Property Predictions 2020

So now we can look forward to Christmas with the election behind us. Whether that was the party you voted for or not the fact remains the that the financial markets here and abroad plus the mortgage lenders have now breathed a sign of relief. What I can say with relative certainty is that asking prices in the West midlands with of course Wolverhampton being the centre of the property universe will rise in 2020. How much will this predicted price rise be according to Rightmove the main property portal around 2%.

The main factor being increased consumer confidence now we have a stable government and of course business confidence will also grow now the country has a plan with a defined outcome. When you add into the mix very low mortgage rates with the mortgage lenders in fierce competion with each, other the future looks good. See previous article –  https://www.applefinance.co.uk/the-ten-year-mortgage-battle/            

“I feel that buyers and sellers will come back to the Wolverhampton property market in 2020 they have been waiting for political certainty to re-enter the market and that has now happened.”

If you would like a free chat about your circumstances and a professional recommendation on a mortgage or bridging product to suit your needs, call Paul on 01902 213201

House Price Increases In Wolverhampton

The recent house price Index report, which points to house prices in the three months to August having increased by 3.7 per cent against the same period last year, although the monthly change is far more subdued, at an increase of just 0.1 per cent. This means that, according to the report, the average Wolverhampton property is currently valued at £228,000

It seems that the interest rate increase earlier last month has made little change to the cost of borrowing, as many lenders had already priced in an upwards move in the bank rate some months ago. In fact, within the last two weeks or so, there are lenders who have actually reduced their rates, possibly in the hope that they will attract new customers in the lead up to the final quarter of this year.

With borrowing still relatively cheap, and the ongoing shortage of homes for sale in many areas of the Midlands and Staffordshire also underpinning values, it seems that house prices are, in some regions at least, continuing in their ascent.

This has been accompanied by interest rates still remaining at a historically low rate and a stable, yet constrained, supply of new homes onto the market further supporting house prices. The report also highlights that the number of first time buyers has now reached levels which are just 8 per cent lower than at the peak of the last boom in 2006, another factor that many will see as a positive, Since first-time buyers underpin the Wolverhampton housing market, this suggests that the market will continue to perform into 2019, and may even improve further.

 

Landlords in Wolverhampton should tread carefully when diversifying

There’s little question the shape of the landlord market is changing. Regulation and taxation changes have seen it move away from the dinner party landlords with one or two properties to those with much more comprehensive investment portfolios.

With that change has come a change in attitude, viewing property in more classical investment terms, and that means looking at ways to diversify. When it comes to investing, no matter whether you are putting your money into stocks and shares or bricks and mortar, diversification is a fundamental strategy. Spreading the risk across different investment properties is a smart move. Even if you encounter issues with one property, the performance of the other properties can help limit the effects, and leave you in a stronger position than putting all of your eggs into just one or two baskets.

From the professional landlords we deal with, we have seen these diversification strategies take a couple of different forms. The first is simply a geographical one; landlords are well aware there are significantly higher yields in certain areas outside of London and the South East. As the latest LendInvest Buy-to-Let Index shows, cities like Wolverhampton, Birmingham and Manchester are all delivering terrific returns to wily landlords. The other tactic has been to look to other asset classes within property, for example by investing in Houses in Multiple Occupation (HMOs) and semi-commercial properties.

With semi-commercial buildings investors have been particularly attracted by the fact that they can avoid the additional 3% stamp duty surcharge normally levied on investment properties. Meanwhile, HMOs have won favour because of the higher rental yields often available. Looking beyond traditional residential properties is a good idea for many investors. Permitted development rights have made it more straightforward to turn disused commercial properties into residential ones, homes that are badly needed to meet demand, while the economics of HMOs will always catch the eye. However, diversification is not as simple as merely buying a property in Wolverhampton or snapping up a nice-looking HMO that happens to be available.

With geographical diversification, landlords need to think long and hard about the logistics. Who is going to handle the management of that property? It’s one thing to take a hands-on role if you have a cluster of local properties, but once you become a cross-country landlord you then need to place your faith in others to maintain the standards you have set. Similarly, finding the right property will take detailed research. Yes,  Wolverhampton may be performing well on the whole, but there’s more to it than that. Which particular areas in the city are delivering the strongest and most reliable returns, and why?

HMOs for example are a much different proposition to a vanilla rental property, even though you are still only looking for typical residential tenants. Landlords need to organise a licence for example, while the fact that different regions have their own rules covering the expectations that a landlord must live up to means investors will need to put time aside to discuss those rules with the local authority’s HMO officer. Similarly, while investing in a semi-commercial property may have certain tax benefits compared to a traditional rental home, it isn’t short of additional logistical hurdles, not least how to go about finding an appropriate commercial tenant. Diversification will remain a crucial strategy for landlords and moving beyond purely vanilla residential investment properties can be a sound and lucrative method for doing so. But it remains vital that investors and their advisers look beyond the talk of large yields and tax benefits to truly get to grips with what they are investing in from the outset, if you need help or advice contact Apple Finance on 01902 213201

 

 

 

Is it really harder for young people in Wolverhampton to buy a home

The Resolution Foundation has called for 25-year-olds to be paid £10,000 to help them afford homes, saying the ‘generational contract’ between young and old has broken down. But is it really harder for young people to buy a home now than it was 30 years ago? House prices were booming in the first half of 1988, when a typical first-time buyer home could cost £50,000. That same property now, according to the Halifax UK House Price Index, would cost £234,850. Since 1988, the Retail Prices Index has increased 2.7 times, according to the ONS, so, in real terms, £50,000 in 1988 is now worth £135,000 – making it harder to afford a deposit.

As regards mortgage repayments, a typical rate in 1988 was ten per cent (two per cent above the Bank of England base rate). Fixed rate mortgages were not generally available. So, the annual repayments on a £50,000 mortgage would have cost £5,000 – or £13,500 in today’s money. Today, it is possible to obtain a two year fixed-rate mortgage at 1.5 per cent, reverting to a variable rate of four per cent after two years. Annual repayments on a £234,850 mortgage are, respectively, £3522 and £9394.

In other words, it is harder for 25 year olds to save up a deposit and persuade a bank to advance them a mortgage, but if they can get over that hurdle they will find the mortgage repayments much cheaper than their parents did.

If you need help or advice call Apple Finance on  01902 213201