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 katie.archer@belvoirlettings.com. I know what sort of properties match whatever
you want from your property investment and I can give you my honest unbiased opinion
