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Inflation decreases in the UK: Inflation is down to 6.8% with falling energy prices mark a considerable improvement to the lending economy. They indicate a greater level of stability for the market as growth becomes more sustainable – seen in the rise in housing prices in-line with projected capital growth.
This marks a return to something like normality as energy prices and inflation both decrease to more manageable levels. For many savers, this represents a better time to buy as fears of a crash ease off, and volatility begins to cool once again. Great news for investors, with long-term savings experiencing greater stability – and freeing up space for revenue-driven investments.
NO CRASH: Transaction Values Rise Again: Defeating fears of crashing, house prices have shown sustainable growth everywhere but London, with a 1.7% rise in transacted values in June 2023. That means we’re not looking at valuation-inflation or over-eager estate agents, but a baseline increase in spending per property in real terms.
As always, avoiding London and focusing on the UK’s over-performing Midland and Northern cities provides a “second chance” at the kind of growth that put London in this position. Increasingly, lower prices over-deliver as spending looks to cascade down from London to Birmingham and Manchester, or Liverpool, Sheffield, and outlying areas.
The off-plan market benefits from these trends, avoiding secondary market costs, providing a buffer against price rises and reassuring us that we’re in the right business!
MORE Interest Rate Cuts: Skipton leads another round of cuts to mortgage rates as inter-bank lending rates decrease, signalling a more confident lending market.
Despite a rocky mortgage market for older lenders, new mortgage lending continues to receive attention at thinner margins by banks in order to increase demand. This is a double benefit to lenders with inflation slowing and a general improvement in market sentiment.
While some interpret these as ill tidings, we are happy to see markets correcting to sustainable growth, calming earlier concerns about inflation-led recession.
Rental Demand Rises, Driving Rental Growth:
The rental market continues to experience rent rises due to a continued imbalance of high renter demand and limited housing supply.
With a drop off in landlord participation in 2023, rental prices continue to rise. According to HomeTrack, newbuilds continue to outperform on capital growth, offering better HMO offerings, with ongoing developments seeing a strong return vs older houses, especially with upcoming EPC compliance costs.
As mentioned in last week’s newsletter, the government call for greater private rental sector strength is the main gap in the market. New buyer inquiries have dropped because house prices are high – which once again reminds us that off-plan purchases beat the market on price and returns.
It’s a great time to be a property investor if you’ve got the capital, as each purchased unit starts to have more impact on the market and lower occupancy risks than ever.
That’s all of this week’s most important news. If you’ve got any comments or questions about any of these headlines, hit reply and we can go over the details, implications, or your thoughts.
Otherwise, I’ll see you next week for your property market round-up. Have a great weekend!
Director, Track Capital
Listen to The Pure Property Podcast from Track Capital here