What an unbelievable couple of years the world has experienced. After a short pause in the property market in early 2020, due to the UK governments lockdown measures, the latter half of 2020 experienced a sharp rise in the growth of house prices. This is said to have been caused by the introduction of the stamp duty holiday in July 2020. Officially, the stamp duty holiday was introduced in England and Northern Ireland on the 8th July 2020, Scotland on the 15th July 2020, and Wales on the 27th July 2020.
Rightmove conducted research which found that due to the coronavirus pandemic, both buyers and renters had a similar shift in priorities, where individuals’ preferences skewed towards properties that were bigger by measure of square meter size and those that had access to a garden. The Rightmove study also found that in January 2020, studio flats were a popular choice for renters, but this swiftly changed to two-bedroom flats in May 2020. Additionally, the same study found that approximately 18-20% of first-time buyers were more likely to move to rural regions.
Reviewing the historical dominance of London and the South East of England in terms of lifestyle and wealth, helps us to understand the current state of British housing. In the early 1980s, London and the South East was prominent due to the stamp the City of London placed in the world as the global financial hub. Below, Figures 1 and 2 depict the average prices for London compared to the less affluent North East.
Average House Prices in London – Figure 1 (Property Data 21/04/2021)
Average House Prices in North East – Figure 2 (Property Data 21/04/2021)
In 2021, I believe it is fair to say that the UK housing market is not one which is described to be an efficient or functioning housing market. The reality is that affordability levels are stretched to the point where you will find that compared to back in 1996, where the median property prices were roughly 4.5x the household income, we are now seeing the median property prices to be almost 8x the household income.
Average UK Property Prices – Figure 3 (ONS, Land Registry 01/01/2021)
In the South East, London, and certain London boroughs, you will find median property prices at 10x, 13x, and almost 30x median earnings, respectively. One of the key factors to the disparity is due to the rapid decrease of mortgage interest rates over the years from levels around 8% to 2% to date.
There are many reports in the media that suggest large companies and banks such as John Lewis and Lloyds bank have plans in buying and developing 1000s of homes across the United Kingdom. It is safe to say that the UK housing market will continue to see falling homeownership rates over the years to come with the UK housing market becoming increasingly rental based.
Getting Ahead with Sourced
At Sourced, we recommend our readers to investigate the following property strategies for the next 12 months.
Commercial Conversions: What is a commercial conversion?
A commercial conversion is a change of use for the building. For example, turning a block of offices into apartments. The new permitted development (PD) rights also allow you to carry out some forms of development without needing full planning permission.
Rent to Rent: What is rent to rent?
Rent to rent is a property strategy for individuals who want to invest in property without breaking the bank. This is where you rent a property from a landlord and then rent it out yourself to a tenant. If you find a property with 3 or more bedrooms, you can convert it into a HMO and make money by renting the rooms out separately, which will yield higher than a single let. This strategy can generate a high monthly income with great returns on your investment.
Assisted Sales: What is an assisted sale?
An assisted sale is a property investment strategy, which allows you to make money from properties you don’t even own. Due to financial pressures that some people are faced with, assisted sales is a good strategy that allows individuals to profit from packaging a deal for sale. You would not need to take out a mortgage or pay any stamp duty and you can get access to funds without having any in the first place.
How Sourced can Help you?
At Sourced Network, we offer property training, mentoring, a funding platform, business leads and much more!
When you join Sourced, you will get access to a ready-made property business framework, helping you to make money from property. To find out more, download your copy of our prospectus.