Some three months after Liz Truss and Kwasi Kwarteng’s calamitous early autumn mini budget, it’s impact on transaction levels and pricing in the UK housing market is evident as a number of news items inside this edition underline. The previous residential boom market all across the UK is now in reverse as a direct result of the increased costs of borrowing, as lenders quickly reset their lending rates sharply upwards.
From a property investment perspective a memorable quote was given to me by Saif Derzi in my interview with him on page 20, when he said that: “buyers seem to think it is 2008, whereas sellers still think it is 2021”.
Whenever an unexpected ‘event’ occurs out of the blue, the ‘herd’ tend to overreact and this time looks to be no different. Mortgage lenders who took fright in October and seemingly overreacted by rapidly withdrawing many products from the market, are now looking to attract new business as the outlook seems clearer and wholesale money market rates have reduced. Five year fixed-rate mortgages are now being offered at below 5% which for the 100,000 borrowers a month whose previous deal is ending will come as a relief compared to what was being offered in November.
So as we start 2023, many readers will be considering their options and inside this edition a number of articles look at the pros and cons of the investing choices available. On page 24, Adam Lawrence offers his thoughts on the fundamental choice of whether to buy to hold or to sell property in 2023.
Our lead article on page 15, about historic asset class ratios, sets out to analyse the trends which have and may influence investment options this year and unsurprisingly it seems UK property is in the main, set for a year of ‘under-performance’.
However as I mentioned in this column a month ago, it’s at times like this where it is those who can see opportunities in adversity who will be likely to benefit. One of those strategies which have been quite ‘fashionable’ in the last six or so years, notwithstanding the impact of the pandemic, is Serviced Accommodation. On page 27, David Kemp offers some practical advice on planning aspects and the regulations affecting usage of premises for short lets.
Too many investors focus on what they are buying and the price they want to pay rather than looking for core demand and as Will Mallard explains on page 36, there are currently some big investing opportunities within the broad category of Social Housing. We will be looking further in future editions at some of the sub-categories mentioned by Will and to take a deeper dive into the investment possibilities.
