Property remains a viable investment
Despite the doom and gloom amongst some landlords about whether property remains a viable investment there remain several reasons why landlords can continue to generate wealth through property.
Here are some of the main reasons why property remains a viable investment.
Rents are predicted to continue to rise
There are many variable predictions about the future size of rent rises but most experts agree that rents will continue to increase. Knight Frank the high-end estate agents are predicting rises of between 12 and 17 per cent by 2019. As ever regional variations will apply with the South-East set to lead the way.
Continued increase in urban renting population
Buying a home remains a big problem for many because money is harder to borrow with larger deposits required. A lack of affordable housing, the prospect of an economic downturn, uncertainty over Brexit have all added to the difficulties of buying and increased demand and importance of renting. The all-time high of 69% owner occupation hit in 2001 has been steadily declining and by 2011 had fallen to 64%. Between 2001 and 2011 there was a 1.7 million rise in the number of households of which 1.6 million were renting whilst the number of households owning their own home rose by just 110,000 (Office of National Statistics).
Population increasing faster than new houses being built
The highest birth rate in 41 years combined with an ongoing struggle by developers to construct sufficient housing (compounded by a shortage of skilled labour) has resulted in the ratio of births to new homes to reach its highest levels since 1945. According to mortgage insurer Genworth, 6.1 children had been born for every property built in England in the past 4 years compared with ratios of 2.9 in the sixties and 2.4 in the seventies.
More competitive mortgage market
The fact that lenders remain confident in the buy to let market is evidenced by the increasingly competitive mortgage market for landlords with new players continuing to enter the market place,
Buy to let mortgages account for 15% of outstanding mortgages and 18% of new mortgages.
Property still a preference for pensions
Over 40% of homeowners approaching retirement now bank on their property wealth as part of their planning as pension freedoms drive a change in attitudes according to data from equity release providers. Both mature age groups and younger homeowners shows strong support for using property wealth to fund their retirement incomes with 51% of 45 to 54 years old surveyed regarding property wealth as a key part of their retirement planning.
People living longer
As average life expectancy continues to rise properties will not be passed onto to children and or returned to the housing stock as quickly as previously.
Low Interest Rates
Bank of England governor Mark Carney predicted only last week that “it would not seem unreasonable to me to expect that once normalisation begins interest rates would proceed slowly and rise to a level in the medium term that is perhaps half as high as historical averages.” This might mean interest rates “normalising” at around only 2%.
Inconsistent housing policies from successive Governments
The consequence of the failure of successive governments to adequately and consistently tackle the
housing shortfall has created a huge back log of housing demand that could take decades to resolve.
It is plain to see that demand will continue to outstrip supply
If you would like to discuss whether property remains a viable investment for you or for general help and guidance about investing into the buy to let market please get in touch with our team at https://sourceinvestments.com/contact/