Property Alert 26th September 2014

Here we are again with some more news and views for the UK property
market…

Asking Prices – An Update

The latest Rightmove index reveals that asking prices in England and
Wales rose by 0.9 per cent month-on-month in September to take the
average asking price to £264,875. ‘We usually see a price fall at this
time of year as potential home movers are generally still in holiday
mode. However, it looks like there are early signs of a bounce back in
demand after the summer lull, leaving those estate agents with a
shortage of stock at a potential disadvantage and therefore eager to
attract new instructions.’

‘While there is more property coming to market this year, it has been
more than swallowed up by increased sales. There is already 10 per cent
less property available per estate agency branch compared to this time
a year ago, and with enquiries by phone and email to agents up by 16
per cent compared to August last year, and at near record levels, you
can see why there has been an earlier than usual price pick-up.’

‘The ability of potential buyers to remain on-watch and in-touch and
react more quickly is also a factor. While you may be switched off from
work during the summer break, many people’s mobile devices are still
switched on to the internet to see what’s coming to market. So far,
2014 has proved to be the ‘year to move’, with consumer confidence
buoyed by consistently low interest rates and improving economic data.’

BTL Don’t’s

Our friends at Residential Landlord offer five must-avoid mistakes for
first-time BTL investors. Let’s quote a little of each…

Investing Short-Term

Buy-to-let investing is a long-term proposition intended to build
wealth over years of investing. Its main advantage over house flipping
is that it is less dependent on the volatility of retail housing
prices. Do not make the mistake of expecting to get quick rich with
buy-to-let property. If you are going to do it, plan to be in for the
long haul.

Becoming Emotionally Attached

Property can have a strange effect on people in that leads them to
become emotionally attached. This is a mistake for investors. Investing
in buy-to-let property requires you always remember one simple fact:
what you are doing is a business. Avoid becoming emotionally attached
to the properties you purchase, no matter how wonderful they may appear
to you.

Failing to Shop for a Mortgage

One of the biggest mistakes new investors make is not taking the time
to shop for mortgages. Compare mortgage options for that first
property, and then continue comparing every time you purchase a new
house. Do not simply go with the same lender because it’s convenient.

Purchasing from the Retail Market

Perhaps the second biggest mistake among new property investors is
trying to purchase investment properties from the retail market. Why is
this a mistake? Because buy-to-let investing is no different from any
other type of investing in as much as you want to ‘buy low and sell
high’. Buying low is not possible when you purchase from the retail
market. Never forget that retail prices are determined by a combination
of supply and demand along with the profit earned by estate agents and
others.

Failing to Research Locations

The point of researching a location is one of understanding who lives
there, who is likely to live there in the future, and what types of
people your tenants will most likely be. Stay away from any market that
appears too weak to support a long-term investment.

The Market – Where Next?

Going back to Rightmove, their director, Miles Shipside offers an
outlook for us. ‘Speculation amongst economic forecasters on topics
such as upwards pressure on interest rates, availability of wholesale
funding for lenders, and the geographic location of major financial
institutions are potentially destabilising influences on consumer
sentiment.’

‘From a buyer perspective when other home-movers are nervous it can be
a good time to act, as harder bargains can be driven. Those who are
buying and selling in the same transaction may have to drop their
selling price but could be able to make up the difference by paying a
lower price for their onward move.’

‘Locking into a fixed rate mortgage would help guard against any
increased interest rate volatility. The other point to remember is that
waiting and pinpointing the best time to move can leave your life and
future property enjoyment on hold for years, so if the sums stack up
and the property suits your needs then it might be best to ignore the
what-ifs and maybes.

That’s it, see you again soon.

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