Over the last 12 months, property values have risen, on average by 7.7% in Bingham. Good news all round, but when you consider property values in the town have previously dropped by 16.61% between January 2008 and May 2009, this is not as good as the media would have you believe. It should be no great surprise to hear that Bingham property values are starting slow up as we head in to the New Year. Property values in the town were growing at an impressive 1.1% in the Spring months of 2014, but in early Winter months, they slowed down considerably, rising by only 0.1% a month.
The reality is we have had 19 months (since the late Summer of 2013) of decent market conditions in Bingham, but now all that pent up demand is starting to fade. The big question moving forward is whether the Bingham market will now be held back by affordability and restricted mortgage lending, and what long term impact this will have on the Bingham property market. It is obvious to me and my fellow estate agents in Bingham, that I talk to in the town, that we all are beginning to be wary about the direction of the market as a result of the not as strong demand and fewer house sales.
This is all good news for landlords looking to buy rental property because you could bag a bargain during this lull, especially with the changes in stamp duty and later in 2015, the new rules regarding pensions, where you will be able to take money out of your pension pot to invest in property. However, at the same time, I would say don’t just buy any old property in Bingham. First time landlords need to be cautious. The doubling of house prices every seven to ten years which has taken place since WW2 doesn’t seem to have been seen since the mid 2000’s. The property market is shifting with more properties being built and restrictions put on mortgage lending, the likelihood of the property market increasing at the same levels as the past are questionable. But investing in Bingham property is also about receiving the rent.
So to answer the question, what will happen in 2015. Supply and demand become increasingly better balanced, so house price gains in Bingham will continue to drift down towards zero over the next few months until the General Election, but I do not expect sustained house price falls in the town like we did in 2008 (as mentioned above) thanks to record low mortgage rates, rising wages and early signs that lenders are starting to increase the availability of mortgages. If I had to stick my neck out on this, depending on the election result, property values will either be either 3% to 4% lower by the end of the year if we have a hung Parliament (because of the uncertainty that brings) or a modest rise of 3% to 4% if the Conservatives get back into power.
On the one hand going for high yielding Bingham property to rent out seems an obvious choice, but high yielding property often doesn’t go up in value that well and in some circumstances does not keep up with inflation, meaning in real terms you have a depreciating asset . So surely you should pick a property that has great capital growth then, because of the obvious potential to generate long term capital profit, especially with inflation eating away at our savings. However, rental yields on high capital growth properties tend to be low meaning if you are taking a high percentage mortgage, the rent does not pay the mortgage payments. Or you could look for a property with a bit of both? (yield and capital growth).
If you are unsure what to do, be you a first time landlord or a seasoned pro, feel free to pop your head round our door or email me on email@example.com. I know what sort of properties match whatever you want from your property investment and I can give you my honest unbiased opinion