Elite Properties - Alternative investment strategies
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Much has been made of the recent turbulence in the UK economy, with many casting a skeptical eye over the future of UK property. Whilst this has deterred some elements of the market such as first time buyers, this situation has stimulated unprecedented levels of opportunity and a flurry of action in the domestic investment property market.
Falling interest rates, (BofE - February 2008) combined with increasing market uncertainty has led to many developers offering outstanding BMV deals. Additionally, the consideration that first time buyers falling back into the rental market due to the ongoing turbulence has created a situation whereby rental yields (particularly from student property) have recently been recorded at an all time high. Clearly, the availability of such deals and the confidence that the UK market performs in clearly identifiable peaks and troughs presents a dream scenario for investors.
After all, we’ve seen negative press before…
Recent media hype is suggesting a decline in house prices over the next few years. The very same thing was being predicted by the Royal Institute of Chartered Surveyors in 2000. Did this happen? No! Prices continued to go from strength to strength. Property has more than doubled in value since 2000…
In fact, Land Registry figures demonstrate that if you had invested £82,251 in an average priced property in 2000,that averaged priced property could be worth £199,760 in September 2007! Just think based on this level of growth… in10 years, for only a minimal investment of only £28,000, you could have over £1m worth of equity!
Best performing asset over last 50 years…
The property market has been the best performing asset over the past 50 years. Government statistics, and those of the Chartered Institute of Surveyors, show that UK property has grown by an average of 11% year on year.
There are a number of reasons why this will continue to happen!
At the end of the day, the same factors that were present 50 years ago continue to play a role in increasing the demand for housing and consequently driving up house prices today. According to the Barker report, there is a current shortfall in the UK property build rate of 600,000 houses. Given that 140,000 new houses are needed each year to meet demand and keep control of prices, it appears that the failure to meet demand will continue to see prices rise. Net migration figures show a sustained increase in the levels of inward migration. There are now over 2 million foreign citizens working in Britain today (Labour Force Survey 2007) which puts yet further pressure on rental and purchase demand.
Social factors such also play a significant role such as rising divorce rates and increase numbers of university attendees year on year (in accordance with government targets). And as a consequence, land availability for new build houses is continually decreasing which means that there is an increasing lack of space to build in the prime areas.
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