“Nothing is certain in life, except death and taxes” said allegedly by Benjamin Franklin in 1789.
If he were alive today, in 2018, perhaps he’d add a third aspect: rising property prices.
It’s something that has happened for years in Britain and one we now accept as a part of life: your property will increase year-on-year in price, and, apart from the odd blip of a year historically, this has certainly held true.
Property prices increase at varying rates in different villages, towns and cities across Britain, with the most expensive postcodes generally being in London or the Dorset honeypot of Sandbanks, near Poole. More recently, even areas that are not traditionally associated with capital growth, are increasing annually.
Liverpool is one such city.
Reading, Britain’s biggest town, is another.
With bank saving rates (and bank borrowing rates) at historic lows, savers would do well to invest in bricks and mortar, even over a short term, like say two years, 10 – 15% capital growth would be realistically expected.
2016 saw rises of 7% on average nationally, with last year dipping to 5%. Similar figures are expected this year – according to industry experts.
A property that was purchased in 2016 for say £100,000 would now be worth in the region of £118,000 if the anticipated growth of 5% forecast for 2018 materialises (which we expect will happen).
Investing that capital sum in a risk-free ISA over 3 years would net 2.2% gross on average per annum, well short of property investment yields.
What you also can account for is that when that £100k property is let, that rent becomes another income source on top of annual capital growth.
No brainer then?
Figures aside, what do Sourced recommend you doing as a seasoned (or as a new) investor?
- Find a growth area. In the early days of property TV programmes, presenters used to advise investors to look for telltale signs of growth: new coffee shops indicating neighbourhood gentrification, along with renovation projects like skips on roads (yes really).
- Look for BTL hotspots. Clear indicators for you to watch out for include proximity to transport links, schools and access to workspace hubs.
- Universities are another major factor to look for too, as they provide employment for staff and academic pursuit for its students. Liverpool, mentioned above, is one of the best cities for your investment, in terms of affordability, supply of tenants and high rental yields.
- Look north. The best places to invest are invariably in the north. Here’s some prime investment places: Preston, Stoke-on-Trent, Leeds, Glasgow, Middlesbrough, Newcastle, Stockton-on-Tees, Gateshead, Rotherham and Rochdale, as well as others.
- Invest your capital in the capitol. London remains one of the most desirable places to live and investors can benefit from yields of around 5% and continuous capital growth.
If you’d like any more advice about property investment, please contact one of our team today on 0333 123 1330.