We’re expecting to see more in the media about the property market than usual this year, focusing on four key areas:
- Month-on-month house price falls
Market values are falling at the moment and they’re predicted to continue on a downward trend - Zoopla expects annual growth to be negative by the middle of 2023. And monthly price drop figures do make for eye-catching headlines!
As a landlord investing for the longer term, it’s important to appreciate that the property market will always rise and fall over time – so you need to look at the bigger picture.
Because average prices rose well over the pandemic, that additional equity should give many property owners a decent ‘cushion’ against any falls we see this year. And even though there were some reports of prices falling month on month in 2022, Zoopla’s data shows that average house prices still rose by 7.2% - an increase of around £17,500 for the average property just in the last year.
Looking ahead, we expect prices to recover well and in five years’ time should certainly be higher than they are now.
2. Bad-news stories about spiralling mortgage rates
Following last autumn’s disastrous ‘mini budget’, when lenders pulled huge numbers of mortgage products and interest rates jumped up, we saw plenty of scare stories in the media about people suddenly not being able to afford to buy.
But once Rishi Sunak took over as Prime Minister in October, rates began to fall again. Current interest rates for fixed-rate buy to let mortgages at 75% LTV start at around 4.49% for 2 years and around 4.79% for 5 years.
Now, even though the Bank Rate is currently at its highest in 14 years and is predicted to rise by another percent by the middle of this year, our partners, Embrace Financial Services, expect mortgage rates to stay fairly stable.
3. New housing policy announcements and possibly new legislation in the run up to the 2024 general election
In 2022, the Conservative Government published two White Papers relating to the housing market: ‘Levelling Up the United Kingdom’ and ‘A Fairer Private Rented Sector’. This year, we expect to get more details on various proposals and may even see some Bills being introduced into parliament. And, as the run-up to the 2024 general election begins, the other main political parties are bound to announce some proposals of their own.
4. Continued focus on energy efficiency in the home
With the ongoing global focus on climate change and continuing cost of living crisis, we expect to see plenty of news reports looking at how homes can be made more energy efficient and greener.
We also hope that we’ll get some clarity this year on the proposed raising of the minimum EPC rating for rented properties, which is currently ‘E’.
Given that some landlords will have to make reasonably big improvements to their properties to get them compliant, it’s vital that the government gives them enough time between confirming the change and enforcing it, to carry out the necessary works. However, it’s also worth considering upgrading the property as close to a C rating as you can so it’s future proofed.
If you have any questions about your local market or would like any advice about letting, buying or selling investment properties, our experts are here to help. Just get in touch with your local Your Move branch and speak to one of the team.
Additional sources:
Current fixed mortgage rates: https://moneyfacts.co.uk/mortgages/buy-to-let/5-year-fixed-rate/
The Your Move Content Marketing Team
