Your ambitions in respect of property investment may be relatively modest or perhaps you already have or aspire to build up a large portfolio of property and/or develop and trade. The reviving UK economy and its regional property markets now offer a wide variety of opportunities to enhance your wealth and in most areas an exit route from selling stock using a buy to sell strategy is far more likely than it was a few years ago.
Those of you who have had the foresight and access to appropriate lending facilities in and around London during the last five years and who have been 'gearing up' during this period will probably be reading this commentary with a sense of achievement and if so, then "congratulations" as the Nationwide have just reported an 18% increase in the Capital's average values over the last 12 months.
In a rising market it can certainly make sense to 'gear up' and leverage your capital (deposits) with high loan to value borrowing, whether you are using a buy and hold or a buy and sell approach. However just six years ago many investors and developers were over-leveraged and we all know what happened then as the 'credit crunch' hit hard. If you are taking a more 'gung ho' approach, then just make sure you have assessed the forward risks beyond 2016 and that you have a good level of liquidity (cash) to meet those inevitable cash-flow challenges.
Many of you will be reading this at or just after the Property Investor & Homebuyer Show at London's Excel venue and if so you may recall the lead article in our October 2013 edition which was published just before the autumn show. We raised a few eyebrows (once again) with our forecast of the (then) upcoming 'ripple effect' for UK regional property markets which seems to have been a fairly accurate prediction. Nationwide have just produced data for Manchester which reports an 18% increase in average values there over the last 12 months, but this does contrast quite sharply with the far more subdued Land Registry data that we quoted last month here in PIN in our Focus on Manchester.
The government certainly appears to want to inflate residential property market activity and the announced extension of the Help to Buy scheme to 2020 will have been well received by house-builders. George Osborne's surprise announcement in the Budget (see page 20) in respect of ending the need for pensioners to purchase an annuity has caused shock waves for the Pensions industry and next month we will be reporting here in PIN on its impact for property investment. You don't have to have a Stephen Hawking size intellect to work out that many retirees could be choosing to put more of their hard earned pension savings into bricks and mortar and the consequences of this 'sea-change' could be far reaching for the Private Rented Sector and the wider property markets, both commercial and residential.