Since the UK came out of lockdown there have been reports that we are seeing a property mini boom:
*Sales agreed data suggests a 13 year high for the market. Year-on-year, the number of sales per branch increased by 44%.
*The number of house hunters registered per estate agent branch rose by 13%, increasing from 379 in June to 428. (Zoopla)
*In July 2020 in the UK 8% of properties sold for more than the original asking price and year-on-year housing demand is up by a third. (Zoopla)
*Year-on-year, housing demand is up by a third.
*The post-lockdown housing market rebound shows few signs of slowing despite the UK going into recession, with the number of new sales agreed in August on Zoopla running 76% ahead of the five-year average. (Zoopla)
*Buyer appetite since the start of 2020 is now 34% higher than the same eight months in 2019 and, despite the summer holidays, it remains unseasonably strong. (Zoopla)
*More homes are coming onto the market, with the flow of new supply over the last month 50% up on this time last year. (Nationwide)
*Edinburgh house prices rose by 3% and Glasgow 2.2%
*During Q2 of 2020, average rents in Glasgow rose by 1.4% year-on-year to £810. Four bedroom properties experienced the greatest year-on-year increase in rents, rising by 3.1% to £1,858. (Zoopla)
*The buy-to-let mortgage market is showing signs of recovery after the number of deals nearly halved during the early weeks of the coronavirus pandemic. The average cost of two-year and five-year fixed rate mortgages have also fallen slightly compared with March, to stand at 2.72% and 3.11% respectively. (Nationwide)
How is this possible when house prices crashed in the last recession? It’s possible that this is because the recession we are seeing today has been driven by a health crisis wheras the last recession in 2008 was driven by finance. The Government chose to shut down certain markets whilst implementing measures to support businesses affected by the pandemic with incentives to boost the property market such as a rise in the Stamp Duty/LBTT threshold.
So why is it still a good idea to invest in property?
House price predictions from Savills shows that prices are expected to grow by an average of 15% by 2024 although London will see with just a 5% increase. Alongside house price rises, rents are also set to increase.
Demand for homes is exceptionally high and this supply and demand imbalance is supporting the headline rate of growth with the time to sell a property falling since lockdown.
With the stamp duty holiday set to end in 2021 it’s a great time to take advantage of this – although for investors the 3% additional property rate is still in effect.
Aside from the financial analysis, socially nearly 40% of millennials are still renting at age 30 and a third of the wider generation are expected to rent into retirement. It’s also believed by the Resolution Foundation that UK renters will outnumber homeowners by 2039. What’s more, the UK population looks set to reach 74 million in 20 years, a sign that the house demand is rising.
At present interest rates are low so you can secure a very competitive buy-to-let mortgage rate making the investment process more accessible.
Finally, for foreign investors, the weakness of the pound continues to be an opportunity to save money long-term especially where the market here in Scotland is so affordable compared to the rest of Europe.
Talk to us if you would find out more about rental values in Glasgow.