The UK Property Market 2011/2012

Hi All,

We’ve been getting a lot of questions about the market, and I thought it worth sharing both questions and answers - so here goes.

I’ve kept it very brief, so if you want further details, let us know click here or visit our website www.grantpropertyinvestment.com

Kind Regards

Peter Grant

CEO

1. What's happening with prices.

Prices fell in 2008 but have been very stable since then. We predicted that prices would be flat in 2011 and in fact they have risen slightly, according to Nationwide Building Society.

2. Has the financial crisis changed the market?

Yes. Since 2008 the market has moved from being a sellers market to becoming a buyers market - favouring investors. There is lower mortgage availability for first time buyers. Buy-to-Let mortgages on the other hand have risen sharply in 2011, allowing investors take advantage of very favourable buying conditions.

3. What's happening in the rental market. 

Rents have been rising as have yields. We have 100% occupancy in prime areas. The Scottish rental market has performed better than England.

4. What impact has the euro crisis had this past 6 months.

None. Prices have in fact risen slightly.  It's been similar to other past 'crisis'. In good times property prices rise and in less good times property prices remain flat.

5. Why is property less volatile than shares and bonds.

Shares and bonds make headlines and react to headlines because they are completely liquid so there can be dramatic price movements. Property prices don't react to headlines and have always been very stable by comparison.  

6. What is likely to happen in 2012? 

2012 is predicted to be similar to 2011, with prices stable and perhaps rising slightly. Nationwide are predicting 2% growth. Rents are likely to carry on strengthening as are yields. We expect occupancy in prime areas to remain very high.

7. How does property compare as an investment?

Over any period (3 years or 30 years) residential property has outperformed shares and commercial property. Over the last 40 years, the average growth is 7% pa. Through gearing that‘s a 28% return pa.

8. When investing, what should I focus on?

There are several rules to follow in order of priority

  1. Location, location, location. Choose a prime city centre area
  2. Traditional property outperforms new build, so focus on that

  3. Rentability. Look for strong rent and high occupancy

  4. Experience. Use GM as a partner and use our strong experience

  5. Price. Buy well but without compromising on the above points

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