As the downturn continues, it's easy to focus on the current conditions and get caught up in the typical mindset thinking that, when things are bad they can only get worse, or for that matter like the saga in 2007 ‘when things were good they could only get better’.
The reality is that this kind of thought process is neither constructive nor particularly useful, and we need to formulate our thinking in combination with information and predictions from quality sources.
A great example would be David Miles who sat on the Bank of England MPC from June 09 to June 12 voting on the committee to set the UK BofE base rate.
His work includes a report which he concluded earlier in this year on likely house price growth in the years to come. He has predicted that our increasing population (which he thinks will continue to grow at a faster rate due to migrants and more people living longer), tight planning controls and rising real incomes will create a "rising trajectory for real house prices over the longer term".
He predicts that home ownership will continue to decline with the private rented sector taking up the slack with first time buyers continuing to get older.
Clearly the economy is not suddenly going to boom any time soon meaning house prices doubling in 5 years, but the current climate does represent a great opportunity to fill up on cheap property from doom filled vendors who believe that things will only get worse.
That said it is also interesting to note the difference that various areas of the country have experienced in house price growth through the crunch...
Whilst most areas have not experienced anything like this level of growth, You can see from the graph below that Kensington and Chelsea’s average house prices rose from around £1.5M to approximately £2M in 2012:
This in the middle of 2 recessions!
So Is there Still Life in UK Buy to Let?
Despite what is currently happening with the economy with all the doom and gloom, there are still many excellent and exciting opportunities to invest in the buy to let market, particularly with growing yields and high rental demand. (Many have adopted a mix strategy approach, taking advantage of current commercial premises & turning them in to multi-lets)
The lack of current liquidity has meant that investors are getting access to greater opportunities and having to adapt with new ways of utilising non-conventional finance, and in other cases, refining current strategies.
There is still a strong interest in the buy to let sector from bank savers getting very little returns and overseas cash buyers who would have invested their money elsewhere. This is particularly the case in areas around London.
We are typically seeing cash investors funding either through a direct BTL purchase or indirectly funding short term joint ventures.
Putting money in a bank account may be safe, but You will get a woeful return. While stocks and shares look like the two ugly sisters – this leaves property as the Cinderella of the investment world.
Despite the downturn and all the doom and gloom reported in the headlines, UK buy to let is still alive if you know how to adapt to the current market trends, know where to invest, what to buy, have access to fast finance or know how to structure a deal, then UK property investing is still a safe bet...
In fact, we would go far as to say, this is still one of the best times to invest!