This update is by economist Chris Worthington, who is a regular PIM speaker.
The latest UK Cities House Price Index published by property market analyst company Hometrack found that the average UK city house price growth had slowed to 1.7% in the past year.
The index is based in a league table of year on year growth in house prices for the top twenty cities in the UK. Liverpool is at the top of the table at 5.7% with Leicester (5.3%) and Manchester (5.1%) in second and third place.
Bristol is in at 13th place at 2.2%, the highest for any city in the South of England. London is at 18th place, with zero growth in the past year.
The overall forecast in the medium term is low single digit growth in house prices.
The annual growth in rents in the past year has also been modest.
According to the Rental Index published by buy to let mortgage market place Landbay, the highest rent increases have been Leicester and Nottingham at around 3%, with the average for the England, excluding London, around 1.2%.
Until recently average rents in London were falling by about 0.3% per year, but now according to Rightmove, London rents are increasing. This is partly because some buy to let landlords have started to sell property in response to the changes on mortgage interest tax relief. This has reduced the supply of rented property, thereby exerting upward pressure on rents.
Looking to the medium term estate agents Savills have forecast that average rents in the UK will increase by 2.5% this year and by a cumulative 15% over the next five years.
There are wide variations across the country for both house price growth and growth in rents, but the overall picture is one of modest but steady year on year growth.
How should buy to let investors respond in terms of new investment and possibly selling property?
For any investment, knowing when to sell is as important as knowing when to buy.
By way of an illustration for many years I have owned a property in Tooting in South London. The mortgage comes to term in about a year so I need to either remortgage or sell the property. Tooting is an up and coming area, so the overall performance may be better than the somewhat subdued London average – but I could probably get better returns by selling up and investing closer to home. I have year to decide!
Our Next Property Meeting
We will all be discussing the latest position on the property market in Bristol and across the UK at our next PIM on Thursday 30 May 2019 at Future Inn, Bristol, BS1 3EN.
We hope you will join us then.
For more info and to reserve your place Click Below