Since the recession many have been wary of keeping their money in banks due to low interest rates and have since been looking to invest elsewhere. This has meant that money has started to be poured into the property market which has caused an increase in demand and therefore an increase in property prices. Not only has there been a huge increase of houses coming onto the market but there has also been an increase in money coming from overseas investors. This is due to the fact that housing in the UK is seen to be a safer investment than in countries such as Spain and Greece. The UK has also been a popular choice with the wealthy in the UAE and also China.
However, one estate agent, Foxtons, have said that there is a low supply of mortgages and as a result this is bringing the growth of the property market to a standstill. There were some concerns during the summer that government schemes such as “Help to Buy” were going to cause a housing bubble and therefore another crash, however Foxtons are stating the complete opposite. They believe that any increase in sales due to these schemes was yet to be seen and that the impact they will have on the property market will appear slowly.
The amount of people now looking to buy a property has dramatically increased due to these schemes however there are not as many homeowners feeling confident enough yet to sell their properties. As a result demand is out growing supply and therefore property prices are dramatically increasing. It is actually predicted that in the next five years house prices will actually increase by a by a further 25 per cent as more and more first time buyers come to the market.
With this in mind if you are a landlord and you are considering expanding your property portfolio within the next five years now might be the time to act. Although there are many who are leaving the rental market and looking to buy their own property there are still a huge amount of tenants who simply cannot afford to get a foot on the property ladder. This is why becoming a landlord could be a very good investment decision. Whether you are becoming a first time landlord or you are expanding your portfolio make sure you have conducted as much research as possible and you have protected yourself in every possible way through landlord insurance. It is essential you find out what your policy includes to make sure you aren’t caught out in the event of making a claim.
This increase in house prices is reflected in a new report that was generated by Savills, another estate agent, and they have said that over the next five years house prices in the South East of the country will become greater than London. If this actually happens it will be the first time in over 10 years as many buyers accept that they will be commuting into the Capital.
Savills have also reported that the amount of people moving in rental accommodation will increase by more than one million by 2018 and as a result the rental prices will be a lot higher than those seen today.
Lucian Cook is the head of the UK residential research at Savills and he has said, “As confidence improves, buyers are likely to look to market beyond London that offer better relative value, though it will be later in the cycle before the north feels this benefit.
“It is not just about a north-south divide. The gap between London and the south east is incredibly high at the moment.”
He then added that the, “Help to Buy will allow some trapped renters to access home ownership even though the costs of home ownership will exceed those of renting.”
For the rental market many believe that the age of owning a home is well and truly over. Roger Harding is from Shelter and he has talked about, “The dramatic and ongoing impact of our housing shortage on ordinary families. The current rental market is already unstable enough – families now make up a third of all renting households, with many forced to jump from one short tenancy to the next and cope with rising rents. The situation is only going to get worse if the number of private renters rises as steeply as his research predicts.
“This doesn’t have to be the future but unless the government commits to building the affordable homes that we desperately need, house prices will continue to rise and the already overheated private rental market will struggle to cope with the added pressure from a priced-out generation.”