Hello,
I hope you’ve had a fantastic week. Here at Track Capital, we have been discussing the supply-demand crisis currently rocking the UK property market, and the knock-on effects this has had on the wider economy.
New builds are not just a path to increased rental yields and capital appreciation. They are also crucial for the country’s success. If you are interested in learning more about the role new builds play in meeting housing demand, and which areas are most in need of new builds, contact us for a chat.
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 from having to click through.
Episode 40: Where Are the Best Buy-to-Let Areas in Liverpool? – The latest episode of the Pure Property Podcast is out now. You can listen to it on Apple Podcasts and all other major platforms.
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Property News This Week
- Tiny London Flat with Bed Next to Kitchen Rents for £1000pcm – Yes – It’s true. Located in one of the most expensive boroughs in London, this micro 1-room flat comes with no furnishings, no oven, no hob, a shared bathroom and a bed within arm’s reach of the kitchenette. And it could all be yours for just over £1000pcm! The advertisement for this property even goes so far as to suggest that the tiny space could be shared between two people. To rent a studio flat in Notting Hill averages around £1,300pcm, with property prices for the same studios valued at approximately £300K. This is around 36.5 times the average earnings in the area, giving Notting Hill the title of ‘least affordable borough in the UK.’ Campaigning for more affordable housing, the spokesperson for PricedOut has stated that rental prices are spiralling out of control due to the UK’s failure to provide enough homes for everyone who needs one. This sentiment has been echoed by the deputy leader of Kensington & Chelsea Council – but is any significant change really on the cards to fix this systemic economical crisis?
- More Investment in Affordable Homes is Needed – NOW – Over the past few months there has been a heavy media focus on the cost of living crisis, but where is the focus on one of the biggest issues for both renters and homebuyers across the UK – A lack of affordable housing? While newspapers shy away from commenting on this critical problem, figures from the ONS reveal that last year, buyers had to spend an average of 9.1 times their annual earnings to get on the property ladder. Compared with 2020 when the average house price spend was 7.9 times yearly earnings, it is easy to see why the ONS has referred to the increase as statistically significant. Between 2020 and 2021, less than 50% of affordable homes were built against the government’s target of 145,000. This is not just a problem affecting major cities either – it’s a national emergency. It has been suggested that establishing a government-backed pension fund that invests in affordable housing construction could make a difference, as could easing the financial pressure on BTL landlords, incentivising them to reduce rents.
- UK Housing Market Has Outpaced Global Share Prices – The team behind the Property Investor Show has revealed research that the UK housing market is still beating the stock market for overall growth, despite stocks doing very well in 2021. Backing this up is the Government’s Housing Market Index in March 2022, which also recorded that the average house price rise across the United Kingdom rose to 10.8% over the past year alone. Compared to the leading shares of the FTSE 100, the NASDAQ, the Dow Jones and the CAC 40, the UK house price rise has outperformed them all. Scotland, Wales and the North of England have been the best performing areas for potential capital gains, demonstrating the importance for investors in exploring emerging markets that still have the potential for significant returns, helping landlords stay on top of the increasing pressure of rising costs and a lack of much-needed government support.
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Canada Bans Foreign Property Investment as Sales Soar 50% – It appears that the Canadian government is finally ready to take action on the house price crisis that has raged for the past two years, driving property prices up by as much as 50% in that short time period. Facing a political backlash and public outcry over the unaffordable prices that have risen far beyond wage increases, Justin Trudeau has finally clamped down on overseas property investment and banned the majority of foreign investors from completing transactions for the next two years. It is hoped that this move will reduce competition for housing and cool the market. Canada has also committed to providing billions of dollars in housing aid to encourage construction activity. However, many experts are cynical about the potential of this change alone being enough to help, calling on the government for a more determined plan of action.
That is all we have for you this week. If you have any comments or questions on this week’s news summary then please feel free to send us an email at [email protected] – if not, see you next week.
