The Land Registry have just released
their latest set of figures for the Melton Mowbray Property market. It makes
interesting reading, as average property values in Melton Mowbray rose by 0.5%
in May. This leaves average property values 4.1% higher than 12 months ago,
meaning the annual rate of growth in the town fell to its lowest level since March
2014. When we compare Melton Mowbray against the regional picture, East
Midlands property values rose by 0.2%, leaving them 2.9% higher than a year
ago.
Obviously this is a far cry from the price rises we were
experiencing in Melton Mowbray throughout 2014. At one point (October 2014 to
be exact) property values were rising by 7.7% a year. All the same, even with
the tempering of the Melton Mowbray property values in 2015, property values
are still higher. This is good news for local homeowners who had been affected
by the downturn after 2007 and still find themselves in negative equity.
However, the thing that concerns me is that the average number
of properties changing hands (ie selling) has dropped substantially over the
last 12 months in the town. In April 2014, 43 properties sold in Melton Mowbray
but in April 2015, that figure dropped to 18.
I have been in the Melton Mowbray property market for quite a while now and
the one thing I have noticed over the last few years has been the subtle change
in the traditional seasonality of the Melton Mowbray property market. It has
been particularly noticeable this year in that the normal post Easter flood of
properties coming onto the market was not seen. This has made an imbalance
between supply and demand, with less houses coming onto the market there is simply
not as much choice of properties to buy in Melton Mowbray and with the
population of Melton Mowbray ever increasing, this will generally strengthen house
price growth for the foreseeable future.
So what does all this mean for Melton Mowbray landlords or
those considering dipping their toe into the buy to let market for the first
time? For many people, buy to let looks
a good investment, providing landlords with a decent income at a time of low interest
rates and stock market unpredictability.
However, if you are thinking
of investing in bricks and mortar in Melton Mowbray, it is important to do
things correctly. As an investment to provide you with income, for those
with enough savings to raise a big deposit, buy to let looks particularly good,
especially compared to low savings rates and stock market yo-yo’s. I must also
remind readers, landlords have two opportunities to make money from property,
not only is there the rent (income), but with the property market bouncing back
over the last few years, property value increases has spurred on more investors
to buy property in the hope of its value continuing to rise.
Savvy landlords with decent deposits can fix their mortgages
at just over 3% for five years, making many deals stack up. Nevertheless, low rates
cannot stay low forever, because one day they must rise and you need to know
your property can stand that test. I saw some Melton Mowbray landlords
struggling in the mid noughties, when interest rates rose from 3.5% in July
2003 to 5.75% in July 2007. That might not sound a lot, but that was the
difference of making a £100 a month profit in 2003 to having to make up a
shortfall in the mortgage payments of £100 per month in 2007.
Its true many landlords were thrown a life raft when the base rate dropped to 0.5% in March 2009. Whilst interest rates have remained there since, mark my words, they will rise again in the future. However, even with the potential for costs to rise, demand for decent rental properties remains high as there are ever more tenants in the market, driving up demand and thus rents. The British love of bricks and mortar plus improving mortgage deals also add up to fuel the buoyant Melton Mowbray property market.
Its true many landlords were thrown a life raft when the base rate dropped to 0.5% in March 2009. Whilst interest rates have remained there since, mark my words, they will rise again in the future. However, even with the potential for costs to rise, demand for decent rental properties remains high as there are ever more tenants in the market, driving up demand and thus rents. The British love of bricks and mortar plus improving mortgage deals also add up to fuel the buoyant Melton Mowbray property market.
If you are planning on investing in the Melton Mowbray
property market, or just want to know more, things to consider for a successful
buy to let investment, I would welcome the opportunity to meet up at our Burton Street offices, give me a call on 01664 569700.
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