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 is one of our regular PIM speakers.
Inflation, Interest Rates and House Prices
Consumer spending and business investment slowed in the second quarter and wage increases are not keeping up with inflation.
UK inflation measured by the Consumer Prices Index rose to 2.9% in August, up from 2.6% in July.
The fall in the value of sterling since the EU referendum continues to be a major impetus for rising prices.
Until recently, most commentators have taken the view that Bank of England are unlikely to raise interest rates until late 2018. However the Bank may need to raise interest rates before then if inflation does not fall. This may be a good time for buy to let investors to review their mortgages.
Robert Gardner, Nationwide’s Chief Economist, recently summarised the situation in the housing market.
“In our view household spending is likely to slow in the quarters ahead along with the wider economy, as rising inflation squeezes household budgets. This is likely to exert a drag on housing market activity. However the subdued level of building activity and the shortage of property on the market are likely to provide support for prices.
As a result we continue to believe that a small increase in house prices of around 2% is likely over the course of 2017.”
In the latest Rightmove House Price Index the average year on year increase in house prices in the UK was 3.1% – with the highest increases by county in Northamptonshire (9.1%), Derbyshire (7.9%) and other counties in the mid regions of England.
Miles Shipside, Rightmove Director, commented
“With newly marketed property seeing a monthly fall of 0.9% and a muted yearly rise of just 3.1%, the heat has come off much of the market and affordability remains very stretched.
However high demand and limited supply are still driving momentum especially in the counties in the middle of the country. Here year on year rises at over twice the pace of the national average are widespread.”
Is this simply a case of the “rippling out” effect of high prices in London and South of England?
The other factor that is likely to come into play is the relatively buoyant economy of many towns and cities in the Midlands compared with the North of England. The Northern Powerhouse needs to get into gear!
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 28 September 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