The Land Registry have just released their latest set of
figures for the Maidenhead Property market. It makes interesting reading, as
average property values in Maidenhead rose by 0.7% in May. This leaves average
property values 12.9% higher than 12 months ago, meaning the annual rate of
growth in the town rose to its highest level since September 2014, bucking the
national trend as most of the UK has seen property price growth ease off in the
last six months. When we compare Maidenhead against the regional picture, South
East property values rose by 0.9%, leaving them 9.1% higher than a year ago.
This is good news for local homeowners who had been affected by the downturn
after 2007 and still find themselves in negative equity.
However, the thing that concerns me is that the average number
of properties changing hands (i.e. selling) has dropped substantially over the
last 12 months in the town. In April 2014, 148 properties sold in Maidenhead
but in April 2015, that figure dropped to 83.
I have been following the Maidenhead property market for quite a while
now and the one thing I have noticed over the last few years has been the
subtle change in the traditional seasonality of the Maidenhead property market.
It has been particularly noticeable this year in that the normal post Easter
flood of properties coming onto the market was not seen. This has made an imbalance
between supply and demand, with less houses coming onto the market there is simply
not as much choice of properties to buy in Maidenhead and with the population
of Maidenhead ever increasing, this will generally strengthen house price growth
for the foreseeable future.
So what does all this mean for Maidenhead landlords or those
considering dipping their toe into the buy to let market for the first time? For
many people, buy to let looks a good investment, providing landlords with a
decent income at a time of low interest rates and stock market unpredictability.
However, if you are thinking of investing in bricks and
mortar in Maidenhead, it is important to do things correctly. As an investment to
provide you with income, for those with enough savings to raise a big deposit, buy
to let looks particularly good, especially compared to low savings rates and
stock market yo-yo’s. I must also remind readers, landlords have two
opportunities to make money from property, not only is there the rent (income),
but with the property market bouncing back over the last few years, property
value increases has spurred on more investors to buy property in the hope of its
value continuing to rise.
Savvy landlords with decent deposits can fix their mortgages
at just over 3% for five years, making many deals stack up. Nevertheless, low
rates cannot stay low forever, because one day they must rise and you need to
know your property can stand that test. Some Maidenhead landlords struggled in
the mid noughties, when interest rates rose from 3.5% in July 2003 to 5.75% in
July 2007. That might not sound a lot, but that was the difference of making a
£100 a month profit in 2003 to having to make up a shortfall in the mortgage
payments of £100 per month in 2007.
Its true many landlords were thrown a life raft when the
base rate dropped to 0.5% in March 2009. Whilst interest rates have remained
there since, mark my words, they will rise again in the future. However, even
with the potential for costs to rise, demand for decent rental properties
remains high as there are ever more tenants in the market, driving up demand
and thus rents. The British love of bricks and mortar plus improving mortgage
deals also add up to fuel the buoyant Maidenhead property market.
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