Property Still Holds Value Post Brexit
Following the EU referendum vote in late June, there has been a lot of uncertainty in the industry from homeowners, landlords, and housebuilders, all questioning what the future holds for the property market.
Examples such as a £40,000 price reduction in average prices in the capital have set alarm bells ringing.
However, in spite of these uncertainties, some good news is that the regional property market is looking up.
A lot has happened this year, not only with the result to leave Europe, but also in terms of legislation. We’ve seen changes to stamp duty on buy-to-let purchases, as well as changes to rules on multiple occupancy, both of which had an impact on local property markets.
The ramifications of George Osborne’s legislation, as expected, was a significant drop in the number of investors registering to purchase buy-to-let properties.
Moreover, whilst general applicant/buyer registration and property viewings also declined slightly, the number of offers being made were actually up, and sales were also on the up.
Turning our attention to our local area, predicted house price growth in Manchester for 2016-20 stands at 24.6% and rental income for the period is expected to rise by 22.8% (stats taken from MEN)
Examples (which we have recently blogged about) such as Moorfields and Glenbrook’s £40 million residential development and Yo! Homes luxury flats are not only exciting projects, but are are an essential part of the city’s residential strategy to deliver additional, high quality housing.
So what does this mean for investors?
Firstly, because of the shortage of homes across the length and breadth of the UK, there is little alternative to continuing to invest in residential developments. Doing so will keep the residential property market strong.
In addition, Manchester has been identified as the top city for rental yields. According to LendInvest’s research, the average rental yield in Manchester reached 6.8% between 2010 and 2016.
Research from HSBC, conducted last year, showed that the northern city offered the best yields, with 26% of the population here living within the private rented sector.
Despite the uncertainty of the Brexit vote, the ramifications of leaving the EU could create opportunities for investors, particularly those who are experienced with property investing. Potential property buyers might be put off by the softening of recent house prices, but at the end of the day, they still need somewhere to live, which is great news if you’re a landlord. If property prices do cool – it’s fair to say that investing in property will be very tempting.
So to sum it up, property still holds value post Brexit. Bricks and mortar remain one of the stronger investment choices, as volatility in the stock market means that tangible assets at this moment in time are essential for any investor’s portfolio.
As quite a few commentators have mentioned, a lot of the media focus has been on the ramifications of Brexit vote in London and the South East. However, we strongly believe that the north is a strong alternative with entry prices significantly lower compared with the capital, as well a great place to obtain yields from the likes of student rented accommodation.
In the north we trust!