For many in property, and in particular those doing development projects to sell on to end-buyers including investors, 2023 was at best a challenging year. The squeeze on personal incomes, alongside the sharp increases in mortgage costs for many borrowers who were not on longer-term fixed rate deals, inevitably led to a more subdued marketplace for
property sales.
Thankfully, as I commented last month, there are some green shoots of optimism being seen, and none more so than in the wholesale money markets, with pricing for 5-year contracts down since early December by some 40 basis points. And lenders have quickly responded with a swathe of mortgage rate reductions as they compete for market share. That is obviously some long overdue good news and with expectations that inflation is quickly moving down towards the Bank of England’s target level of 2%, we could well see the BOE bank rate below 4% by autumn, just in time for when many expect a General Election to take place here in the UK.
So as we peer ahead, many readers may well be pondering if this is now time to ‘un-batten the hatches’ and to now look more actively for deals which stack and to find the wherewithal to fund new acquisitions. Not a week goes by without a national mainstream media story about rent price increases all across the UK and few now expect this trend to reverse for quite some time ahead.
Tenant demand levels have of course been exacerbated by the 1.25m net migration figures into the UK since 2022. Together with new rental supply being subdued and with a continuing exodus of older landlords selling portfolios, this enhances the more positive outlook for investing for those ‘who have reasons to be cheerful and not fearful’.
On page 14 you can read in this month’s investor-interview with Sam Patel just how, and contrary to many others, he has been very active with acquisitions in the last few years. Two of his award-winning projects are featured in the article and the high returns he is achieving underline just why these projects have been acknowledged as being very successful.
Our lead feature article on page 26 on Historic Ratios shows that UK and London residential property values are now fairly priced against the other main asset classes. As such, and with an eye for the future on page 20, Adam Lawrence explains just why he thinks that ‘financial leverage’ is something we should be considering to potentially ‘bag a bargain’, in what will still be a buyers market for at least a few months or so.
