As we wade into 2016, news of global stock market slumps and the rapidly depreciating cost of oil would have us believe that the year ahead holds a significant amount of uncertainty. Perhaps the most dramatic headline grabber has been RBS who, on 12th January, appeared to advise that other than high quality bonds, everyone should sell everything! However, just two days later, a further announcement revealed that they had earmarked £1 billion to invest in the private residential rental sector in the UK.
Invariably at this time of year we are asked the same question by our clients and purchasers; “what does the year ahead hold for the property market?” This is a tricky question to answer without a crystal ball, but we can be more certain on some things than others, so here goes…
If we are to understand that RBS is seemingly taking a bullish position on the London residential sector (given £1 billion investment!) then we are firmly in the same camp for no other reason than economic fundamentals. Whilst the government has implemented a number of measures designed to cool the residential market and deter buy-to-let investors from buying residential property (especially affecting London and the South East), it fails to effectively address the supply side of the property equation. Undoubtedly the demand side policies will have some kind of short-term impact as buyers evaluate the consequences – but over the long-term, they are unlikely to deter investment from domestic and international buy-to-let investors. Here’s why:
For as long as the market equation looks like this, the situation is not going to change – buyers (whether it be owner occupiers and/or buy-to-let investors) all understand the reality and it points to capital value growth. So the same buyers are going to chase the very limited stock which exists.
Obviously, from a buy-to-let perspective there are a number of other factors, all of which are likely to continue to tip the balance towards buying.
The increased rate of Stamp duty Land Tax for second home buyers and buy-to-let investors may have a short-term impact on values and vendors will need to be realistic about asking prices. However, while the market equation remains the status quo and the low interest rate environment persist, the fundamentals remain healthy. Prospects are great for investors and homeowners and we are optimistic about the year ahead in the UK residential market.
By Ashley Osborne | Head of UK Residential & Managing DirectorAs we wade into 2016, news of global stock market slumps and the rapidly depreciating cost of oil would have us believe that the year ahead holds a significant amount of [K]
By Ashley Osborne | Head of UK Residential & Managing DirectorAs we wade into 2016, news of global stock market slumps and the rapidly depreciating cost of oil would have us believe that the year ahead holds a significant amount of [K]
By Ashley Osborne | Head of UK Residential & Managing DirectorAs we wade into 2016, news of global stock market slumps and the rapidly depreciating cost of oil would have us believe that the year ahead holds a significant amount of [K]