Here is the latest edition of the Property Options’ monthly update on the UK Buy To Let (BTL) market.
This update is by economist Chris Worthington, who was one of the speakers at our recent February PIM.
The latest UK Economic Outlook published by PwC concluded that while economic growth held up better than expected following the EU referendum, there are now signs that growth is beginning to ease.
This trend is forecast to continue with growth of 1.6% in 2017 and 1.4% in 2018. The forecast for consumer spending growth is also a slow down to around 2% in 2017 and 1.7% in 2018.
In the Buy to Let (BTL) market a slowdown in economic growth combined with a slowdown in consumer spending and an increase in inflation from the higher costs of imports will exert downward pressure on rents, a trend that is already underway.
According to the latest figures published in the Homelet Rental Index average rents increased by only 1.1% in the past year. The estimate for rental growth forecast from Rightmove was more optimistic for BTL investors at 1.8%.
Should BTL investors therefore turn their attention to the forecasts of increase in house prices?
The current figures suggest that a slowdown in house price growth is also getting under way.
Halifax data showed that house prices were unchanged between February and March 2017 while Nationwide reported a 0.35% fall in house prices in March.
Rightmove found that month on month house prices in London fell by 2%, putting a drag on the average growth in house prices in the UK as a whole.
Martin Ellis, Halifax Housing Economist commented
“Housing demand appears to have been curbed in recent months due to the deterioration in housing affordability, caused by a sustained period of rapid house price growth, from 2014 to 2016.
The beginnings of a squeeze on households’ finances, as a result of increasing inflation, may also be constraining the demand for homes.”
However in the long term there is better news for BTL investors.
The Office for Budget Responsibility anticipates that average house prices will increase by 26% over the next five years.
BTL investors with a long term view should take into account the planned infrastructure developments.
Estate agents Martin and Co have recently published a report on the impact of completed major road infrastructure projects on house prices – with increases in house prices well into double figures.
BTL investors should therefore research the plans for improvements in local infrastructure, including transport links and also schools, retail and leisure facilities and amenities such as parks and cycle paths – the factors that contribute to a better lifestyle.
Find Out More
We will all be discussing the latest position on the property market both in Bristol and across the UK at our next PIM on Thursday 29 June 2017 at Holiday Inn, Bristol City Centre, 6-9 pm.
We hope you will join us then.
For more info and to reserve your place Click Below