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Richlist

Property Prices....Big Increases

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Prices up 0.8% in October

Average UK home now costs £287,000

Eastern England prices rose 10.4% in the last year.

South East prices rose 9.5%

Reasons given are shortage of supply and very strong demand.

Nationwide say prices up 3.7% for the past year.                                                       Halifax say 9%                                                                                                                    Land Registry (Eng'& Wales only) say 5.6%...........which rather suggest none of them really know the exact figure.

Suffice to say prices are up........rents will follow shortly. My rents will be raised 5% asap.

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Shortage around here of suitable property. All the LA's are stating that they just do not have enough property on their books and have not  for 6 months.

Good example is a property next door to one of my properties.  In 2012 it was sold.    Last Friday it came on the market at 12 midday on Rightmove. By 3pm it was sold.  The couple, on paper, made a cool £35,000  "profit" in 3 years.  Crazy.imo.

 I will find out if it was an investor which it probable was. I do know Serco Ltd. and local government are buying up property to house refugees in my area.

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Prices have indeed shot up, along with rents. 

But, it's worth remembering that demand alone doesn't force prices up, it's the banks willingness to lend which makes a far greater impact on prices. So long as the economy holds and banks lend, the prices will continue to rise due to demand. But, remember 2008, things can go South if liquidity dries up so make sure you have "b" plans in place for long terms security. 

Six years ago the Bank of England cut the base rate to its historic low of 0.5% and my guess is that our debt levels have "check mated" us, making it difficult to raise them at all without causing a recession. As debt levels rise, landlords need to focus more than ever on buying for cash flow rather than jumping on the long term equity growth bandwagon.

What do you guys think?

 

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Yes I agree 100%.

When I started buying and letting residential property in 1999 it really was all about capital growth, although I didn't realise it at the time. Property prices were rising so fast it made any profit from rental income almost incidental.

Over the past 16 years or so that situation has been turned on its head. Rental income, (or rather the profits after costs are deducted) has become THE most important thing rather than capital growth and helped tremendously by low mortgage rates.

Availability of BMV (below market value) property has reduced considerably as well. With low interest rates there are less repossessions coming to market.

Prices have risen sharply in most of the country over the last couple of years but revenue is still the primary mover for me.

 

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Its 6 months or so since I last looked at 'my' property price increases, they hadn't much and some maybe dropped over the previous year a little.

My gut tells me that they haven't risen since, but I hope for a nice surprise.

The forecast continued low interest will encourage some purchases both private and BTL. The continued attack on BTL's by legislation and tax changes will obviously offset some of that.

The cash flow will clearly become more critical as interest rates do rise. As I imagine there will be many that are still in negative equity due to remortgaging pre crash  when money was thrown at us, and they being in areas that aren't seeing the property boom that I read of, some may fail. But when rates do rise it is likely to be gentle as the B of E monitor market effects.

This year I've increased my rents by 3.6% on average, I seem to be getting away with it but as I've 3 just come empty we'll see what the result is as I re let. Last year I increased by 2.2% avarage. 

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Property prices have increased in my North Wiltshire area but you can see that some of the prices being asked are from "dreamer's" rather than a proper valuation based on any facts.

I receive all the new property listings and I know my area and market like the the back of my hand and I know straight away what will sell and what will struggle. More often than not I get the properties coming back at me on Rightmove at reduced prices sometimes two or three times reduced in price before they actually sell.  (  I am watching one right now that has taken my eye :D  I have about 28 days to complete on it if I were to go for it to save a few thousand pounds in extra stamp duty )

I never thought for one moment that property would rise so quickly as it has done in the last 2 years but personally I think it will flatten off post April as the BTL market shrinks through lack of buyer's and to me, the over inflated price being asked.

Another interesting fact that caused a mini selling boom near to me was when a cash investor bought 15 low'ish cost BTL properties in a week (stc). This was about 18 months ago. I knew the investor as well......and still do.

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I'm selling a small flat in my part of Essex at the moment that has increased in value, I estimate, by 27% over the last 2 years.

An investment buyer was found virtually the same day that it went on the market and the buyer knows we will not be completing until after April 6th, so they are faced with paying a total of 5% sdlt.

There is a massive shortage of good quality property at the right price and that ain't gonna change any time soon. They knew that if they didn't buy it someone else would be along.

 

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On 02/03/2016 at 8:16 AM, Richlist said:

Yes I agree 100%.

When I started buying and letting residential property in 1999 it really was all about capital growth, although I didn't realise it at the time. Property prices were rising so fast it made any profit from rental income almost incidental.

Over the past 16 years or so that situation has been turned on its head. Rental income, (or rather the profits after costs are deducted) has become THE most important thing rather than capital growth and helped tremendously by low mortgage rates.

Availability of BMV (below market value) property has reduced considerably as well. With low interest rates there are less repossessions coming to market.

Prices have risen sharply in most of the country over the last couple of years but revenue is still the primary mover for me.

 

Totally agree with you - We're always pushing the idea of maximising cash flow because capital growth should never be relied upon and we know that interest rates won't get much lower! Now, more than ever before, landlords need to treat their portfolio as a business. It amazing me how few landlords are honest about their outgoings, you need to be very clear on what your ROI is, which is way more telling than yield alone. 

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There are certainly some strange prices out there.  For the last 18  months I have been dealing with the sale of a London flat (not mine) the price has gone from 585K down to 535K - that was 8 weeks ago and now back up to 585K depending on buyer. None of them seem able to exchange let alone complete.  As a freeholder I am well fed up with the paperwork so am going on strike until after 6 April.  The government needs the money!

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