New research from Halifax has shown Simon Morris that UK residential property continues to offer investors significant year-on-year returns, as the market goes from strength to strength.
The UK’s residential property market has recorded impressive growth as the country’s economy has recovered from the global recession. The Office for National Statistics’ July 2015 House Price Index suggests that the average UK house price expanded 5.2% in the year to July 2015. When seasonally adjusted, we see that the average UK house price grew 0.8% from June to July 2015.
Clearly this shows that there’s still a lot for investors to gain from investing in the UK’s residential property sector. This underpins UK residential property’s reputation as a sought after asset class, especially as at the moment it’s very much a seller’s market. New research from Halifax has shown what investors can expect to gain by entering the UK residential property game.
Select Property reported that the Halifax research indicated investors with UK property investment assets have generated capital growth of 9% over the past year. Furthermore, the bank’s figures suggest that capital growth climbed 2.7% in August alone; the largest rise since May 2014. Investors in markets such as buy-to-let, which as Simon Morris recently explained may be boosted by the emergency summer budget, can now expect an average rental yield of £722 per month.
An economist at Halifax, Martin Ellis, commented on the release of the bank’s latest research into the UK’s residential property market. He explained that “the underlying pace of house price growth is strong. The shortage of second-hand properties for sale on the market is resulting in upward pressure on house prices.”
The Halifax economist went on to note: “House price growth in August hit its highest level in 16 months, as the number of homes being marketed fell to record low levels. Sellers are just not coming to the market and no-one really has an answer to how to tempt them back.”
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With this level of capital and rental growth, investors may believe that now is the time to enter the UK’s residential property market. Yet Simon Morris would advise investors to be cautious. The same advice he gave when explaining what the emergency summer budget means for buy-to-let investors applies here.
At the time he said: “It’s more vital than ever that potential investors seek as much independent advice as they can before they invest, and opt for UK regulated investment products. This will allow them to make an informed decision, so that they give themselves the best chance to generate a healthy return on their investment.”