Second guessing the property market? Try Nuancing

September 3, 2019

Are you finding it tricky to second guess the property market? Given the shifting sands of UK politics it’s difficult to know what the outcome might be. There are questions over High Speed Rail HS2 and how it might be managed moving forwards. Yet investors may have been encouraged by such infrastructure investments to buy. So what to do?

Well maybe a slightly more nuanced approach might help? Why?

Well the traditional markets of the capital city, London and other main city centres like Birmingham are attractive investments, but entry level pricing is not always that accessible. And if you are looking for something slightly different from an investment it can pay to be more open-minded, or nuanced.

For example central London prices are showing falls on a monthly and quarterly basis, (although average annual prices show modest growth of 1.5% vs. 2018) and the volume of transactions are down annually at 5%.*

Greater London is a different story. The market continues to rally, with prices rising by 3.1% in July 2019, the strongest monthly performance since 2014*.  And annual prices have increased by 1.9%, outperforming 2018. And whilst the market is still not flowing freely – the fall in annual transactions has slowed to just 1.7% – quarterly transactions have surged by 33.4%.

So the London suburban market is holding up better than central London.

What’s more by looking slightly further afield you can get more for your money. For example Teddington has recently received favourable coverage over its relative affordability, claimed to be the cheapest riverside spot in south-west London, particularly for families. Given the combination of riverside activities, a good range of family houses and the large parks nearby.  What’s more, until recently, Teddington had avoided the price falls seen in central London.

But of course you can always look at the centre of London in a different way. If you want to invest and make money, but don’t like the prices of many central London properties, then there are some good-looking Ex-Local Authority properties that are affordable, mortgagable and deliver high yields. Now you don’t hear that often in the same sentence do you, London and high yield?

This suburbs-vs-centre theme can also be worth considering for the other major cities.

Let’s take Birmingham, once known as the first manufacturing town of the world it continues to attract investor attention, with a flourishing economy built on the service industry with the likes of Deutsche Bank, HSBC and PWC relocating offices to the city. Home to five universities, it has one of the UK’s largest student populations, many of whom choose to stay in the city beyond graduation.

Investing in the city-centre is not for everyone and if you want to buy more of a family home then the suburbs are a good place to look. So what about areas like Solihull and Sheldon? Right near major infrastructure links like rail and airport, prices are more attainable than central Birmingham.

On an annual basis sold prices in Sheldon were 8% up on the previous year and 15% up on 2016 when the average house price was £157,143.

So if you are finding it hard to second guess the property market, then maybe a more nuanced, subtle, approach of choosing in the suburbs might just work.

If you would like to discuss your situation or find out about suburban opportunities then please get in contact.

I work with time-strapped Expats and Entrepreneurs who don’t have the time, local presence or gaps in their know-how to build property portfolios in the right way for them. (Or who are simply stuck with little progress). This means you can carry on your day-to-day lives without spending disproportionate time getting sucked into investing.

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*Source LCPAca Residential Index: Land Registry and cash sales, July 2019 figures

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