Buy To Let
THOUSANDS of homeowners could lose at least £l0,000 off the value of an average-priced home next year. According to a leading Mortgage Magazine.
House price forecasts up to 2010:- the largest falls are likely in Eastern England, with falls of more than five per cent expected to be commonplace in Hertfordshire, Essex, Suffolk, Bedfordshire and Norfolk. But the magazine also reckons falls of four to five per cent are on the cards in counties like Oxfordshire, Kent, Surrey, Buckinghamshire and Sussex. And South-West England will also see many falls of more than four per cent.
But another pundit predicts 2007 would see no change in house prices nationwide — with five per cent rises in prime Central London locations and better parts of the South-East balanced out by small price falls up to five per cent in areas like the North and Wales, where fulls are likely after two years in which prices have rather overrun the spending power of local buyers.
Another buy to let expert says 'With mortgage arrears and repossessions continuing at low levels, employment still robust we see no trigger for substantial house price falls. Rather, what we see is encouraging room for price growth in those markets which have been sluggish in recent years. Property buyers need to target areas in the right stage of the cycle, which means London and the South-East
Buy To Let Property Investor should:-
Find an area with a good employment market for young people, with plenty of tenant demand, and likely housing scarcity, which usually means the South-East.
Otherwise, find areas where specific regeneration projects are likely to boost annual return above the market average in the next few years. Around London, that means areas like Stratford, Wembley, Greenwich and Croydon.
How do other 'experts' see the next 12 months? It all depends on interest rates. In 2006, we held our breath as the media predicted increases of at least one per cent, which would have put our market into a big reverse. In 2007, we hold our breath again. With US rates rising, there is again potential for a rise, but I don't see it hitting sales volumes. Rates look good, and lenders must offer highly competitive buy to let rates to hold market share.
Where would I buy? As an investment, find something within 60 miles of your home, because then you understand the market better. Landlord's Buy cheaper, scruffy property rather than brand new. I personally like Bracknell, a sixties new town which has to smarten itself up by replacing concrete monstros-ifties with better-looking buildings.
Prices could go up by ten per cent in 2007 as purchasers who have been waiting for a downturn in 2006 realise their ploy has backfired. Sales have fallen off an awful lot in 2006, but prices haven't crashed. They will strengthen at the start of the year, but might weaken later in the year as sellers try to conclude a deal before the Government's Home Information Packs have real impact. A Buy To Let property investor said 'I would be tempted to buy a retirement flat to rent out in southern England, with the long-term aim of living there myself'
and another property investor said 'I notice a lot of people are selling up everything they have at 55, to become tenants so they can enjoy their money and leave nothing, to the Government. They aim to rent in between jaunts around the world'.
Another property investor said 'Although the city expects a rate rise early in 2007, I am by no means convinced it will happen. Unemployment in the private sector could also creep up, but the resilience of the housing market this year has been impressive. I expect house prices to rise nationally by up to two per cent in
2007, with London and the South-East doing better than the norm because they have lagged behind for last couple of years.
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