What’s in store for the rest of the year?
Buy to let property undoubtedly produces the best return on investment. Over the past 20 years, property has reigned as the best performing investment type and the introduction of buy to let mortgages has allowed for an increased number of investors to leverage their money and utilise property as a way to gain additional income or save for their retirement.
The last two decades have witnessed a surge in the popularity of buy to let and this is set to continue for the foreseeable future as the market continues to grow in a bid to meet residential demands. As we continue into the first quarter of 2016, there are likely to be several factors to consider over the course of the year, some of which will result in changes for investors and the need to adapt.
Growing house prices
As the economic crisis remains well and truly behind us, house prices have seen a sustainable increase throughout 2015 and have proved that property is a safe and viable investment. Forecasts for 2016 show a healthy amount of growth on the cards, with the average property price rising by 6%. In fact, those looking to purchase a property in the near future can rest assured knowing that the next five years could see UK property prices rise by as much as 18% in the north of England. This is the sort of increase we would expect to see, as it portrays a gradual but promising rise in house prices.
2016 looks set to be the year of the Chancellor’s vision of a Northern Powerhouse finally coming together. Already a much talked about topic of 2015, government plans and funding will enable this new concept to really take-off over the next 12 months.
The Northern Powerhouse vision aims to correcting the North-South imbalance of the UK by combining the strongest cities of the north in a bid to rival London. Cities such as Manchester, Liverpool, Leeds and Sheffield are all well performing individually, but by linking them together they create one, strong super-city. These key areas are due to see significant investment and major changes including more housing, new business start-ups and the construction of the HS2 high speed train. All aspects are likely to attract a host of new tenants and buyers to the north resulting in an increased rental demand.
Tax changes are due to be introduced later this year. New stamp duty rules on second homes are set to take effect from 1st April 2016 and the changes to landlord tax relief is also due to be introduced gradually this year. Further details are still yet to be revealed and more information regarding the changes are due next month in March.
However, even despite these changes, buy to let still remains the most profitable form of low risk investment on the market and the returns made from property still far outweigh those from cash ISAs, stocks, bonds and shares. By investing wisely and in the right locations, investors will still benefit from long term capital growth in addition to generating a healthy rental return. Those who invest before April can avoid the stamp duty charges, however for those investing wisely and in the north, the charges will have a minimal impact and are likely to be offset by rental increases and capital growth.
Demand for overseas
The demand for international property is high. Countries such as Spain are witnessing significant growth levels as the housing markets continue to recover from the financial crisis. Tenant demand and property sales have continued to increase while house prices have remained low; this has resulted in a flurry of European buyers keen to purchase Spanish property at just a fraction of the price. In some areas, prices are 50% lower than they were in 2008.
Sequre International has seen a marked increase in enquiry levels already this year, a trend we expect to continue as the Spanish markets continue to thrive.
With house prices in Spain now expected to rise by as much as 12% this year, the appetite for overseas property has returned and the market is once again booming. The pound also recently reached a 7 year high against the euro, providing a prime opportunity for buyers to ensure their funds travelled much further. However, exchange rates are prone to fluctuations and forward planning can safeguard against such fluctuations in the future.
If you have any questions about the future of the property market, talk to Sequre today. Our team of professionals have several years’ experience in the property industry and are able to spot growing trends and location hotspots within the UK and the international markets. Our property consultants are on hand and are always more than happy to talk you through any queries or buy to let questions you may have. Speak to us today on 0800 011 2277.