Here is Property Options’ latest Property Market Review – for January 2019.
This update is by economist Chris Worthington, who is a regular PIM speaker.
The latest UK Cities House Price Index published by property analyst company Hometrack reported that UK city house price inflation is running at 2.6% year on year, the lowest annual growth rate for five years.
The highest increase in house prices were in Edinburgh (6.6%), Manchester (6.6%) and Birmingham (6.3%). House prices in London fell by 0.1%.
The report forecasts a subdued increase in average house prices in cities of 2% in 2019 and fall in house prices in London of 2%.
In the medium term the forecast from estate agents Savills is an increase in house prices from 2019 to 2023 in the UK of 14.8%, close to 3% per year and 4.5% in London, slightly less than 1% per year.
Turning to rents the latest national rent review published buy to let (BTL) lender Landbay found that average year on year rental growth in the UK has been around 1%, but rental growth in cities outside London is out performing the UK – with rental growth of 1.9% in Manchester, 2.0% in Birmingham and 2.5% in Leeds.
The Lettings Index published by estate agents Hamptons International reported an overall year on year increase in rent of only 0.1% in Greater London with an increase of 1.2% in inner London and a fall of 0.2% in outer London, further evidence that BTL investors should consider investing outside of the capital.
House prices and rents are always key considerations for BTL investors but it is also important to consider yields – the annual rent divided by the value of the property.
On line estate agency yieldit recently reported on the locations with the highest yields. The top locations from their data set are Bradford (6%), Scarborough (6%) Folkstone (5.8%). Mortgage broker Private Finance have produced another list for high yielding locations. These include Southend (6.6%) with Nottingham in second place at 6.4%. The top ten list also includes Edinburgh, Manchester, Liverpool, Coventry and Southampton.
The landscape for BTL investors across most the UK is one of moderate annual increases in house prices and rents and hence a moderate total rate of return. There is clear north/south divide or more accurately a London/rest of the UK divide.
Locations with high yields are a mix of places with a strong local economy, such as Manchester and Southampton and places with relatively low house prices such as Bradford and Liverpool.
The inclusion of Folkstone, Scarborough and Southend in the list of high yield locations is interesting, perhaps BTL investors should look more closely at coastal towns!
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 31 January 2019 at Future Inn, Bristol, BS1 3EN.
We hope you will join us then.
For more info and to reserve your place Click Below