If we look generally at European Housing, renting and ownership sit roughly at 50/50 but exceptions can be made when you look at Berlin (and the other city central hubs), where renting is 80% of the housing market – London is currently undergoing the same transition.
Rentals or ‘houses of multiple occupancy’ (HMOs) have become a flexible commodity for young professionals who want to reside in a desirable area, often close to the place they work. HMOs also deliver benefits for local small businesses with increased convenience shopping plus a vibrant social scene with wine bars, local tapas restaurants, etc popping up.
Connectivity is a key factor. In London, everything is just a several minute tube ride away. Commuting into London (without the strikes) is at its most simplistic for the local villages.
It’s also important to note that times have changed. People now will change locations for careers or job contracts. The late 1960’s model of the cost of a typical home being £3k (average general earnings per week of £27 and a pint of beer was 60p) and the house owner working at the local factory in a ‘job for life’ left us long ago.
We already have globalisation. The internet granted everyone the power to buy anything from anywhere and this purchasing power caused a shift, not only in business transactions, but in the way that people are employed.
The flexibility of Zero hours contracts to my Gen X thinking are incompatible; stability and ownership is what has been instilled within me from a very young age, along with debt levels; keep one high and the other low. Principled, structured and almost orderly.
Yet, debt is good. Perversely ‘no debt’ decreases your credit score because in today’s market debt proves you can repay your borrowing. You should load up on debt because of the ultra low interest rates and, with the availability of 0% credit cards for up to 4 years, you have time to work it all out but, ultimately, it’s all about flexibility.
Flexibility, in everything is the modern metric. People want to be able to change jobs and career paths. Government contracts in Newcastle might be paying more or be longer term than Westminster; the gaming industry might be paying more in Widnes; Warrington is now a central distribution hub for HGV transportation and Brighouse finance individuals with skills that are portable, now have that freedom of working ‘wherever’. Housing is just following the same flexible needs and trends as luxury goods, like the iPhone – upgrade or switch, when required. The rental market (for well-maintained properties) will continue to be buoyant.
We live in a different time and the indices of the late 60s and 70s cannot be applied. Global travel was for the few. European travel was for the few. Today, it’s just part of day to day life. So, how can we have hopped, skipped and jumped from a £3k home in the 60s to an average of £250k today and not invested in the links between major cities (outside of London)?
In the North of England commuter connectivity between two of the Powerhouses – Manchester for its legal sector and Leeds for its financial quarter – is currently a shunter train service and takes around an hour and a half from city to city with no electrification. This makes every town and village along that route undesirable for commuters. It has stagnated the rural areas between these two fine cities for decades and workers have lobbied for better connectivity.
So the Tory manifesto has outlined a looming kiss of death for HS2 (Birmingham, it seems, may still get HS2 at this point – the cost to BCC is Peel Holdings) but has committed to the electrification of Leeds to Manchester; detailed below:
HS2 is a great ambition but will now cost at least £81 billion and will not reach Leeds or Manchester until as late as 2040. We will consider the findings of the Oakervee review into costs and timings and work with leaders of the Midlands and the North to decide the optimal outcome.
We will build Northern Powerhouse Rail between Leeds and Manchester and then focus on Liverpool, Tees Valley, Hull, Sheffield and Newcastle.
A young professional will choose connectivity and infrastructure above broadband, or a social life, every time. If they are reassured about the infrastructure to travel to either Leeds or Manchester then the northern towns of Oldham, Halifax, Rochdale and Bury suddenly become attractive. These areas become desirable almost overnight as the current ‘Generation Rent’ starts to look at the housing ladder and the possibility of starting a family.
Will this investment in rail increase flexibility within the Northern economy? Let’s hope ‘Generation Rent’ is converted to ‘Generation Buy’ and invests away from the transport ‘rich’ City centres soon.
Christian Lister, Operations Director