The Land Registry have just released their latest set of
figures for the Bingham Property market. It makes interesting reading, as
average property values in Bingham rose by 0.1% in May. This leaves average
property values 4% higher than 12 months ago, meaning the annual rate of growth
in the town fell to its lowest level since February 2014. When we compare Bingham
against the regional picture, East Midlands property values rose by 0.2%,
leaving them 2.9% higher than a year ago.
Obviously this is a far cry from the price rises we were
experiencing in Bingham throughout 2014. At one point (April 2014 to be exact) property
values were rising by 5.6% a year. All the same, even with the tempering of the
Bingham property values in 2015, property values are still higher. This is good
news for local homeowners who had been affected by the downturn after 2007 and
still find themselves in negative equity.
However, the thing that concerns me is that the average number
of properties changing hands (ie selling) has dropped substantially over the
last 12 months in the town. In April 2014, 28 properties sold in Bingham but in
April 2015, that figure dropped to 14.
I
have been in the Bingham property market for quite a while now and the one
thing I have noticed over the last few years has been the subtle change in the
traditional seasonality of the Bingham property market. It has been
particularly noticeable this year in that the normal post Easter flood of properties
coming onto the market was not seen. This has made an imbalance between supply
and demand, with less houses coming onto the market there is simply not as much
choice of properties to buy in Bingham and with the population of Bingham ever
increasing, this will generally strengthen house price growth for the
foreseeable future.
So what does all this mean for Bingham landlords or those
considering dipping their toe into the buy to let market for the first time? For many people, buy to let looks a good investment,
providing landlords with a decent income at a time of low interest rates and
stock market unpredictability.
However, if you are thinking
of investing in bricks and mortar in Bingham, it is important to do things correctly.
As an investment to provide you with income, for those with enough savings to
raise a big deposit, buy to let looks particularly good, especially compared to
low savings rates and stock market yo-yo’s. I must also remind readers,
landlords have two opportunities to make money from property, not only is there
the rent (income), but with the property market bouncing back over the last few
years, property value increases has spurred on more investors to buy property
in the hope of its value continuing to rise.
Savvy landlords with decent deposits can fix their mortgages
at just over 3% for five years, making many deals stack up. Nevertheless, low
rates cannot stay low forever, because one day they must rise and you need to
know your property can stand that test. I saw some Bingham landlords struggling
in the mid noughties, when interest rates rose from 3.5% in July 2003 to 5.75%
in July 2007. That might not sound a lot, but that was the difference of making
a £100 a month profit in 2003 to having to make up a shortfall in the mortgage
payments of £100 per month in 2007.
Its true many landlords were thrown a life raft when the
base rate dropped to 0.5% in March 2009. Whilst interest rates have remained
there since, mark my words, they will rise again in the future. However, even
with the potential for costs to rise, demand for decent rental properties
remains high as there are ever more tenants in the market, driving up demand
and thus rents. The British love of bricks and mortar plus improving mortgage
deals also add up to fuel the buoyant Bingham property market.
If you are planning on investing in the Bingham property
market, or just want to know more, things to consider for a successful buy to let
investment, please feel free to pop in and see me at our office in Bingham on
the Market Place or call 01949 714101
