Property investment news catches up with Gladfish predictions
Regional cities are experiencing a renaissance in house price growth and sales, and Manchester is leading the way. It won’t come as a surprise to Gladfish clients. Our Hotspot Algorithm picked out Manchester as a star market of the future in August 2015. And we’ve recently updated our Manchester Property Investment Guide.
Here are the highlights of the week’s property investment news:
House sales and prices are taking off in regional cities
The Hometrack Index report concludes that regional cities are in the early stages of the housing recovery, while turnover has been flat or falling in the less affordable cities including London, Bristol, Oxford and Cambridge. It found that:
- Sales volumes in Liverpool and Manchester are up by more than 40% in three years.
- Property prices in regional cities are growing faster than those in London. Strong house price growth is seen in Portsmouth (8.1%), Birmingham (7.4%), Leicester (7.2%) and Liverpool (6.8%).
- Manchester leads the pack with house price growth of 8.8%.
- Price growth in London slipped to 5.6%, down from 12.8% a year ago.
The report says that prices in London and other previously fast-growing cities have been negatively affected by weaker investor demand, the impact of Brexit, and, most notably, affordability issues.
It forecasts that sales volumes in the most expensive cities will fall by around 5% during 2017, with affordability constraining demand. While regional cities may witness slower growth in demand, there remains continued upside for activity and house prices, the report states.
Follow the money – look east when investing in London
Wealthy investors in London property have turned east. Central hotspots have cooled, and outer boroughs in the east of London have heated up. Boroughs such as Havering, Barking and Dagenham are attracting more buyers.
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Transaction numbers fell most where there had previously been high volumes and price rises. For example:
- Hackney – sales down 37%
- The City of London – sales down 46%
- Kensington and Chelsea – sales down 24%
Prices in these boroughs have fallen by between 5% and 9% during 2016.
Meanwhile, property in the east of London is among the hottest in the UK:
- Havering – property prices up by 18% in 2016
- Barking and Dagenham – prices up by 18% in 2016
Areas to watch in 2017 include London’s outer boroughs – those that are benefiting from regeneration and better transport connections prompted by the Elizabeth Line.
Buy-to-let investors aren’t put off using an agent as fees rise
The proposed ban on letting agency fees is not putting off investors from using investment property management services (as we first discussed in our blog, “Why the ban on letting agency fees is not a factor for property investment”).
Though nearly 80% of buy-to-let investors expect their agents to raise fees because of the ban, only 9% say they will leave their agent if fees are raised to compensate for the ban. However, investors are planning to mitigate the higher fees: 40% of investors say they will raise the rents they charge to cover the fees.
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