Buy-to-let market and house prices show stability

As we move out of summer and into the autumn, we enter a period of traditionally high activity in the property market.

With everyone back from their holidays, and movers looking to get settled before the run-up to Christmas, now is a great time to sell or let a home.

Here’s our latest round-up of what’s been going on in the property world recently…

The housing market

The latest data from Halifax has revealed that the annual rate of UK house price growth cooled for the second successive month in August. However, any fears of a dramatic housing market crash post -Brexit have been quashed.

House price growth in the UK has been on a downward trend since March, with issues over affordability limiting housing demand and leading house price growth to ease off. Halifax’s research also showed that house prices dropped by 0.2% in August, after falling 1.1% in July.

Nevertheless, prices in the three months to the end of August were up 0.7% on the previous quarter, in spite of the month-on-month fall in property values. What’s more, prices in the three months to August were also 6.9% higher than the same three months in 2015.

None of this is especially dramatic or a major cause for concern, though. As we pointed out in last month’s blog, house prices have remained broadly steady since Britain voted to leave the EU.

Sales
It’s long been true that parents will pay a lot more money to purchase property within the catchment areas of high-performing state schools.

A recent survey by Santander, which spoke to 4,000 adults, found that 27% of parents with school-age kids have either purchased or rented a new property in the catchment area of a top-performing school.

They are, in fact, prepared to pay an 11% premium (on average) to secure their desired property. In the current property market this is equal to around £24,000 to move to their desired catchment area.

Lloyds Bank, which carried out similar research, suggested the figure that parents are willing to shell out to live near to the most desirable state schools is even higher, standing at £53,000.

Property prices in the postcodes surrounding the top 30 state schools in England average around the £366,000 mark, some 17% higher than the national average.

While the two banks have come up with differing data, they are both clear that property prices near top-performing state schools comfortably outstrip the national average, with parents eager to buy up property in the most desirable catchment areas.

Lettings

Buy to let property may have had its ups and downs over recent months, but it is still seen by many as the best performing investment on offer.

Investing in property brings greater returns than all other major asset classes, including stocks and shares, pensions and cash.

Many are viewing post-Brexit Britain as the perfect place to invest in property, according to auctioneer company Auction House.

After the 3% surcharge on second homes and buy-to-let properties was implemented on April 1 2016, some feared the slow death of the buy-to-let market.

There have been changes to the Wear and Tear allowance and the prospect of changes to mortgage interest tax relief in 2017 to think about, with many landlords feeling they are being unfairly targeted by a government eager to increase home ownership.

Still, low rates on buy-to-let mortgages, rising rents and the prospect of strong yields have all meant that investing in property remains an attractive proposition.

The rental market has remained stable and robust in the face of the recent political and economic turmoil.  According to new figures from the HomeLet Rental Index the average tenancy in the UK rose by 3.1% to £913pcm in the three months to August 2016, up from £885pcm in August 2015, with rents in 11 out of the 12 regions surveyed recording an increase over the year.

Returns from property, and capital growth, have also been considerably higher than the annual returns from stocks and shares in recent years; more than 16% a year compared to just 6%.

With interest rates low, demand for rental accommodation high and 75% buy-to-let mortgages readily available, the chances of higher rents and strong house price growth look positive in the short to medium term.

For more help and advice on buying or selling a home in London, please get in touch with Atkinson McLeod.
To find out how much your home could be worth in the current marketplace, check out our instant online valuation tool.