Local property market information for the serious investor

Month: March 2018

No 14. Harrison Drive

Harrison Drive in St Mellons is number 14 on my countdown of the top 20 streets in Cardiff based on turnover and popularity.

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Homeownership Amongst Cardiff Bay’s Young Adults Slumps to 45.06%

Doom and Gloom for Cardiff Bay Property Market?

The degree to which young Cardiff Bay people are locked out of the Cardiff Bay housing market has been revealed in new statistics.

A Cardiff Bay landlord was asking me the other week to what effect homeownership rates in Cardiff Bay in the early to middle aged adult age range had affected the demand for rental property in Cardiff Bay since the Millennium. I knew anecdotally that it affected the Cardiff Bay rental market, but I wanted some cold hard numbers to back it up. As you know, I like a challenge when it comes to the stats.. so this is what I found out for the landlord, and I’d like to share them with you as well.

As anyone in Cardiff Bay, and most would say those born more recently, are drastically less likely to own their own home at a given age than those born a decade earlier, let’s roll the clock back to the Millennium and compare the figures from then to today.

In the year 2000, 45.6% of Cardiff Bay 28-year olds (born in 1972) owned their own home, whilst a 28 year old today born in 1990) would have a 24.3% chance of owning their own home. Next, let’s look at someone born ten years before that. So, going back to the Millennium, a 38 year Cardiff Bay person (therefore born in 1962) would have a 67.4% chance of owning his or her own home and a 38 year today in Cardiff Bay (born in 1980) would only have a 52.5% chance of owning their own home.

Since the Millennium, overall general homeownership in the 25 to 44 year old age range in Cardiff Bay has reduced from 62.32% to 45.06%

If you look at the graph below, split into the four age ranges of 25 year olds (yo) to 29yo, 30yo to 34yo, 35yo to 39yo and finally 40yo to 44 yo, you will quite clearly see the changes since the Millennium in Cardiff Bay. The fact is the figures in Cardiff Bay show the homeownership rate has proportionally fallen the most for the youngest (25yo to 29yo) age range compared to the other age ranges.

The landlord suggested this deterioration in homeownership in Cardiff Bay across the age groups could be down to the fact that more of those born in the 1980’s and 1990’s (over those born in the 60’s and 70’) are going to University and hence entering the job market at an older age or those young adults are living with their parents longer.I read some national homeownership statistics of different age groups with the same number of years after they left education (rather than at the same age) and that gave an identical dip to the graph above.  Neither are these drops in homeownership related with a significant increase in the number of young adults living with their parents. Again, nationally, that has hardly changed over the last 20 years as the percentage of 30-year-olds living with Mum and Dad only increased from 22% of those born in the early ‘70s to 23% of those born in the early ‘80s.

So, what does this mean for the rental market in Cardiff Bay?

Only one thing .. with the local authority not building Council houses, Housing Associations strapped for cash to build new properties and the younger generation not buying, there is only one way these youngsters can obtain a roof over their head and have a home of their own .. through the private landlord sector. Now with the new tax rules and up and coming licensing rules, Cardiff Bay landlords will have to work smarter to ensure they make the investment returns they have in the past. If you ever want to pick my brains on the future direction of the Cardiff Bay rental market .. drop me line or pop in next time you are passing my office.

 

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Cardiff’s ‘Millennials’ set to inherit £178,159 each in property!

That got your attention … didn’t it!

But before we start, what is Generation X, let alone Generation Z, Millennials, Baby Boomers  … these are phrases banded around about the different life stages (or subcomponents) of our society. But when terminologies like this are used as often and habitually as these phrases (i.e. Gen X this, Millennial that etc.), it appears particularly vital we have some practical idea of what these terms actually mean. The fact is that everyone uses these phrases, but often, like myself, they are not exactly sure where the lines are drawn …until now…

So, for clarity …

Generation Z:              Born after 1996

Millennials:                 Born 1977 to 1995

Generation X:              Born 1965 to 1976

Baby Boomers:            Born 1946 to 1964

Silent Generation:       Born 1945 and before

My research shows there are 34,513 households in Cardiff owned by Cardiff Baby Boomers (born 1946 to 1964) and Cardiff’s Silent Generation (born 1945 and before). It also shows there are 67,635 Generation X’s of Cardiff (Cardiff people born between 1965 to 1976). Looking at demographics, homeownership statistics and current life expectancy, around two-thirds of those Cardiff 67,635 Generation X’s have parents and grandparents who own those 34,513 Cardiff properties.

… and they will profit from one of the biggest inheritance explosions of any post-war generation to the tune of £8.366bn of Cardiff property or £185,452 each but they will have to wait until their early 60’s to get it!

The Millennials are also in line for a big inheritance windfall.

There are 81,364 Millennials in Cardiff and my research shows around two thirds of them are set to inherit the 39,886 Cardiff Generation X’s properties. Those Generation X’s Cardiff homes are worth £9.669bn meaning, on average, each Millennial will inherit £178,159; but not until at least 2040 to 2060!

While the Cardiff Millennials have done far less well in amassing their own savings and assets, they are more likely to take advantage of an inheritance boom in the years to come. This will probably be very welcome news for those Cardiff Millennials, including some from poorer upbringings who in the past would have been unlikely to receive gifts and legacies.

However, inheritance is not the magic weapon that will get the Millennials on to the Cardiff housing ladder or tackle growing wealth cracks in UK society, as the inheritance is unlikely to be made available when they are trying to buy their first home…but before all you Cardiff Millennials start running up debts, over 50% of females and around 35% of men are going to have to pay for nursing home care. Interestingly, I read recently that a quarter of people who have to pay for their care, run out of money.

So, if you are a Cardiff Millennial there potentially will be nothing left for you.

Of course, most parents want to give their children an inheritance, the consideration that what you have worked genuinely hard for over your working life won’t go to your children to help them through their lives is a really awful one … maybe that is why I am seeing a lot of Cardiff grandparents doing something meaningful, and helping their grandchildren, the Millennials, with the deposit for their first house.

One solution to the housing crisis in Cardiff (and the UK as a whole) is if grandparents, where they are able to, help financially with the deposit for a house. Buying is cheaper than renting – we have proved it many times in these articles … so, it’s not a case of not affording the mortgage, the issue is raising the 5% to 10% mortgage deposit for these Millennials.

Maybe families should be distributing a part of the family wealth now (in the form of helping with house deposits) as opposed to waiting to the end… it will make so much more of a difference to everyone in the long run.

Just a thought?

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