I was having an interesting chat with a Colchester buy to let landlord looking to invest in more private rental properties the other day when the subject of the size of households came up in conversation. Post Brexit one of the reasons I think the Colchester property market will, in the medium to long term, be OK, is the fact that the size of households in the 21st Century is getting smaller – which would sustain demand for private rental properties in Colchester and therefore it’s less likely property prices would drop.
Looking at the statistics back as far as the early 1960’s, when the average number of people in a home was exactly 3, it has steadily over the years dropped by a fifth to today’s figure of 2.4 people per household. That’s doesn’t seem like a big drop but if the population remained at the same level for the next 50 years and we had the same 20% drop in household size, the UK would need to build an additional 5.28 million properties (around 105,769 per year). As a country we are only building 139,800 properties a year which doesn’t leave much room for people living longer and immigration. Looking closer to home…
In the Colchester Borough Council area, the average number of occupants per household is 2.3 people – lower than national average.
When we look at the current picture nationally and drill down into tenure types (i.e. owned, council houses and private renting) a fascinating picture appears.
The vast majority of homeowners who don’t have a mortgage are occupied by one or two people (81% in fact), although this can be explained as residents being older, with some members of the family having moved out, or a pensioner living alone. People living on their own are more likely to live in a Council house (43%) and the largest households (those with 4 or more people living in them are homeowners with a mortgage – but again, that can be explained as homeowners with families tend to need a mortgage to buy. What surprised me was the even spread of private rented households and how that sector of population are so evenly spread across the occupant range – in fact that sector is the closest to the national average, even though they only represent a sixth of the population.
When we look at the Colchester Borough Council figures for all tenures (Owned, Council and Private Rented) a slightly different picture appears…
|1 person households in Colchester||2 person households in Colchester||3 person households in Colchester||4 person households in Colchester||5+ person households in Colchester|
But it gets even more interesting when we focus on just private rental properties in Colchester, as it is the rental market in Colchester that really fascinates me. When I analysed those Colchester Borough Council private rental household composition figures, a slightly different picture appears. Of the 11,689 Private rental properties in the Colchester Borough Council area:
- 32% of Private Rental Properties are 1 person Households
- 32% of Private Rental Properties are 2 person Households
- 17% of Private Rental Properties are 3 person Households
- 11.8% of Private Rental Properties are 4 person Households
- 6.9% of Private Rental Properties are 5+ person Households
As you can see, Colchester is not too dissimilar from the national picture but there is story to tell. If you are considering buy to let purchases in the Colchester property market over the next 12 to 18 months, I would seriously consider looking at 1 bedroom apartments/houses. Even with the numbers stated, there are simply not enough 1 bedroom apartments/houses to meet the demand. They have to be in the right part of Colchester and priced realistically, but they will always let and when you need to sell, irrespective of market conditions at the time, will always be the target of buyers.
If you’d like a second opinion on investing in private rental properties in Colchester or would like an informal chat about any aspect of properties in general please feel free to call me on 01206 862288 or email email@example.com – I’m happy to provide free feedback without obligation.
If you send me the hyperlink to the property from Rightmove or Zoopla I will usually respond within 24 hours. I am also happy to undertake free pre-purchase visits to your shortlist of potential properties to provide a rental valuation.