When I was looking for an investment property, everybody told me all about the high rate of returns and sky rocketing property prices in England. They told me all about the rental opportunities especially in central London. One of the things that nobody told me about was the bone chilling weather in the UK.
Spring is now officially here, and it would appear that the London and South East residential property markets are showing good signs of early growth. Research provided by Hamptons International displayed a 16% increase in the number of listed properties for sale over the last year. Combine this statistic with the number of new registered buyers nearly reaching a 12-month high, and a positive picture emerges about the current state of the London property market.
Though David Cameron, the leader of the conservative party, keeps saying the UK economy is in recovery the evidence really doesn’t bear that out. In recent months economic reports have all been bad news about the UK economy and with the coalition government’s economic blinkers firmly in position, it’s expected that we are going to see a lot more house repossessions in the future as we descend into the verge of a double dip recession. Recent comments point to a total washout when it comes to assessing the coalition’s economic “strategy”. According to the governor of the Bank of England, Mervyn King, the value of workers pay is in the steepest decline since the 1920′s.
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The spotlight will soon turn on to the property analysts across the country to give their 2011 predictions for the market. But with the unpredictability that saturated the industry in 2010, many will be apprehensive about giving concrete opinions regarding how the market will evolve over the next 12 months.
After a stronger start to the year, recent activity in the property market has been marked by uncertainty as the market seemed to pause.
If the mood in the market continues to feel unsettled it is not helped by the recent Government austerity measures. One obvious consequence of tax increases and employment cuts has been a slump in house purchases. This atmosphere of uncertainty and apprehension has fed an increasingly acute need in the public for information. People toying with the idea of buying or selling a house are keen to do their research. However, the plethora of available and conflicting indices have not served to deliver concrete answers. Additionally, Land Registry reports from Government and other sources designed to accurately represent market activity can be out of date as soon as they are published because of the time dalay in reporting. House price indices from banks such as Halifax and Nationwide reflect their business areas and cannot always give a compelte picture. Therefore, when researching the available information it’s wise to take in a variety of sources and recognise the motivation and possible bias of any particular source in order to get a more full picture.
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The last two years have shown just how much an industry can change, evolve and eventually settle into a new type of normality which people have become accustomed to. The UK property market, which has undergone a huge amount of uncertainty (with the new coalition government and the constant threat of “cuts” over the last year) but recent statistics show that there is still plenty of optimism out there.
The biggest problem facing the UK lettings market is the low level of stock. More specifically, it is a problem if you are a tenant wishing to move, but it’s also proving to be a financial blessing for landlords for a number of reasons.
We all know our government thinks we are stupid – that almost goes without saying, but the recent quietly released and not-talked-about figures from the Land Registry bear closer inspection than the government press release farms (newspapers) have given. Quite honestly – how any one makes an informed decision based on the misinformation and garbage being spouted is beyond me.
The last ten months have seen rising prices in the sales market. Hamptons International have reported an increase of between 10-15% uplift. In fact, in some cases, they achieved prices beyond the peak of the market in 2007. This is in despite of a lack of properties for sale and the overall stock levels down 27% year on year. This pattern is set to continue during the early part of 2010 with a steady climb until the general election. As always with political elections, the danger of rising interest rates and potential increase in taxation mean that the market will be nervous around this time; however once the election is over it will recuperate quickly.
After an interesting year in the property market, early 2010 is a crucial time for investors to examine their property portfolios and examine where the best yields are to be found. This is all the more important if one considers the growth in sale prices which overtook the growth in lettings values and the subsequent yield contraction of 55 basis points. The average property acquisition yielded 4.7% gross at the end of 2009.
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