Investment experts got it wrong again. House prices are up

Avoid the mistake of ignoring the number one rule of property investment

When I read the investment news towards the end of last year, I couldn’t help but have a little chuckle to myself. Various experts, including RICS, Nationwide, John Charcol and Henry Pryor, have forecast that house prices in the UK will rise by a maximum of 3% this year and could fall by 4%. They have cited factors which include:

  • Affordability
  • The Brexit effect
  • Over-inflated property markets
  • Higher stamp duty
  • UK property tax changes

Hardly a mention of the massive disparity that still exists between the number of homes being built and the demand for homes in this country, and what the UK homes shortage means for property investors.

The latest property investment news confounds experts

The chief economist at IHS Markit, Dr. Howard Archer, expects the UK property market to deteriorate. He would have been surprised by Nationwide’s recorded 4.3% annual increase announced in January. While this is the lowest growth rate for 14 months, it’s still more robust than many had predicted.

The robustness of the UK housing market has prompted Archer to have a rethink. Last autumn he was predicting a 2017 fall of 2%. Now he’s predicting another year of growth at 3% – lower than 2016, but a complete turnaround from his previous forecast.

Property investment in regional cities performed best in 2016

Regional cities were the star performers in 2016, as focus shifted from London property investment. It, of course, won’t be news to regular readers of our property investment research. We still see some incredible opportunities for investors in London off-plan property, but the opportunities further afield have been evident for some time. The latest house price survey from Hometrack has confirmed our views.

Our Bristol investment guide highlighted the reasons behind the huge demand for property in the city. In 2016, Bristol topped the list of UK investment property price growth with the average house price rising by 9.6% to £261,600.

Our Manchester property investment guide described the huge government investment in the city and the other property fundamentals that are translating into demand for homes. Residential property prices have responded with a rise of 8.9% – the fastest growth in the metropolitan district for more than ten years.

Birmingham, too, witnessed average prices rising by more than the UK average. In our Birmingham property investment guide we noted that, in our opinion, it is the best place in the UK for businesses to invest. And where businesses invest, demand for homes goes up.

These three cities, together with OxfordPortsmouth and Southampton, saw their rate of investment property prices growth race ahead of London.

Only Aberdeen saw house prices fall, as demand for homes in the city was hit square on the chin by the rapid slowdown in the offshore oil and gas industry (evidence that property investors must always beware of an area that is reliant on a single industry or employer for jobs).

How can you spot the next property hotspots?

By the time the mainstream press floods its property investment pages with stories of the property hotspots where you ‘simply must invest’, those hotspots are probably past their best performance period. The news is backward-looking, not forward-thinking.

Here at Gladfish, our researchers work differently. Our unique Hotspots Algorithm assesses 108 data points across 324 UK districts. We examine all the property fundamentals that create demand for homes now and will sustain that demand over the lifetime of an investment. We package all this information into property investment guides that are free to download. In these investment guides, you get:

  • Investment summaries to read if you're short on time.
  • The story behind the area; why we think it’s ripe for investment now.
  • Analysis of the fundamentals (e.g. shops, schools, transport links, major employers and major investment) that make the area ripe for investment.

To read more about our research and get free access to all our property investment guides.

Give our team a call on +44 (0)207 923 6100.

Live with passion

Brett Alegre-Wood

Brett Alegre-Wood
February 19, 2017

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