The Land Registry has just released the latest set of
figures for the Nottingham Property market. It makes interesting reading, as
average property values in Nottingham dropped by just 1% in May. The average
property values are 3.9% higher than 12 months ago, meaning the annual rate of
growth in the town fell to its lowest level since April 2014. However looking
at the regional picture, East Midlands’ property values only rose by 0.2% which
means they are 2.9% higher than a year ago.
This is a far cry from the price rises we were experiencing
in Nottingham throughout 2014. In November 2014 property values were rising by 9.6%
a year. All the same, even with the tempering of the Nottingham property values
in 2015, they are still higher. 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 selling has dropped substantially over the last 12 months in the
City. In April 2014, 643 properties sold in Nottingham but in April 2015, that
figure dropped to 485. I have been in
the Nottingham 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 Nottingham property market. It has been particularly
noticeable by its absence this year, the normal post Easter flood of properties
coming onto the market did not happen. 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 Nottingham and with the population of Nottingham
ever increasing, this will generally strengthen growth for the foreseeable and
have a positive impact future house prices.
So what does all this mean for Nottingham landlords or those
considering dipping their toe into the buy to let market for the first time? For many people, buy to let looks appear to be
a good investment, providing landlords with a decent income at a time of low interest
rate as the stock market remains unpredictable.
However if you are thinking
of investing in bricks and mortar in Nottingham, it is important to do things correctly;
buy property 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 rental income;
with the property market bouncing back over the last few years, property value
increases have 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, at some point in the future they must rise and
you need to know your property can stand that test. Some Nottingham landlords
struggled, when interest rates rose from 3.5% in July 2003 to 5.75% in July
2007. These figures may not sound a lot, but this 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.
It’s true that many landlords were thrown a life raft when
the base rate dropped to 0.5% in March 2009. Although interest rates have
remained there since, I believe 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 helps to fuel the buoyant Nottingham property market.
If you are planning on investing in the Nottingham property
market, or just want to know more, things to consider for a successful buy to let
investment, please email me on Jaclyn.bartlett@centrickproperty.co.uk
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