Let’s face it… If you have the cash to invest in property right now… Why shouldn’t you go straight ahead and just do it? Low interest rates coupled with buyer/seller hesitation means that you might be able to snap up a bargain deal should you look in the right places… Taking advantage of an uncertain market to get in whilst you can… After all it’s better to have and hold than to wait and want?
Since lockdown the average price of mortgage funded property sales is now 10% higher in the UK with property prices rising upwards of 5% according to latest figures from Halifax but is this really a fully fledged resurgence in the market or is it a bubble waiting to burst before recession deepens thanks to covids potential return?
Whether or not you sit on the half-empty/half-full side of things in property you should always ask the same question when buying regardless of whats going on outside things you can handle… Am I getting at a good price?? Do I see potential growth value?? And for buy-to-let investors… Can I get a good rental yield?
If all three questions are answered with a ‘yes’ then it really is that simple.
Should you buy ‘today’ or ‘tomorrow’ you should always ask yourself the same questions… A good property at a good price with good potential to appreciate in value that yields at a good positive rate will always do you… well… Good!
But if we are to take ‘market conditions’ into account, those sceptical of buying right now might want to consider one or two other things on top.
Firstly ‘affordability’… Can I afford to invest?
Secondly ‘length of investment’… How long am I in it for?
Whilst now is a good time to invest ‘long term’ it might not be so good for those short term ‘flippers’ that want in and out for a quick buck or two.
For example, a developer friend of mine new to the game, a fancy architect with bright ideas is looking to add swanky new apartments to Nottingham City Centre upwards of £250,000 for his first toe dip into the market… All well and good… You might say… But remember we are in midst of a pandemic that has seen unprecedented change to the way we live our lives… No more is the city centre worker working in the city centre not needing a brand new apartment next to their now empty central based office.
Anyone who’s walked around Nottingham City Centre over the last six months will realise there’s nobody there!!!!! Which means no need for new accommodation as office-dwellers now do zoom in their pyjamas instead.
So if professionals no longer need ‘city centre living’ then suburbia becomes a greater attraction. Bigger property for less money, the maths make so much sense.
Now I’m not going to say ‘do not invest’ in city centre apartments as that would be extreme, but for new developers looking to build niche and get in ahead of the next market curve, suburbia is where I would recommend, especially as now folk realise people can work from home and do just as good at their jobs without the need to congest our transport links during the days rush hours.
Whilst this ‘lifestyle’ of city centre verses suburbia might not work for everyone, we need to remember during uncertain times, tried and tested is often the best way.
The ‘outskirts’ for example always offer best pound for pound value. Cheaper property than in the centre or suburbs, the yields tend to stack up relatively better, and the sheer number of people that need to rent in these areas is much higher. Win win for Mr or Ms Investor looking for their next investment.
The concern of yield and void is not nearly as much for example on a £100k property than it is on a £200k or £300k property…. Remember as ‘investors’ we are looking for yield, growth, and we are also looking to spread and lower risk of loss… Which is why right now those who invest at the lower end of the market would be least effected should any crash be imminent.
As for market conditions? Who’s to say what Boris, Trump, Merkal or Putin will do next? We really cannot for sure be confident if there will be a worldwide travel ban for years to come or an ‘everybody’ back to work plan that pretends nothing ever happened… One thing for sure is if you invest you do so with one eye open with the other planning for potential scenarios.
Buying big is like playing pontoon blind… Buying little is like sticking with 17…. Whilst it might hurt a little it won’t be too rash should you not get the result you want to achieve.
Through my own personal experience I anticipate a buying frenzy to fall short for Xmas before a dip and resurgence once again in the new year… but then it always does that… But mid-2021 I fully hope that this covid-malarkey is over and done with and we can start rebuilding our economy again… Huge part of that will be the UK housing market… With lending set to become more readily available and more houses being built than ever before… What is next will see a market moving towards not just recovery but longer term appreciation in value and whilst rents will always rise so too over time will property prices which means that deal you could have got just ten minutes ago (before reading this) might just do you well, all in good time.
Key is to expect dips and dents along the way… But by buying good property at a good price and by doing so affordable to you… You’ll be the one smiling upon your returns at the end of it all!
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Daniel Peacock.