In common with much of Lincolnshire, Grantham has enjoyed a property boom in 2021. From owned homes to commercial and rental properties, demand has been fierce, as has requests for property insurance quotes.
With house prices up for the 5th consecutive month and growth in the last three months the fastest for 15 years, the Coversure Grantham team thought now was a good time to explore the highs of the property market. How do these rising prices affect home owners and landlords in the Grantham area, and can this housing price boom continue into 2022?
Grantham’s Property Market: Opportunity Knocks?
According to Rightmove, house prices in Grantham have risen 7% in 2021, with the average home now worth £197,966. Rising prices are good news for property owners as their wealth increases due to rising equity. This increase in wealth can lead to overall increased confidence and boost spending generally, which is good news for local businesses and the wider Lincolnshire economy.
At £197,966, though, Grantham properties are priced at 27% below the national average, so does that mean Grantham is a relatively cheap place to buy a property? It could undoubtedly look attractive for professional property investors, but when you consider the average salaries in our area, the average home is still eight times the average wage; we’d say it’s not so affordable for locals looking to buy.
So, while high prices may be good for existing property owners, it’s bad news for first-time buyers wanting to get on the property ladder. Therefore is renting the way to go?
Grantham’s Rental Property Market
The latest ONS’ figures show that rents are on the rise too, with UK rents up 1.3% in the year to September 2021, and when we look at the East Midlands area, they are up 2.7% – that’s one of the highest annual growth rates in the UK. Great news, for landlords but are these house prices and rent rises sustainable? To answer that, we need to explore the reasons for the increases. So, why have property prices risen so much in 2021 in Grantham? The main reasons are:
1. The Race for Space – with multiple lockdowns in 2020 and 2021 many poeple wanted to increase their living space; both inside to accommodate home working and outside for access to green spaces. The pandemic has resulted in more flexibility in terms of working locations, and moves to the coast and countryside have been increasingly popular.
2. The Stamp Duty Holiday – to help homebuyers whose finances were impacted by Covid the UK government introduced a stamp duty holiday in July 2020. Initially, this meant potential savings of up to £15,000, and its extensions stimulated the housing market right up to the end of September this year.
3. Low Interest Rates – interest rates have remained at their historical low since March 2020. The 0.1% base rate was introduced to help the UK economy weather the storm of the pandemic. This in turn has meant that mortgage rates have fallen, making the cost of borrowing lower.
4. Demand Outstripping Supply – In February 2020, the BBC reported that the scale of the housing gap, that is, the amount of housing stock versus the need for homes, was more than 1 million. The latest figures for new house builds show an 11% shrinkage in 2020-2021, worsening the situation. Lockdowns saw many building site closures, and the charity Shelter reported in 2021 that the house building was down by a third.
With the stamp duty holiday now over and with many returning to their workplaces, we predict the franticness of the 2021 housing boom will subside. There’s also talk that due to rising inflation, bank interest rates will rise. However, as we’ve seen with the latest property market figures, which come two months after the stamp duty holiday ending, prices, while slowing, are still rising.
Relief For First-Time Buyers In 2022?
For first-time buyers relief may come from the competitiveness of the home loans market. New figures show that mortgage rates for those with large deposits are starting to rise as banks anticipate a base rate rise. Mortgage rates for first-time buyers however, those with only a 5% deposit, are the lowest for a decade. These rates are likely to stay competitive as the number of mortgages on the market has also increased, from 96 in December 2020 to over 1000 last month, so customers can shop around. There’s also a new trend for longer-term mortgages; once the norm was for mortgage terms to be for 25 years, now we are seeing 40-year fixed-rate mortgages on offer.
Developments like St Martin’s Park at Stamford, a mixed-use development with a range of residential properties including 30% earmarked as affordable homes, could also alleviate supply issues in the region.
Will Property Prices And Rents Continue To Rise In 2022?
When house prices rise sharply, and to the extent we have seen recently, it’s tempting to assume that this boom will bust, but as we’ve seen in the past, the housing market tends to buck all trends. What we do know is that the Office for Budget Responsibility (OBR) revised their 5-year property forecast in October, and they no longer expect house prices to fall. The OBR has predictedthat house prices will continue to rise into 2027. Who are we to argue with that?
Like Some Indepdent Property Insurance Help?
Whether you’re a first-time buyer, an existing homeowner, or a landlord looking to protect your property investment, we can help. Coversure is the home of property insurance, so why not give our friendly team of property insurance specialists a call on 0800 308 1020 or come in for a chat and let us help you protect what matters to you.
The Coversure Grantham Team
House price growth at 15-year high, says Halifax – BBC News
UK House Price Index for September 2021 – GOV.UK (www.gov.uk)
Grantham, England: Lincolnshire Salary | PayScale
Index of Private Housing Rental Prices, UK – Office for National Statistics (ons.gov.uk)
Stamp duty holiday: How much do I have to pay now? – BBC News
Housing shortage: Scale of UK’s housing gap revealed – BBC News
Demand outstrips supply as UK housing stock shrinks 11% (yahoo.com)
First-time buyer mortgages: Rates on 5% deposit deals falls | This is Money
Planning permission granted for St Martin’s Park, Stamford (southkesteven.gov.uk)
Economic and fiscal outlook – October 2021 – Office for Budget Responsibility (obr.uk)