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The monthly magazine providing news analysis and professional research for the discerning private investor/landlord

Editor's Comments

Richard Bowser's introduction from February 2013

The long running Eurozone crisis seems to be at least on hold and it also appears that fears over US government debt levels and a 'fiscal cliff' have been resolved. So with 'fear' levels suppressed, the opposite emotion of 'greed' has re-surfaced as stock markets in Wall Street and London's Square Mile have seen a strong start to the year, with more retail investors seemingly attracted to a possible new bull market. At the time of writing the FTSE 100 is at 6263, having risen around by over 300 points since the start of the year, yet this much publicised 'high' is still some way short of the 6930 level reached fourteen years ago at the end of 1999 at the height of the technology 'boom'.

This financial market confidence is partly underlined by the more positive medium term outlook for the USA economy, which is certainly looking more promising as the realisable benefits from their massive reserves of shale oil are being absorbed while new discoveries are being regularly announced.

We will be looking further in the next few months at investment prospects in the US property markets and where the best opportunities may be for long term wealth creation on the western side of the Atlantic.

Unfortunately on this side of the 'Pond' our own reserves of oil from the North Sea are in decline and the pound has weakened as UK economic outlook shows no sign of any meaningful recovery while our reliance on costly imported energy in the future is becoming more apparent.

The most recent house price data is still mainly reflecting the trends which started back in mid-2009 with a continuing recovery in London and parts of south east England, but with the exception of some specific regional 'prime' high equity, high demand locations such as north Oxford where 'old money' is in control of much of the local property supply, the prospects for growth are less encouraging.

However as the article on page 14 underlines, London values are already at record average highs compared with those in the rest of the UK, which anyone looking to invest further in the Capital needs to consider.

A quick scan through some recent auction results in the north of England shows that in the low price sales bracket at below £60,000 successful auction bidders are buying at around 40-50% less than was being achieved some six years ago at the market’s peak back in mid 2007.

The ability of these buyers to obtain mortgage finance is of course more difficult as many BTL lenders have a minimum lending amount or will not lend on residential property below £75,000, and the article on page 28 explains much more about current BTL lending trends.

So should you be seeking to buy using mortgage finance in locations where some believe there will be very little prospect of any growth in values until at least 2020? Perhaps like many people your strategy is now more 'income focussed' rather than with any expectation of short term growth in local property values, and if so then the article about managing HMO properties and tenants on page 24 may help you to understand just what is required to succeed.

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