Back in March it was reported that property Investors were on the rush as a 3% stamp duty was close to being introduced. Now 6 months later, what have the implications of this been? This period showed a jump of 50,000 properties being sold in a single month, but also had a severe effect on the period after where transactions halved in April. The rise on property transaction to the same time in 2015 was a 77% increase. Gross Lending is up also at around 50% for the same periods.
It is vital for any potential investors to consider that these increases were mainly due to the buying frenzy brought about before the Stamp Duty increase. What is of more importance is if this frenzy has had any effect on the property market. For cities such as Liverpool, London and Manchester a continued growth of over 10% on a yearly basis is continuing, whilst more rural areas are closer to an 8% rise. These figures have remained roughly the same, meaning that stamp duty or the effect of stamp duty has had no real bearing on the market as of yet. However, this is to be confirmed as it will need several years of data for accurate readings. The highest price jump was witnessed in Liverpool at a staggering 15.6% from march 2015 to the following March in 2016. This is a welcome change for the city as it had previously been one of the weakest areas in terms of property prices.
Predictions will become increasingly difficult following the UK's impending Brexit. Currently, property prices have been kept afloat by foreign investors taking advantage of the currency situation, and the simple fact that the pound isn’t worth as much, therefore the drop in house prices may already have happened through inflation. This means house prices for UK citizens have not seemed to budge but for buyers from outside the UK, Britain's property market is currently a massive discount sale.
In the coming months and years, we will expect to see some kind of drop in the property price growth due to Brexit repercussions. However, we are certain prices will keep be moving up, albeit more modestly. Once the Brexit storm has settled then we fully expect business as usual. We do not expect to see any further changes in stamp duty, or at least we have not heard anything, so we are assuming this can now be set as a constant.
In conclusion, there will be no great surge in property prices outside the norm, but equally the likelihood of a property market crash is unthinkable. With rental yields for Buy-to-let investors as high as 10%, we continue to see a growing number of properties being bought by investors rather than actual residents. Investors are often cash buyers and this may have an effect on mortgages with more people forced into letting and renting.
This article was provided by Henley Consultants
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