Following 3 successive years of price rises – and as predicted by several speakers at April’s Property Investor Show – high street lenders Halifax and Nationwide have reported that in the year to May house prices fell in the south of England, with all other areas – except Wales – recording slowing annual price growth. Halifax suggest that the buoyant market a year ago was a major reason for the 1% year-on-year fall. Rival Nationwide report the drop as -3.4%.
Two groups who will welcome this news are first-time buyers (though higher than expected mortgage rates are squeezing their purchasing power) and the investor community.
So how should we expect this to affect investors? Savills expect to see an increase in deliberate landlords. In their view investors, particularly those with cash to hand or that have registered as limited companies, will take advantage of price adjustments to secure stock with less competition from mortgaged owner occupiers. Institutional investor demand for purpose-built homes for rent remains strong, with returns still looking resilient compared to other asset classes. Savills are also predicting UK rents will have risen 10.0% by the end of this year.
With mortgage interest rates currently running at rates last seen over 10 years ago and possibly set to rise further it would be prudent to expect further house price falls during the second half of 2023 and into 2024.
To be sure you are fully briefed on the opportunity that these market conditions create be sure to attend The Property Investor Show at ExCeL London on 6 & 7 October.
BBC online: https://www.bbc.co.uk/news/business-65825576
Savills (Rental Forecast 2023-27) https://www.savills.co.uk/research_articles/229130/334953-0