By Julian Ramsden, Director | 19 February 2016
There were 2 noteworthy bits of property news this week.
Secondly, Santander released a report on housing affordability, stating that the number of British properties worth more than £1 million will triple by 2030.
There’s definitely good news for buy-to-let investors in these figures. Rising asking prices indicate capital growth, and an effect of the affordability issue is rising tenant demand.
In light of these trends, here’s the current RW Invest industry forecast:
- Investor demand for buy-to-let property will continue apace
The buy-to-let tax changes George Osborne announced last year (including to stamp duty) haven’t stifled interest.
Also, we haven’t seen the projected investor stampede either in a rush to beat the April increase in stamp duty. Instead, demand continues at a healthy rate, with investors taking medium- to long-term views when it comes to yields and exit strategies.
- Student property will continue to be a solid performer
It’s been outperforming other asset classes with triple digit growth, and we see no signs of this slowing.
Universities are increasing their intakes but many are unable to house all their first-year students, much less second and third years. This means there’s robust demand for purpose-built student accommodation that offers convenience and on-site amenities.
As a result, we’re seeing many opportunities offering guaranteed 6-9% net rental income.
- Regional cities will offer increasingly strong investment cases
We’ve written about regional cities the last couple of weeks, and I keep bringing it up because there’s a tendency to see London as the star performer.
And London does offer lucrative opportunities, not just in residential property but in hotel pods and student accommodation. It’s a safe haven because demand so dramatically outstrips supply (and if you want to read more on this, here’s a fascinating analysis that correlates gold prices with property prices).
But cities like Birmingham, Leeds, Manchester and Liverpool have transformed – and the business and social scenes are driving exponential increases in tenant demand. There are lower entry points than for London, and the prospects for capital growth are extraordinary.
See the proof
The proof is in our current portfolio – take a look at the yields on these student, buy-to-let and hotel opportunities.
You’ll see a solid combination of net rental income and secure exit strategy that reflects prospects in the current market.