rental market has become and with rooms generally being snapped up quickly, it is a market that you pretty much cannot go wrong with!
When it comes to the HMO market, Gillingham is strong (with 83 HMOs out of a total 173 for the whole of Medway – up from just 60 in 2018) and whilst it could be said to be a little saturated, the trend towards renting coupled with the rising cost of living means that there will only be growing demand for quality, affordable accommodation.
Demand for HMOs is up in general, with website SpareRoom recently reporting at the end of September, for only the third time ever, nationally there are more adverts for people looking for rooms than adverts for rooms themselves!
Interestingly, however, a recent report has predicted that despite high demand, HMO rents are likely to remain relatively steady (overall) during 2022. I have, however, seen how average rents over the past five years double room rents have shot up from around £375 per month to around £550 per month or more.
How Can Investors Capitalise?
When it comes to investing in an HMO, apart from getting your compliance correct the most important thing is purchasing the right property in the right location and achieving a high standard of finish.
With the tenant demographic changing to more professional renters, there are higher expectations on the finish. Long gone are the low-end rooms (however we do still see them… sitting… available for a long time!) and landlords are now needing to meet much higher standards to meet tenant expectations.
Landlords are needing to meet much higher standards of room
Are you a Gillingham property investor, looking to expand your portfolio into the Gillingham area or wanting to make your first investment? I’d be keen to hear your comments and thoughts on the Gillingham HMO market! The best way to get in touch is by messaging me through LinkedIn.