A new year is a time for new goals and new strategic investments. With 2020 now in full swing, many people are considering whether to invest in property this coming year. The good news is that thanks to a stable market, the emergence of buy-to-let hotspots, low interest rates and the removal of market uncertainty, 2020 is a great time to invest in property. Here, we take a look at all four of these reasons in greater detail.
1. A Stable Industry with Price Growth
As we noted in our review of the past 20 years, house price statistics currently show a good level of stability in the market. Looking specifically at the year ahead, very few economists predict a downward trend for house prices, and it looks like we may be set for further price growth – after all, house prices have just risen at their fastest annual rate for 14 months according to Nationwide, with an increase of 1.9% in January.
It’s also important to consider that the market has grown rapidly in the past. For example, data from Nationwide shows that house price growth has been on average 309% over the past 25 years. Even when we look at the shorter term, growth is still apparent, with 41.2% growth over the past decade and 18.2% over the past five years. It’s also important to know that these are national averages, and some areas, like central London, have also vastly outperformed these figures.
With further growth predicted for the year, now could be the time to capitalise on this trend and purchase a long-term investment property.
2. The Emergence of Buy-to-Let Hotspots
Over the past couple of years, we’ve seen a number of buy-to-let hotspots emerge, particularly in the north of England.
Manchester, Leeds, Liverpool and Birmingham have all offered higher yields than London and south-east England recently, and house prices are significantly lower. This makes these cities particularly attractive for first-time investors. Plus, thanks to the high student and recent graduate populations in these areas, demand for rental properties is forecasted to remain high in 2020 and beyond.
However, you should remember that even though these properties are cheaper, this doesn’t automatically make them a good investment. Before you buy, you should do your research to make sure you can sell or rent them easily.
3. Low Mortgage Rates
At the start of 2020, mortgage rates remain at an all-time low. As a result, we’ve seen a number of buyers take out fixed mortgages over five or 10-year periods, locking in these interest rates for the long term.
As the mortgage market remains highly competitive, lenders are keen to win your business and are keeping rates low. This is particularly true in the buy-to-let market, where lenders have recently introduced low rates. Over the next few years though, many analysts believe that mortgage rates may begin to rise again, so acting quickly will ensure you get the best rates.
4. The Removal of Market Uncertainty
Over the past few years, the looming spectre of Brexit (and the political instability it has caused), has loomed over the housing market. Now, with the UK set to finally leave the EU, a greater degree of certainty will return to the market.
A so-called ‘Boris Bounce’ at the end of 2019 proved largely unfounded in spite of the fact that many large deals were completed in London following the election, with overseas buyers and investors purchasing luxury homes in the capital. But many experts believe that the end of political uncertainty will bring the market back to life, with more properties coming to the market and more people committing to purchases due to increased market certainty.
Remember though, that other market factors are at play, but the general consensus from economists and property experts is that the certainty of the election result will bring clarity to the housing market; particularly as the threat of recession has subsided.
If you’re considering investing in property in 2020, then please get in touch. At Phillips & Southern, we have many years of experience and knowledge in dealing with investment properties that we’d love to share with you. Please get in touch with us on 020 7731 9820 or email [email protected].