Buy-to-let boom shows no sign of ending
Investors who fear they have missed the boat when it comes to making money from property will be cheered by new evidence that the buy-to-let boom shows no sign of disappearing.
House prices are continuing to rise, despite predictions to the contrary by the Centre for Economics and Business Research back in January.
The CEBR reported that UK house prices grew by 8.8% in 2014, but will fall by 0.6% in the year to come. The forecaster said that even after the uncertainty due to the general election in May has cleared, there will not be a strong bounce-back, stating that indicators such as fewer new buyer enquiries and the prospect of interest rate rises will keep prices down.
However, what a difference a month makes! Figures from property portal Rightmove in February showed that the average price of property in the UK coming onto the market has increased by 2.1% or £5,000, pushing the average price of property up to £279,004.
This throws doubt on the assumption that prices will fall pre-election, as demand is outstripping supply. Data shows that there’s been a 31% increase in housing transactions in the last two years in the UK, outpacing the 11% increase in the quantity of properties coming onto the market.
As well as this, governor of the Bank of England Mark Carney has said that interest rates may go down even further – causing shockwaves among experts who assumed that rates could only go up. He had previously said interest rates would return to a new normal of 2.5-3% by the end of this year, but it looks as if the landscaped has changed somewhat. This is because Bank of England policymakers are concerned that that UK is slipping into a dangerous deflationary spiral, which could affect wages and push people to hoard money, rather than spend. In part this has been triggered by global oil prices, which are on a downward trajectory.
These developments are only good news for buy-to-let investors. Currently there are record low mortgage rates on the market, with remortgage applications leaping 24% in January from December. This means that investors could be in a strong position to take advantage of great deals currently available as with banks and building societies in better shape than a year ago; increased competition on the high street mean that there are more mortgage deals at lower rates.
So why not take the plunge and snap up a bargain? The climate’s ripe for those who are looking to make the most of current deals available. Plus rates could go down rather than up, meaning that those on variable rates, those looking to remortgage and new buyers could be in an even better position.