UK Property Investment Blog

Three pieces of fairly positive property news this week.

Tony Pidgley, the Chief Executive at Berkeley Group, who also called the 1990′s housing market correctly, says we’ve reached the bottom of the market. “We all accept that, give or take 5 per cent, the market is somewhere along the bottom (of its economic cycle).”

Tony was interviewed in The Independent, and stated there will be between 35,000 and 50,000 construction starts on new homes in 2009. And you will recall that the government wants 240,000 new homes built each year just to keep pace with the demand for new households. So based on supply and demand prices will rise.

Also over the last couple of days, the National Association of Estate Agents (NAEA) said the average selling price of a two-bedroom flat increased by 1.6% during the month to £124,727, while the sale price for a three-bedroom terrace increased by 0.6%.

Top end, executive properties enjoyed the biggest lift, with the price for which they change hands soaring by 11.1% during February to average £591,111.

But three-bedroom semi-detached properties and four-bedroom detached homes fared less well, seeing their prices drop by 3.8% and 4.2% respectively.

Peter Bolton King, chief executive of the NAEA, said: “Smaller houses actually saw their value increase – this suggests that people who are buying are picking up smaller houses than they may have done previously, possibly because they can only get smaller mortgages. It may also reflect a trend of downsizing.

The price of small properties and executive homes rose during February but the value of other houses continued to fall, research has showed.

“The very top end of the market has also performed well, demonstrating not only that the very rich can still afford a high end property, but that with plummeting interest rates are now perhaps more tempted to put their money into bricks and mortar.”

The figures come after property website Rightmove said house prices rose for the second month in a row during March.

What does this tell us?

Well as we have felt for the last few months the huge bargains at the lower end of the market may only be with us for the next 3-6 months, as once financing improves more and more people will be looking to buy and snap up the bargains and properties at high yields.

We are busier than ever with new and existing investors – this morning I took a call at 8.30am from someone with over 5000 UK properties, looking to buy another 1000 over the next 6 months!!

It also shows that the larger family properties will continue to slow down, in my opinion, for the next 12-18 months as many professional families will have had a scare and be careful about taking on increased levels of debt on their family properties.

I firmly believe the market will continue to move in different camps ie the lower end of the market, the investment end where first time buyers and investors compete for properties, will be more and more competitive, while the £200,000-500,000 end of the market will continue to slow for the next 18 months.

From the stats above this is looking the way it is going, and I see no reason why this will differ. So buy as many investment properties as can just now, and hold off moving home for a while is my opinion!

Signs that the property market is on the verge of a revival are growing more prominent in the media.

Following a survey by the Bank of Ireland, they found that two in five first time buyers were planning on investing in the property market during the next 18 months. A time frame that correlates will all the other recent action that has been taking place on the property market.

During January and February 2009 alone Rightmove reported an upsurge of interest from 1st time buyers, with a further 36% finalising on sales during this same period.

The impact of this sudden revival in the market is already having a positive effect upon property prices. For 2 consecutive months in a row, property prices have increased by 3% in value.

Combined, all these figures point towards the same conclusion: the property market is changing and is changing for the better.

Continuing in their survey, the Bank of Ireland discovered that due to the current nature of the property market:

70% of buyers surveyed wanted to buy as soon as possible due to low property prices
10% want to invested soon due to low mortgage rates
80% of 1st time buyers believed the market is more affordable
40% believed there is good value in investing in the property market
35% believed there are good rates available

Plus 81% of the people interviewed ranked acquiring a property as one of their top three goals to achieve in the next 18 months: career and further education being the other two.

Put into context, these statistics leave you with 2 promising outcomes: a tenancy group in need of rental accommodation over the coming 18 months, or the perfect opportunity to expand your current property portfolio while prices are still low.

The press may be all doom and gloom at the moment, but the property market certainly isn’t. In fact it seems to be getting better and better with each passing month.

In a recent report released by the Royal Institution of Chartered Surveyors, they experienced – for the third month running – an increase in property interest of up to 16%.

An increase that backs up the growing theory that buyers and investors alike are returning to the property market.

But the Royal Institution of Chartered Surveyors are not the only ones to feel this surge in interest, the National Association have also reported a similar uptake.

