We have all read the hit and miss figures from lenders regarding property prices. Nationwide reports house prices rose by 0.9% in June whilst Halifax and Bank of Scotland research suggests a 0.5% decrease in the same month.
Data that varies widely in the current market will covey an air of uncertainty. But what we can reveal however is that Estate Agents are seeing a huge rise in the number of viewings and offers being made this month. Overall this is what counts, as increased activity inevitably leads to a rise in house prices through greater demand.
Whilst offers increase and more deals are tied up, there is a difficulty getting new property on to the market as most home owners remain unaware of the sudden flood of demand. This current cycle will mean the beginning of a short term boom in the housing market over the next few months, which means that estate agents do need to be careful not to take on too much though or there will be the return to saturation again.
What does this mean for investors and landlords?
With reports from economists hinting much of what we have written over the last few months, that interest rates are set to stay low for a while to come, the return of activity to the housing market will bring the return of confidence we have been waiting for. This effect will have several key influences on the market, both positive and negative, including:
Rental Supply Ease
- Investors and developers with projects that were
due to be sold but flipped over to rent will be put back on the market –
Easing supply in the rental market which, over time, will boost rental
values.
End of the Bargain Sale Property
- More buyer activity will reduce the number of ‘bargains’ available and therefore the property deals that come with a high rental return. This means you will need to act soon as property finders will struggle to continue to source some excellent deals, some of which are currently over 10% return! (See our BMV Property Links -Must be registered).
Whether or not this will be a bubble set to burst will remain unclear for some time and will rely on how well managed our estate agents become, as they are the key to managing supply in the property market. As mentioned above, too much supply and it becomes a buyers market again as we are seeing the shift return to the sellers. But be clear that we are still embracing changes to the delicate balance of supply and demand. This is the stage however, where the real innovators make their best investment decisions as we switch from relief to optimism to excitement very quickly indeed.
