The UK economy has strengthened, house prices have risen, rental demand has increased and new property hotspots have emerged. Quite a lot can change in just one year and this is why it’s vital that property investors continue to keep their eyes on the market as we plough through 2016.
Last year was an important year for buy to let and new rules and government changes have kept us on our toes. Here we’ll take a look at some of our predictions for the year ahead -
House prices
We’ve seen a sustainable property market throughout 2015 as the UK gradually began to return back to pre-crisis levels. This growth looks set to continue and by the end of 2016, average house prices across the UK are predicted to increase by around 6%.
Rising prices are positive indications for property investors and it’s important to take note of areas which have been following a steady incline – consistency is key in the housing market and areas which see prices jump too high month-on-month may end up grinding to a halt. Over the next five years, house prices in the North are predicted to rise by 18%, which indicates a very healthy and sustainable level of growth for savvy investors looking to invest wisely.
Buy to let
This year, it will be 20 years since the first launch of buy to let mortgages on to the market. With each year, the market has grown in popularity and has outweighed almost all other investment types from the last two decades.
Whilst buy to let is looking to see some changes this year, including new rules on tax relief and potentially higher stamp duty rates, investors should keep in mind that buy to let is still a profitable market. In spite of these major changes, returns are still expected to outstrip those made from cash ISAs, stocks, bonds and commercial property. Also, as these changes don’t come into play until April 2016, those who have the ability to invest in the first quarter of 2016 should do so, and save a small sum on the impending stamp duty charge, as we would expect to see a peak in the number of buy to let sales at this time.
Northern Powerhouse
This was certainly one of the biggest buzzwords in 2015 and not without good reason. The Chancellor’s vision of a stronger economy by seeing northern cities join forces will mean better investment in these areas and more government backing.
At Sequre, we have always found cities in the North to provide higher rental yields and returns when compared to London and the South. Manchester has been singled out as the driving force of the Northern Powerhouse, but Leeds, Liverpool and Sheffield are all key areas due to see major changes.
Plans for more housing, new initiatives and government funding will gradually put these cities in a stronger economic position and drive more people to live in these areas, thus narrowing the gap of the North-South imbalance. With more people attracted to these northern cities for both work and lifestyle reasons, this will increase the rental demand significantly and create an even stronger urge for buy to let investment in the North.
