FREE CHAPTER OF THE BOOK: Strategic Property Investing: What works and what doesn’t in a complex UK residential property market
To help answer some of the ‘most asked questions’ of the moment about the property market in these uncertain, fast-changing times and to highlight the official paperback launch date (14th May), here’s another free chapter of the book, which seems to have struck a chord with investors and recently became an Amazon #1 bestseller.
This chapter highlights the most important changes that residential property investors need to know about and puts the impacts of #coronavirus on the property market into context.
Perhaps the ‘most asked question’ I’ve had from investors over the last few months is, ‘what does Coronavirus mean for you?’, often with a follow up, ‘is the housing market about to crash?’
My answer, as always, is that broad brush #statistics and forecasts are not particularly helpful for investors; we don’t have one housing market.
Some parts of the market (e.g. non-prime regional rental housing) continue to perform well. Others (e.g. prime, internationally-targeted newbuild developments) — not so much.
It’s all about supply and demand. Find out more about what’s really driving the property market via the chapter, and visit bit.ly/strategicpropertyinvesting if you’d like to get a copy. All profits go to bit.ly/letsbeatcovid
What a difference just a few weeks makes. In mid-February, the Land Registry released its most up-to-date house-price data. Owing to the time lag of such indices, the report covered December and revealed that a post-election boost meant property prices in London rose by an average of 1.6 per cent. My thoughts on this were quoted in BBC News: ‘The second highest value region, the South East, experienced the lowest annual growth, which is great news for potential home buyers looking to get a foot on the housing ladder in this part of the country.’
The property market was undeniably on the up after years of uncertainty created mainly by Brexit, a fact confirmed by HMRC’s residential property transactions report, which was released a couple of days later. It revealed a 5.2 per cent increase in transactions in the year to January 2020, with a total of 102,810 transactions. My commentary was quoted in Mortgage Introducer: ‘January’s increase in transactions suggests a rebound in confidence, reflecting the ‘Boris Bounce’ and increased certainty around Brexit. The uptick in transactions also points to a release of pent-up demand and much-needed supply. This is great news for potential homebuyers, sellers and investors, as it both reflects and affects how easy it is to buy and sell.’
A month later and the HMRC residential property transactions report for February confirmed that the market was all set for a spring bounce with transactions 6 per cent higher in the year to February, with 103,870 residential transactions. But there were already worrying signs that Coronavirus could have an impact, as I commented in Financial Reporter: ‘Residential property transactions picked up in February, reflecting improved confidence from greater certainty around Brexit. However, this uptick is likely to be eclipsed by the impact of Coronavirus on market confidence in the short to medium-term.
‘The investors we work with continue to remain positive about the long-term prospects in the residential property market, though in the short term they are also focused on ensuring cash buffers are adequate and risks well-managed. There is a buying opportunity for long-term investors with the appetite and set-up.’
The fast-moving pace with which Coronavirus has taken over our lives was evident in Nationwide’s house-price index for March, released earlier this week, which reported annual house-price growth at its highest level since January 2018. But while the market may have been busy at the start of the month, this certainly wasn’t the case by the end of it, as I explained to Property Reporter: ‘Nationwide paints a picture of economic and social confidence in March, notably across Wales, Yorkshire and the North West. The bad news is the housing market is now effectively ‘on hold’ amid the impact of Coronavirus.
‘But the good news is that the government’s generous package of support means there is no reason to believe the housing market will not make a full recovery form the shock once emergency measures cease.’
The most valuable commodity in investment at the moment is arguably not oil, or data, but certainty.
One clear opportunity we’ve been given is the chance to reflect, review and adapt. If you’re not certain or confident that your property investment strategy is going to work going forward, or it’s not working now, then it’s vital to adapt in a way that is considered and strategic, rather than erratic or emotionally-driven.
For those who are not sure how to do so, I wanted to share a free chapter from the book I’m publishing later this month – the topic couldn’t be more relevant or important: How to adapt your strategy in the face of change.
The book, Strategic Property Investing: What works and what doesn’t in a complex UK residential property market, will be on special launch promotions on 30th April 2020 for the ebook, and 14th May 2020 for physical book.
I’ve partnered with the brilliant Asif Qasim’s #letsbeatcovid – letsbeatcovid.net – and all the profits will be going towards the amazing work they are doing to get frontline NHS workers enough of the right protective gear, as a small token of appreciation for the incredible work the NHS are doing.
To preorder your copy of Strategic Property Investing on Amazon, click here
Coronavirus has had an undeniable and distressing impact on lives and businesses the world over – investors, consumers and politicians!
NHS workers have been doing an incredible job, and sadly many have not only been suffering from coronavirus itself, but with a sense of anxiety around the health, social and economic consequences. It’s a difficult time for all.
I wanted to share 3 things you need to know about how coronavirus affects you, if you’re a UK residential property investor focused on long term investing – like buy to let investment. And it’s not all bad news.
How you’re affected will very much depend on your circumstances, for example:
- Have you borrowed money to invest?
- If so, is that via a buy to let mortgage, a commercial mortgage, or via equity release? On a fixed or variable rate?
- What type of properties and tenants do you focus on?
These will affect how coronavirus affects your property investments, and what you can do to minimise the impact of immediate threats like loss of income – for example using mortgage holidays, which for the record are not really holidays but deferments. You can find out far more about these policies and how they can be applied to you by speaking to your bank, and will want and need to work directly with any tenants who are struggling financially as a result.
More broadly…What do you need to know about coronavirus?
1) Value is not disappearing – buildings are not going to fall down – there’s no need to panic as a long term investor. Capital values may take a dip, but the truth is even in the last Global Financial Crisis, rental levels hardly dipped across the board. So if you’re investing in assets which are priced well and deliver long term value via rental income, there’s no need to stop. From a users’ perspective, we need houses more than ever over the coming months!
2) The opportunities are changing – and some new ones will appear. All-time low interest rates create a huge opportunity for investors using bank lending. Meanwhile, the attractiveness of some strategies is falling, in particular certain approaches that have become popular relatively recently, like more compact living – for example via Houses in Multiple Occupancy – and shorter term models like serviced accommodation. It’s not all bad: working from home is clearly on the up in the short term. Consider what opportunities this entails – as mentioned earlier, residential property has in many ways never been so important! And it’s likely that there will be a great buying opportunity, as fewer investors have appetite to buy at times of crisis. As ever, there’s strengths, weaknesses, opportunities and threats – the classic SWOT analysis always seems to come in handy!
3) It’s more important than ever to make strategic, not emotional decisions. In investing, it’s all to easy to follow the herd or the heart. Unlike the benefits of Herd immunity for our population-wide recovery from a medical perspective, herd mentality is often unhelpful from an investment perspective. To avoid emotional decision-making, make sure you’re clear on your goal, and if it’s a long term goal focused on income then you may simply need to focus on tactics: what deals will you be able to do, and what operational procedures are now required, to make the best of this challenging situation?
So, stay safe, sane and healthy, wash your hands, and do what you can to take strategic, not emotional decisions.
If you want to find out more about long term residential investment and adapting your strategy to suit the current climate, I regularly share content via social media, in particular linked in, and via my newsletter, which you can find at annaclareharper.com.
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