feature
Island Life - April/May 2011
Country Property
WOODLAND - FARMLAND - EQUESTRIAN
Sam Biles of leading Coastal and
Country estate agents Creasey Biles &
King comments on how the landscape
of property purchase on the Island is
changing in the post-recession period;
how wealth and property could be
getting stuck with the retiring Baby
Boom generation, and how the spring
Budget will bring some cheer to some
hard-hit first time buyers:
There is something odd going on
with the ageing process. But ask any
Island estate agent about first time
buyers and he or she will tell you that
they are definitely looking older. In
fact some would say they are ageing
at an alarming rate. On the Island with
its older-than-average population and
relatively low average wages this is
probably more so than with the rest of
the UK.
In the early 1990s many young
people would leave school and enter
a vocational career or occupation that
didn’t require a university education.
Within four or five years, when still
in their very early twenties, many had
saved enough to buy their first home
and were on the first rung of the
property ladder.
On the Island in 1995 the average
house price was around £50,000.
It is now just below £160,000. This
threefold increase in property values set
in place the foundation of future wealth
for those now in their 40s; generated
though the capital appreciation of their
home.
But all that has changed. Gap years,
university, student debt, establishing
a career and time spent building a
substantial mortgage deposit means
many current school leavers cannot
expect to purchase their first property
until they are in their late twenties or
even their thirties.
This may be good for the rental sector
but not so good for parents whose
bosom offspring often return to the
'nest'. Sadly, school leavers, unlike
their parents, may not be able to build
substantial equity to help in later years.
This perhaps is due to the fact that
when you are 18 or 19 your mid-30s
are far distant and planning and saving
for a deposit can seem irrelevant.
What does this mean for those who
want early entry into the property
market? Many will hope that the
education system will swing back to
some extent and provide a viable route
to a rewarding career. Otherwise the
only alternative seems to be obtaining
a good degree in some difficult subject
and securing a well-paid job that pays
a huge bonus every year. Anything else
and young people may not be so young
by the time they get on to the property
ladder. Parents are living longer and
many are therefore more circumspect
about helping their children, worried
about providing for the ir own future.
However if this wealth becomes ever
more trapped in the hands of the over
60s then it will make things difficult for
first time buyers to buy.
That in turn could lower demand for
property and thereby damage property
prices, harming that very asset that the
'oldies' were relying on to see them
through their old age. Some say the
'Boomers' now retiring have had a
very good run, with massive increases
in property prices, final salary pension
schemes and high disposable incomes .
Unless some way can be found to share
this bounty across the age spectrum
tomorrow's property market could look
very different from that of yesterday.
The recent Budget does at least nod
in the
direction
of this
problem.
The
Sam Biles MRICS FAAV
Chancellor's measure to assist 10,000
first time buyers with a £250 million
shared equity scheme to help with
the purchase of new homes will be
welcomed. But this is only really
scratching the surface of the problem.
Reforms to encourage young people
into rewarding vocational training
and apprenticeships may have much
longer-term benefits to the property
market as well as themselves.
The road we are on to a more buoyant
property market is still a challenging
one. The economy, national confidence,
rising cost of living, unemployment,
difficult lenders and the looming
spectre of interest rate rises will all have
to be overcome.
We must also remember that a period
of time will have to elapse while this
new order of first time buyers works
its way through the further education
and initial career-establishing years.
First time buyers are the fuel that drives
the property market. At the moment
there is not much petrol in the tank.
It could well be that first time buyers
will have to be a little older yet before
existing property owners become a
little wealthier. The Island's market is
somewhat different with net migration
on to the Island each year and an older
population demographic.
www.creasey-biles-king.co.uk
24
Visit our new website - www.visitislandlife.com