On the back of new figures suggesting that house price growth has dropped to 9.4%, Simon Morris asks whether the residential market will prove lucrative for UK property investment funds going forward.
Simon Morris, Residential Property Expert
Simon Morris is a London-based property expert with a speciality in the residential and commercial markets. As such, Simon often uses his industry experience to act in an advisory capacity to UK property investment funds on how to maximise profit potential on their property portfolios.
The most effective way to do so is to keep track of the numbers typifying any particular market. Only through doing so can you determine its long term trajectory, and thus, it’s potential profitability, which is why it is so important that new figures have suggested house price growth has slowed.
Average House Prices Drop from 11% to 9.4%
According to the BBC, Nationwide have released new figures recently which suggest that house price growth for September measured 9.4%. This was down from the 11% figure recorded for August, and the average UK house price now sits at £188,374.
However the bank went on to suggest strong regional variations remain in place. London for example, recorded prices 31% above the last time the market peaked in 2007, with the average price for a house in London coming in at £401,072, showing it’s still easy to make profit from effectively investing in London’s property market. Prices on average across the nation though, sit currently at 1% above their pre-2007 levels.
House Prices over the Quarter Remained Strong
Yet despite house price growth slowing month to month, they still rose 1.5% over the quarter, leading Nationwide’s chief economist, Robert Gardener, to suggest that “while September saw a slowing in house price growth, the picture on a quarterly basis (July, August and September combined) was still relatively strong, with all thirteen UK regions recording annual price gains.”
Gardener elaborated by saying that “the outlook remains uncertain. There have been tentative signs from surveyors and estate agents that buyer demand may be starting to moderate, but the low level of interest rates and strong labour market suggest that underlying demand is likely to remain robust.”
Temper Residential Investment with Caution
In Simon Morris’ opinion, ‘uncertain’ is the watch word here for UK property investment funds with residential elements to their property portfolio. Residential can still prove lucrative, however any plan to profit from residential property must be tempered with caution in the current climate.