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London residential property investors looking north for better rental yields
Almost two thirds of buyers of investment property in the North of England are from the South East, with over a third from the Greater London area, new research has found. The study from buy to let specialist Sequre Property Investment, suggests that prices are too high in the south for landlords who may be looking north for bargains. According to the firm they are being enticed out of their own back yard to cities such as Manchester, Liverpool, Preston and Salford by stronger returns and lower entry level prices. Average gross yields of 8% in Manchester compare to 4.5% in London, while a typical two bed investment property costs in the region of £90,000 versus £300,000 in the capital. It also says that speculation of a cooling property market in London and the South East is impacting on investor confidence and driving them to seek alternative locations such as northern cities, where prices have risen at a more sustainable rate and demand from tenants, particularly young professionals, remains strong. The relocation of the BBC and developments such as MediaCityUK have also helped boost the profile of the North and attracted investors from outside the region. Of those London based investors buying in the North, a significant proportion, 42%, are cash buyers. The firm says this is largely due to the lower entry point which means that many investors don't require borrowing. They are keen to de-risk the investment and avoid overleveraging, particularly as many are approaching retirement age and are looking to boost their retirement income One, two and three bedroom buy to let properties in new build developments of up to five years old are most popular, offering a low maintenance and hassle free investment. ‘The buy to let market in the North of England, particularly in hubs such as Manchester and Liverpool, is now being driven largely by money from London and the South East,’ said Graham Davidson, director of Sequre Property Investment. ‘Investors have benefited from huge house price growth in the south over the last few years which has sent the equity in their homes and buy to let portfolios soaring. Now they are seeking new investments which will deliver strong rental returns as well as steady capital growth, at a time when doubt is being cast over the future of the London market,’ he explained. ‘These are mainly professional investors who are comfortable with a 'hands off' approach and are unconcerned about owning property in different locations. It's all about the rental returns and delivering a secure monthly income,’ he added. An example is IT consultant Matthew Earle, 35, who lives in south west London and is currently in the process of adding a number of new investment properties in the north of England to his portfolio. These are spread across northern cities including Manchester, Hull and Sheffield. ‘My main focus is on generating a strong rental income and there's no doubt that yields are much higher in the… Continue reading
Greenwich in London sees largest house price growth in last 12 months
The London Borough of Greenwich recorded the biggest rise in house prices among major UK towns and cities over the past year, according to new research. The study, based on house price data from leading lender the Halifax, shows that the average house price in this south east corner of the capital was 24.6% higher than in the previous year, increasing from £263,183 to £328,044 in 2014. The Halifax report says that this is a significantly faster increase than in London as a whole, which saw price growth of 13% over the same time. Ealing, in West London, experienced the second biggest rise in average house prices with an increase of 24.5%, the research also shows. Crawley in Sussex with growth of 22.4% saw the third largest rise and is the only town outside London making the top 10. And overall some nine of the 10 areas with the strongest price growth in the past year are in London. These include Tower Hamlets with growth of 22%, Kingston upon Thames at 21.4% and Sutton in south London at 20.7%. Sheffield is the top performing area outside the south with prices rising by an average of 13.7% over the past year. Over the past five years, the South Yorkshire city has seen a significant increase in employment, particularly in managerial, professional and technical skilled occupations. This may have been a key factor in helping to boost housing demand, and hence prices, in the city. The towns experiencing a decline in the average value of homes over the past year are all outside southern England. Bury in Lancashire saw a fall of 4.8%, Keighley in West Yorkshire was down 4.4% and Nuneaton in Warwickshire down 3.2%. Four of the 10 weakest performing towns are in the North West. Besides Bury, they are St. Helens with a fall of 2.6%, Preston down 2% and Rochdale down 0.9%. ‘A number of towns and cities have recorded significant rises in house prices over the past 12 months. Nine of the 10 best performing areas are in the capital, and therefore within easy reach of central London,’ said Craig McKinlay, mortgage director at the Halifax. ‘Continuing improvements in the economy, rising employment and low mortgage rates will no doubt have supported housing demand and, combined with shortage of homes coming on to the market, will have contributed to rising property values,’ he explained. ‘At the other end of the spectrum, several of the towns experiencing price falls in the past year are still suffering from relatively weak employment conditions, which may have had an adverse impact on their local housing markets,’ he added. Continue reading
UK buyers and sellers concerned about property prices, research suggests
Both buyers and sellers in the UK are concerned about the price of property with 86% of buyers feeling it deters them and 91% worried about selling up. Some 40% of sellers stated that getting the best price for their property was their primary concern and an equal percentage of buyers listed house prices as a major deterrent to buying, according to research by online estate agent eMoov.co.uk. The over 50's lead the way as those most concerned about securing a good price for their property. With retirement potentially on the horizon, 40% of them listed getting the best price as their primary fear. This is in contrast to those looking to buy, as 43% of those aged 18 to 24 were most fearful of the price they would have to pay for their property. With London property costing double the national average, over 40% of people living in the capital feared property price tags, however Norwich was the surprise top of the bunch with over half of buyers surveyed worried about price. Southampton held the biggest fear factor for buyers searching for a new property with 42% of them stating that finding their next dream home was a concern. With interest rates currently as low as they can get and a rise inevitable next year some 19% of buyers considered this something to fear when looking to buy a property. The majority of these were under the age of 44, most likely as a result of larger mortgages and less equity in comparison to the older property buyers. Estate agency costs were the third biggest concern with 27% of sellers worried about it. This was most prevalent for those 35 and over. Finding the right mortgage concerned 29% of those aged 18 to 24, the highest of all the age brackets surveyed. Some 16% of those aged 25 to 34 also cited finding the right mortgage as a worry. ‘Buying or selling a property can be scary business for some. It can be a minefield of problems from start to finish and it's no surprise it strikes fear into the hearts of those involved,’ said Russell Quirk, the firm’s chief executive officer. ‘It won't come as a shock to anyone that house prices top the survey, they are what drive the market and unfortunately for the majority dictate the options open to them. It comes down to the age old game of cat and mouse, buyers worry about finding the lowest price, sellers are fearful about selling under value,’ he said. ‘It is interesting to see just 6% of people worry themselves silly over which estate agent they are going to use but 27% are put off by the actual cost of estate agency fees. This reflects a significant change in consumer behaviour over recent years and the importance put on ensuring value from an estate agent, something that the mainstream, high street agent simply does not provide,’ he added. Continue reading
