In our latest edition of the Property Options newsletter we review the overall trends on the buy to let market in the UK for landlords and investors and as usual we also provide an insight into the Bristol market.
According to the latest statistics from Rightmove average house prices in Bristol increased by 6% in the past year.
This is higher than the average for the UK as a whole – 4.2% in the latest house price index published by LSL Property Services.
Looking towards the longer term a report from the Centre for Economics and Business Research forecasts that average house prices in the UK will rise by 3.5% in 2016 and by around 4.2% every year up to 2020. Buy to let investors in Bristol can therefore anticipate a higher than average growth in the value of their investments assuming that Bristol continues to beat the average for the UK as it has done in the past year.
The September 2015 edition of the Homelet Rental Index highlights the following statistics:
- The annual growth in average rents (8.5%) was the same as 2014 (8.5%) and higher than 2013 (4.9%)
- Average rents have increased in nine of the twelve regions in the UK including Bristol and the South West
- Rents have fallen in the North West (-4.6%), East Anglia (-2.2%) and Northern Ireland (-1.4%)
In London annual rent increases moderated in 2015 to around the UK average. However this follows a period of much higher rent increases in London in 2013 and 2014 taking average rents to £1555, over 100% higher than the rest of the UK (£762).
Speculation on the date when interest rates will rise has continued unabated but earlier predictions for the date of the first rate rise by the Bank of England Monetary Policy Committee (MPC) have been pushed back. Mark Carney, the Governor of the Bank of England recently said that interest rates rate rises are a “possibility not a certainty” and that any increases would be “modest and gentle”. This is echoed in the financial markets where the prevailing view is that the Bank of England will not raise the base rate until early in 2017 giving more time for buy to let investors to make decisions on new mortgages.
The Bristol Buy To Let Market
A recent report from Barclays Bank underlined the strength of the Bristol buy to let market with two thirds of buy to let landlords describing the market as buoyant. Bristol is ranked third in the top twenty league table of Barclays mortgages completed on buy to let property after Birmingham and London and ahead of cities with large student populations such as Manchester, Nottingham and Leeds. Average monthly rents in Bristol at £877 are also higher than in these cities.
Estate agents Hamptons have also recently reported on the strength of the Bristol housing market. In 2014 the number of homes sold in Avonmouth doubled from the previous year and prices increased by 21%. Redcliffe is another hot spot in the local market with an increase in transaction volumes of 93% last year.
A report from Savills estate agents highlighted the changes in the origin of buyers of property in Bristol. While the majority are from Bristol and the surrounding area a growing proportion of buyers of larger properties valued at over £500,000 are from Greater London.
However Hometrack Property Analysis point out that the sale of a property in London (average price £437,000) would almost cover the cost of two properties in Bristol (average price £231,300). The trend towards selling a property in London and buying in Bristol will be given a further boost when the planned electrification of the Bristol to Paddington railway goes ahead in 2016.
Is this all good news for Landlords and buy to let investors in Bristol? We say the answer is yes – and like us, investors may take the view that it is good time to invest while mortgage rates remain low and before the impact of buyers from Greater London exerts more upward pressure on house prices in the city.