The general election is round the corner and amongst many questions, you may have in regards to the parties policies, there may be one as to what will happen with your property value and housing supply after 8th June 2017?
No surprise general elections bring so much emotion and public debate. At the end of the day, it is affecting everyone and there are always threats, but also opportunities. Dealing with the ‘noise’ can be difficult, if not impossible. Hence we usually see sideways movement on the markets as investors stay put. They wait and listen. From our perspective, we are interested what England will have to offer past the election date and how this may affect your property value and the housing in general.
House prices rose about 638.39% since 1970. That is on average 13.58% increase in value per annum which makes property investment incredibly attractive. Add rental income on top of that and you have the best asset class available. East Midlands has just seen 3.3% increase in rent values while Greater London a decline of 3%. We believe this trend will continue. Rental properties will increase in value more outside London who has seen quite an uplift in housing supply. Therefore, a choice for renters. The other reason to support it, is that we see more and more investors looking to buy properties up north, where the house prices are much lower. That’s the power of demand.
Recent suggestions that the property market is slowing down, come as a worry to many investors. Buyers still remember the year 2007 and nobody wants to buy at the top. Looking from historical data perspective those worries seems to be premature. House prices in last 7 years grew on average only 3.9% per annum. By comparison, between 1970 and 2009 properties rose annually by 15.6%. Terms bubble or overbought do not apply to the current market situation. What is being observed, however, are controlled measures proposed by the government to support, regulate but not really regulate, English housing market (Scotland and Wales have slightly different policies), and general public response to them. Supply of properties is expected to continue to rise, therefore, despite very strong demand, buyers seem to have more opportunities and choice. Yet, delaying purchase comes at a price as longer the decision is postponed for, more expensive the property will be. Lending is very attractive, government Help to Buy scheme will continue for next couple of years which will further support the demand. Inflation is reasonable, unemployment low which gives electorate money to invest in property. Not all look at purchasing a property from the money making machine perspective. For some intangible values are more important and hence families are inclined to pay on average 5.4% more for their next home. How do you value happiness? By recognising needs of an individual person and exchanging the contract. Or, you can try our instant valuation tool for a really quick ballpark figure on your property.
Perhaps the era of a ‘cheap property’ ended, but this really depends on individual’s point of view. Modern properties are more expensive to buy, yet never less popular. They offer better construction method and quality. New builds offer efficiency and sustainability. They offer character which should hold on value. Although they cost more, they are much cheaper to run.
Furthermore, both main parties put their housing proposals on the manifestos and they seem to be quite similar. We don’t necessarily agree with numbers as both parties also, to a different extent, want to kerb the immigration. One of the main reasons why current housing proposals are not even closely met is due to lack of workforce and skills required. Hence the reason we do not need to worry about the oversupply and decline in prices. Build to rent sector also receives a lot of praise and is considered a solution to the housing problem. It certainly will benefit. Yet, it is not going to happen overnight. Planning applications take time and causing quite a lot of frustration for developers, preventing some investors of entering this form of investing in property. As much this is relevant to planning application process as to sales progression until the rules are simplified we don’t need to worry about house prices touching the ceiling and start to decline. Looking around our local area, prices of properties in Warwick and Stratford Upon Avon are expected to rise by 2021 by 29.5% and 23% respectively. Those are still attractive projections for grabs to London investors. Overseas investors could pocket at least additional 10% in currency difference as pound will remain weak until a good deal is agreed for Britain.
Construction sector seems to be growing and influencing such sector is good for all people of Britain. Money, workforce, salaries and taxes staying all in our country. This general election is naturally very important but from the housing perspective, is not going to change anything. Britain is going to build more but we don’t think it will do this for less. Until supply can largely meet the demand, the prices will rise. Even increased legislation and measures against buy to let are not going to stop it as it is still very profitable and will continue to be. Finally, the idea of investing in bricks and mortar was, is and will be a good idea and indeed a very good investment, for years to come.