If looking for somewhere to invest your money, it’s wise to evaluate the condition of the property market before making a decision.
Investing in bricks and mortar has long been a favoured approach by the general public, providing long-term security, ongoing rental income and equity for future investments.
This year, the question is whether real estate still holds the influence it once did, especially with concerns over Brexit and government clampdowns on the buy-to-let sector.
However, confidence in the market remains strong and experts believe that, despite external pressures, the underlying pattern of supply and demand still makes property a wise choice as we move further into 2017.
Property experts from Capital Economics, Nationwide and Halifax all predict a rise in UK house prices throughout the year and for buy-to-let investors in particular, the signs are especially promising.
Last year, 11 out of 12 regions across the UK witnessed an increase in rental values, pushing the average monthly income to £892. A report by the Royal Institution of Chartered Surveyors (RICS) also predicts that rents will increase by 25% in the next few years.
However, as a note of caution, this positive driving force is unlikely to come from London. Despite expected growth in the rest of the UK, prime central London could even see prices fall by as much as 5% over the next 12 months according to estate agents Strutt & Parker and economic forecasters Volterra.
Conversely, the UK’s lack of homes is a positive sign for buy-to-let investors. Lack of supply means prices remain high and thus would-be buyers are pushed into the rental sector.
This is something the government are looking to address by launching a £7 billion house building program to construct up to 200,000 new properties. Investors should take note of where these new schemes are taking place for potential buying opportunities.
Markets are Riskier
Despite a fair bit of scaremongering over Brexit, the property market held up extremely well after 23 June 2016. Lending for purchases within the buy-to-let market rose from 28% in the third quarter, to 38% in the fourth. This is exactly the same figure as before the Referendum and shows that real estate is still a safe bet.
On the other hand, financial markets are a lot more susceptible to volatility – as seen with the sudden drop in the pound. Investing in shares is a high-risk strategy as well, especially during this time of political uncertainty, and does not provide the short-term access to equity that property brings.
Markets require constant attention and a diversification approach that can become complicated. By investing in a managed let through a qualified agent, there’s none of this ongoing stress.
Instead, rental yields are assured over a period of two to three years and can be as high as 10% in some areas. Property also allows you to plan a long-term exit strategy, as well as providing a physical asset to leave in your will.
Points of Note
Location is still the key to a successful property purchase. The expected 3-5% national growth in house prices will be driven by hotspots in the north-west and Yorkshire where long-term yields can be gained with low-entry point purchases.
The student sector remains strong, especially with purpose-built student accommodation becoming increasingly popular. The PBSA market is expected to have a value of £46 billion by September with nearly 30,000 new beds being added into the sector this year.
For landlords who use a letting agency to manage their investment, the chance to sit back and take in assured yields is a big draw. Combined with high demand and more people willing to rent, this makes property still the most lucrative investment in 2017.
If you’re ready to invest in property, get in touch for a chat with us today.
With London out of the picture for many investors, you might be wondering where the best places are to invest your money. South West and Northern England and Scotland are the hotspots for this year. We take a look at why 2017 is the year to invest in the North and why you should invest in Plymouth.