Discussing these details in their January report, they found during the first 2 weeks of January, that the number of first time buyers investing in property more than doubled to 22.5%, whilst the number of registered buyers rose to 14.5%.

This sudden burst in interest is not that far off what is considered to be the first signs of a market recovery. The NAEA for example witnessed a surge of property sales topping on average 4 per estate agent during these same 2 weeks, compared to their 6 property sale average during November and December.

Now whilst the recession has still got a way to go, all of these figures when placed side by side, equal optimistic news for the property market!

Having lost a lot of consumer confidence during the onset of the credit crunch, the fact that 22% of these sales were due to property investors, proves that confidence is returning.

And it is not only property investors who are feeling the pull of the property market.

With property prices now 17.2% cheaper than they were this time last year, the appetising appeal of these properties is attracting a lot of interest.

The only obstacle left for obtaining these incredible deals is getting a mortgage – something that as an investor you won’t have to worry about if you take the first step towards your property success.

I have been considered optimistic for saying for a while that the bottom of the UK buy to let market is far sooner than many commentators are predicting and that we need to make the most of the next 3-6 months.

What have I been basing this on?

Simply how strong the rental yields now are alongside the strong local affordability. With saving rates at less than 1%, many large investors are cash buying to increase cashflow and make the most of the bargain prices.

First time buyers are chomping at the bit to buy as prices are very affordable based on their salaries.

With yields so high even the most conservative lenders are beginning to see the figures work in terms of debt servicability.

With base rate dropping to a new low yesterday of 1%, cashflow for buy to let investors as highlighted in the last newsletter is better than ever making it even more attractive.

With borrowing in December 3 times higher than predicted by many economists and Halifax announcing yesterday that house prices were up in January by 1.9% there are early indications that the market is close to bottoming out.

The key here is to differentiate between the buy to let market, which I would put as properties under £120,000 that cashflow well and the owner occupier market with properties at say over £200,000. The buy to let market will bounce back just as soon as there are more mortgage products on the market because there is huge demand for property that gives a strong yield. Compared to almost all other investmenrt opportunities this oiffers excellent potential and long term security – if you can buy at excellent value today, cashflow your investment well at sensible leverage then will do very well in 5-10 years time.

The bargains right now are incredible, and as long as you can get a mortgage, you are able to pick up some terrific deals! Experienced investors are buying as many as they can just now, and many new investors are entering the market as they can see the strong rental yields and the security of owning property far outweighing many other forms of investment.

Pretty much time to take action! Follow us on Twitter to get the latest updates and attend this free property investment course to get the ball rolling!

John A. Hitchin:

Just completed the course and the next step is to stack 100 properties.

After trawling through 300 pages on Rightmove and filtering out all the unsuitable’s I now have got 39 properties saved on my Rightmove account.

The good news is all of them stack with £600+ cashflow, on a 7% interest rate, at full asking price!!! Don’t anyone tell me these deals are not out there!

Mark Warren:

I’ve just completed my second training day and it went fantastic! I didn’t expect such immediate responses…

Meeting other investors who are already renting out their properties and earning a positive cash flow every month, really put everything into perspective for me.

It is possible… And the amazing thing is I know that everything I have learnt today… I will put into practice tomorrow. Great!

Sharmir Khona:

Wow I am totally inspired!!! So much so that I have decided to go ahead and book a place on the Commercial Mentor course.

My partner even loves the content too and really enjoyed the day.

She can see my vision now and understands what I want to achieve. Thanks so much! There is no need for me to convince her now… she is already hooked!

Describing their free 2 hour property investment workshop as ‘The most profitable 2 hours of your life’, we have to admit when we heard about Property Mentor, we were a bit skeptical:

“Financial freedom after your first 4 properties? Profit in 30 days? No risk?” – it sounded too good to be true. We thought, surely this couldn’t be possible in such a short amount of time? So we put Property Mentor’s word to the test.

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Using their simple step-by-step system, they broke down the flaws in the current housing market into delectable segments, before putting the facts to us straight:

Far from being an investor’s enemy, the credit crunch could be utilized to become your ally. Ensuring you come out owning more properties than you did during the property boom.

And surprisingly it made complete sense. Falling house prices = investment bargains

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