Over
the last 12 months, property values have risen, on average by 9.5% in Melton.
Good news all round, but when you consider property values in the town have
previously dropped by 16.44% between March 2008 and May 2009, this is not as
good as the media would have you believe.
It should be no great surprise to hear that Melton property values are
starting slow up as we head in to the New Year.
Property values in the town were growing at an impressive 1.3% in the
Spring months of 2014, but in early Winter months, they slowed down considerably,
rising by only 0.2% a month.
The
reality is we have had 15 months (since the late 2013) of decent market
conditions in Melton, but now all that pent up demand is starting to fade. The
big question moving forward is whether the Melton market will now be held back
by affordability and restricted mortgage lending, and what long term impact
this will have on the Melton property market. It is obvious to me and my fellow
estate agents in Melton, that I talk to in the town, that we all are beginning
to be wary about the direction of the market as a result of the not as strong
demand and fewer house sales.
This
is all good news for landlords looking to buy rental property because you could
bag a bargain during this lull, especially with the changes in stamp duty and
later in 2015, the new rules regarding pensions, where you will be able to take
money out of your pension pot to invest in property. However, at the same time,
I would say don’t just buy any old property in Melton. First time landlords need
to be cautious. The doubling of house prices every seven to ten years which has
taken place since WW2 doesn’t seem to have been seen since the mid 2000’s. The property
market is shifting with more properties being built and restrictions put on
mortgage lending, the likelihood of the property market increasing at the same
levels as the past are questionable. But investing in property is also about
receiving the rent.
So to answer the question, what will happen in 2015. Supply and demand
become increasingly better balanced, so house price gains in Melton will
continue to drift down towards zero over the next few months until the General
Election, but I do not expect sustained house price falls in the town like we
did in 2008 (as mentioned above) thanks to record low mortgage rates, rising
wages and early signs that lenders are starting to increase the availability of
mortgages. If I had to stick my neck out
on this, depending on the election result, property values will either be
either 3% to 4% lower by the end of the year if we have a hung Parliament (because of the uncertainty that brings) or a
modest rise of 3% to 4% if the Conservatives get back into power.
On the one hand going for high yielding Melton property to
rent out seems an obvious choice, but high yielding property often does not go
up in value that well and in some circumstances does not keep up with inflation,
meaning in real terms you have a depreciating asset . So surely you should pick
a property that has great capital growth then, because of the obvious potential
to generate long term capital profit, especially with inflation eating away at
our savings. However, rental yields on high capital growth properties tend to
be low meaning if you are taking a high percentage mortgage, the rent does not
pay the mortgage payments. Or you could look for a property with a bit of both?
(yield and capital growth).
If you are unsure what to do, be you a first time landlord or
a seasoned pro, feel free to pop your head round our door or email me on charlotte.baker@belvoirlettings.com I know what sort of properties match whatever
you want from your property investment and I can give you my honest unbiased opinion
