Improving employment rates are positive for buy to let
Recent data shows vast improvements in the number of repossessions and unemployment rates across England and Wales, both of which are positive indicators for the property industry.
Repossession numbers are falling
Figures from Land Registry saw repossessions fall from 1,241 to 806 between July and October – a total decrease of 434 repossessed properties. The Council of Mortgage Lenders (CML) also confirmed in November that rent arrears and house repossessions were at the lowest they had been in several years and have been continuously falling since 2013.
Unemployment at lowest level
Mirroring the decreasing figures for repossessions, The Office of National Statistics (ONS) also recently announced that unemployment levels in UK are down to 1.9 million, the lowest level it has been in six years. In the UK, there is now a total of 30.8 million people in work.
The correlations between rising employment levels and falling repossessions indicates a stronger financial situation for homeowners and tenants. Raising large deposits still remains a barrier for aspiring homeowners but current and future tenants are generally finding themselves in a better economic position and are renting property for longer term. The stronger rental demand is clearly positive news for buy to let investors.
According to the same report from the ONS, the average house price currently stands at £177,766, displaying an annual growth of 7% across England and Wales. However, when compared to the capital, average house prices rise to £464,936, almost twice as much as the average UK figure.
Comments from Sequre
Graham Davidson, Managing Director of Sequre Property Investment, comments on December’s House Price Index from the Land Registry.
“The report shows repossessions have continued to fall, demonstrating how improving employment rates and a slow in the rate of inflation is creating a more sustainable and stable environment for home owners.”
He added “Unexpectedly, we have seen an increase of 0.6% in the rate of house prices throughout December compared to the previous month, a trend which we don’t expect to continue. This increase is possibly due to a hive of buyer activity during September/October and resulted in the purchase prices being pushed up. In addition to the house price increase, an annual rise of 16.3% in London illustrates that the capital still remains a difficult market for property investors.”
“London and the South East remain relatively unaffordable to all but the wealthiest buyers and this is causing more to look to areas such as the North of England, where property remains affordable. The North West has taken a dip of 1.6% in December, which signifies the North’s affordability and higher yielding opportunities for investors.”