Welcoming the green shoots
in the Residential Property Market
Spring is here! Historically, the time of the year when many people consider putting their homes on the market and moving to a new property; however, since the downturn in the property market the big question everyone is asking is: “Will it happen this year?”
From the beginning of 2009 there has undoubtedly been more activity in both viewings and sales agreed. A number of buyers have preferred to invest in bricks and mortar and are shunning alternative forms of investment, due in part to the derisory bank deposit rates and the volatility of the stock market. The purchases of investment properties, which are funded with cash without a mortgage and with a good rental market, bring in a net return in the region of 6%.
Whilst the mortgage market is improving, the number of mortgages offered having increased over the last two consecutive months, it has got a long way to go until we reach the value and number of mortgages offered in January 2008. Lenders are offering good mortgage products for those house buyers who have in excess of 20% equity available and a good credit rating, also for buy to let borrowers who have in excess of 30% equity available and a good proposed rental income.
There are occasions when a property owner has no choice but to enter the market due to relocation, or more traumatic reasons such as death, matrimonial problems or financial difficulties. In these cases there are alternatives to be explored. Delaying the sale of one property by converting it to a buy to let property (with a suitable mortgage) can release capital to buy the new property, or why not consider selling at auction? Auction houses often are associated with repossession cases or forced sales, which is not necessarily true.
When buying, either as an owner occupier or an investor, the same principles apply. Firstly, get advice from an experienced local valuer on the location and type of property to be bought and on the rental market, in the case of an investment purchase. Secondly, consider engaging the services of a relocation agent when moving to an unknown area, which can save considerable time and secure properties that would otherwise be missed. Thirdly, the engagement and advice of an experienced property lawyer who can work with a financial adviser, mortgage adviser and accountant will maximise benefits gained from property ownership in the short and long-term, as part of a balanced asset portfolio.
There are signs that the value of properties in the Yorkshire region have stabilised and, as this continues, it will increase the confidence of sellers and buyers to come into the market and as spring unfolds I think we will at last see those green shoots
Yorkshire Ridings Magazine, spring 2009