We are into week three of my PESTLE and property series, we have ticked off Political and Economic on our list and next up is Social. The definition of social factors is as follows:
Social factors that influence investment include age distribution, population growth rate, employment levels, income statistics, education and career trends, and religious beliefs, as well as cultural and social conventions.
The key factors that I would like to focus on are population growth, career trends, employment levels (covered last week as part of the economy) and social conventions.
The population has been rising and is predicted to rise over the coming years; ONS predict that the population will rise to 70 million by 2029, with the population being recorded as 65.5 in 2017, a 5.5% increase, given that our population is currently 66.5m today (2019). I have a feeling that we might exceed the 70m forecasted a bit earlier than 2029! This is only going to further increase demand for housing. If you then add to this that according to the ONS, 42% of marriages end in divorce, this may not seem relevant to property, but it means that in most cases a family needs two homes rather than one, thus increasing the demand for housing. Finally, we are an ageing population, older people are more likely to be homeowners, meaning that they are living longer and unlikely to be looking to sell their homes anytime soon. This again limits the supply of housing coming on to the market.
Due to technology and improved transport links, people have become far more flexible as to where they work and for how long. The average length of time that someone spends in a job is now five years. Gone are the days when you would work for one employer your whole life. People are willing to relocate for the right job and many are willing to commute further, according to this BBC article the average commute was 57 minutes in 2015.
All these factors make a case for a strong rental sector, as people are not looking to be tied to an area as perhaps they once were. It also highlights the importance of good transport links when you look to invest in Buy to Let properties.
The final social factor I have is a bit more left field; it is the tendency for people to want things now. We are in the generation of click and collect, easy credit and 24 hour delivery services. Gone is the art of delayed gratification, we no longer have to be patient and carefully save before we can buy, instead we can buy items and receive them in an instant and not worry about paying later. Being able to save and delay a purchase is no longer a skill we practise on a regular basis, unfortunately this is a key skill for any successful property investors. Although PESTLE is referring to external factors, it could be argued that this is more of an internal factor as it is down to you, however, the reason we want everything now is because of the marketing and ‘keeping up with the jones’s’ mentality that we have developed, which is an ‘external factor’.
That’s it for one more week, next week I am looking at property and technology, this is an area I am not very good at as I am not a fan of technology. Hopefully I will be able to open your eyes to technology that can be used even if, like me, you’re a bit of a technophobe.
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