House Prices in the UK fell by at least 0.9% at the beginning of 2017 since August last year to the delight of investors. Even so, when compared to past years, the mortgage rates are still quite high resulting in increased prices of homes. These changes mean that house prices on average are on the rise as the demand among potential home owners also increases in the UK.
The trend of high demand and low construction activity in the building of homes in 2016 is likely to continue in 2017 if nothing is done to change the current landscape. The result of this is costly houses that most property investors will not be able to afford. As Halifax intimated in its recent statement, the drop in house prices has not had any significant effect in the housing industry because the mortgage rates have not gone down. We believe that the current average price of a home which is approximately £220, 250 or lower has alienated many buyers that were interested in investing this year.
Although the pace of economic growth is stable, economists still argue that there exists real risk if building of homes continues to lag behind demand for residential property. It has even been suggested that house builders are hoarding their land in a bid to raise prices to get a better return when sold. However, local land directors have refuted those claims, instead confirming saying that almost forty thousand plots are ready for construction. Even so many buyers are still going head to get mortgages in anticipation of buying a home in 2017, which is a positive sign that home ownership in the UK is still a possibility for investors.
Even as demand for homes continues to rise resulting in higher prices, first time buyers seem to have an advantage over other investors. The introduction of a new tax rate that favors them becomes operational in April meaning that those that invest in rental property or second homes will be less interested in certain properties. The reduced number of investors in such properties will likely bring their costs down for the benefit of those buying for the first time. As funding partners, we have seen the property industry in the UK weather tougher storms and are hopeful that an upward trend in home construction will be a reality soon.
This article was written by Matthew Dailly, Managing Director of specialist bridging loan company Tiger Bridging.
About Tiger Bridging:
Tiger Bridging is a specialist bridging finance provider with over a decade in the market. They provide short term property funding solutions across the whole of the UK, offering bespoke and flexible lending terms.
Their funding is free from the restrictions imposed by larger institutions or the mainstream lenders. Their small stable of valued and fast-moving investors, complemented by a select group of hedge funds, provides a steady and reliable flow of capital to clients. Their culture is bespoke and their attitude is proactive. If the deal makes sense, they we can get the funding, regardless of the credit status of the client.
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