Weekly Property News Round Up – 24.06.23

Weekly Property News Round Up – 24.06.23

Hello ,

I hope you are well. We are coming to the end of the first half of 2023, during which time we have added a wide variety of incredible new developments to our portfolio that span the UK and offer investors some exceptional yields.

From attractive office conversions and affordable, high-yielding HMOs to ultra-luxury high-rise apartments and serene waterfront residences, there is something for every taste and budget.

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Now, let’s take a look at all the headlines that caught our attention this week. I always try to summarise the links to save you having to click through.

News

Episode 63: A Pulse Check on the UK’s Property Market Rollercoaster! – The latest episode of the Pure Property Podcast is out now. You can listen to it on Apple Podcasts and all other major platforms.

Remember, you can also listen to this week’s newsletter on the podcast as well.

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UK mortgage rates have recently surged, with the average two-year fixed deal exceeding 6%. This is following the Bank of England’s 13th consecutive interest rate increase, which brought the rate to 5%.

Predictions indicate that the base interest rate may peak at 6% this year. The Institute for Fiscal Studies warns that this could reduce the disposable income of one million UK mortgage holders by 20%.

However, IMF economists predict that interest rates will eventually return to pre-pandemic levels, which would cause mortgage rates to fall.

Rising interest rates could result in 1.4 million mortgage holders, particularly those under 40, losing over 20% of their disposable incomes, warns the Institute for Fiscal Studies (IFS). Banks have already raised mortgage rates in anticipation of the Bank of England increasing base rates.

Consequently, mortgage holders may pay about £280 more each month. Fixed-rate mortgage deals have protected some, but many such contracts will end this year, exposing people to higher costs. Despite this, the UK government has ruled out substantial financial support for mortgage holders.

Despite recent struggles, UK commercial property trusts could offer a potential bargain for investors. Commercial property has been hit hard by Brexit, COVID-19 lockdowns, and market turmoil, with average funds generating only around a 2% return in the past five years. 

Recently, however, some financial experts suggest this sell-off has created buying opportunities. Despite challenges such as remote working and economic stress, analysts think the situation can only improve. 

Especially, UK listed property funds, currently trading at substantial discounts, could offer value for long-term investors.

The cost of living crisis in the UK is set to worsen as annual rental prices rose 5% in May, the highest rate in seven years, with London experiencing a 5.1% increase.

The rising mortgage rates, which have reached nearly 2007 levels, are making home buying challenging, escalating rental demand. The ONS reported a drop in the average UK house price to £286,000 in April.

The rental market is also affected by a lack of housing stock, resulting from tax changes impacting landlords. Experts caution against introducing mortgage subsidies or price controls, suggesting instead tax and regulatory reforms.

That is all we have for you this week. If you have any comments or questions on this weeks news summary then please feel free to hit ‘reply’ – if not, see you next week.

Tobi Mancuso
Director, Track Capital

Listen to The Pure Property Podcast from Track Capital here

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