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Hi guys and welcome to another property news round-up this week we start off by focusing on the EU referendum and look at whether house prices will go down if we have a Brexit vote. We end our round-up in France for the Euros and take a look at the winners and losers of the tournament if it was based on property. Missed our last property news round-up? If so, catch up here.
Will Property Prices Go Down If There’s Brexit?
With less than three weeks to go until we cast our votes at our local polling stations on whether we should leave or stay in the European Union, one question that stands out in the property industry is whether property prices will go down if we leave.
So will it? Well, not exactly. Recent stats from National Statistics indicate that house prices are still rising fast. They increased at a rate of 9 per cent a year in the year to March 2016.Prices are predicted to increase by roughly a further 10 per cent by the end of 2018.
In addition the treasury have mentioned that the Brexit would bring about an increase in the general cost of borrowing across the economy. This, in turn, would crush demand for housing and lead to fewer transactions. (The Independent, June 2016). This would therefore have a negative effect on price growth. Some analysts have even said that leaving the EU would also have a negative effect on foreign investment – this causes problems for the top end of property investments in London and the ramifications would lead to reduced investments.
But we all want cheaper homes right? Some have argued that we should welcome lower prices because that will help make homes more affordable, especially for first time buyers. Pro-Brexit Tory Lead of the House of Commons Chris Grayling, has tried to expand on this topic, and mentioned that staying in Europe will make it even harder for young people to buy a house due to immigration from the Continent which, he claims, is driving up domestic demand for housing (as mentioned in a recent article by The Independent).
London Property : Prices Rise 432% In Two Decades
Property prices per square metre have risen by 432 per cent in Greater London over the past two decades. This compares to a national average increase of 251 per cent, or £2,216 per square mile according to data that was conducted by Halifax.
In addition, Land Registry data indicates Greater London has gone past the £600,000 milestone for the first time.
Moreover, property investment firm London Central Portfolio [LCP] have said that this new London average price (£600,076 to be precise) is 14 per cent higher than a year ago. This has been linked to low mortgage rates and the falling cost of stamp duty on properties costing less than £937,000.
Survey Claims Student BTL Investment Due For Major Expansion
Research from Mistoria Group found that one in 10 student property landlords say their HMOs enable them to offset the new tax rules and remain profitable, while a further 50 per cent do not believe any other asset class offers the same yields and return on investment as student property. (Letting Agent Today, June 2016)
The Mistoria Group’s report which was based on a survey of 500 landlords last month – reveals that 35 per cent of student landlords purchased HMO properties in the first quarter of this year to beat the new stamp duty rise, moreover, a further 43 per cent of landlords plan to acquire between two and three new student properties in the next 18 months.
Student accommodation has been the strongest growing investment property market in the UK and the north west has attracted many investors. For example, a HMO that houses four students, can be purchased for just £160,000.
Want know more about HMOs? Check out our handy infographic.
The North-West Has UK’s Highest Property Yields
According to research from LendInvest, the north-west of England produces the best average rental yields over the past five years. In addition, it is estimated that investors could achieve yields some 200% higher with property outside of the capital.
Manchester and Liverpool were top with regards to yields, Manchester producing yields of 6.02% whilst Liverpool saw yields of 5.15% respectively.
Manchester has Europe’s largest student population and a graduation retention rate of 58%, demand for rental accommodation within the northern city continues to outpace supply and continues to attract a wealth of investors.
Euro 16 : Winners & Losers Of The Property Championship
Property prices have changed a lot since the last the Euros in Poland and Ukraine.
Just like the property market in England, in Europe there is also a north-south divide.
Turkey, Iceland, Sweden, and Ireland had the biggest rises, though not all for the same reasons.
The Turks win the property championship with a 65.6% increase, Istanbul has helped The Crescent Stars in the tournament as there is burgeoning young population who are new to housing investment and eager to buy in the city that stretches across two continents.
Other successful nations such as the Republic of Ireland, benefited from a booming economy, with GDP expanding 7.8% in 2015 thanks to huge capital investments from abroad. Moving further north, Iceland has enjoyed a nice recovery since the 2008 financial crisis, with demand for high-end properties since 2013.
The Swede’s property boom was down to negative interest rates, many in the Scandinavian country are concerned that high household debt and low-interest rates could lead to a crash.
The home nations also saw property prices increase. As mentioned previously about London property, The average house price in the capital passed £600,000 mark.
Host nation France and one of the favourites to win the tournament, has experienced negative property price growth between 2012 and 2016. This could be inferred to a decrease in household income and stricter mortgage conditions.
See how other European countries did at the Euro 16 property championship below.
Image Source : Yahoo
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