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Follow on Google News | Young Index Reveals Stable Property Market SentimentYoung Index Reveals Stable Property Market Sentiment
By: Young Group Neil Young, CEO, Young Group Young Index: Summary Results • 86% of investors believe residential property values in London will rise or remain static over the next 12 months (compared to 82% in Q4,2007) • 39% of investors believe UK residential property values outside of London will rise or remain static over the next 12 months • 95% of investors intend to hold their residential property investments for at least the next 12 months • 50% of investors intend to buy residential property investments within London within the next 12 months • 6% of investors intend to buy UK residential property outside London • 84% believe the proposed changes to Capital Gains Tax (CGT) has had no impact on their investment plans or behaviour • 89% of investors expect the Base Rate to be below 5.00% at Q1 2009 ________________________________________ Neil Young, CEO of Young Group, commenting on the latest Young Index figures, points out: “As purchase transaction volumes in the residential property investment market reduce, it is increasingly evident that the London market is distinct from that of the UK as a whole. Both property and rental values in the capital are cushioned from the cooling in the housing market, buoyed as a result of the inherent disparity between supply and demand.” The capital has the advantage of strong demand for housing from a population that is expected to swell from 7.2 million to more than 8 million by 2020 (GLA and ONS). London is also the city most effected by changes to the UK demographics; The uncertainty created by the current economic climate also means that there is record rental demand for homes from those choosing not to buy, and those not able to buy (affordability is at an all time low according to the latest figures from Halifax). This record demand means that landlords are benefiting from record rental income and experiencing the highest rental yield for two years (according to specialist mortgage lender, Paragon). The same cannot be said for locations outside of the capital where the disparity between supply and demand is not as pronounced and is reflected in the Young Index results which show that over the next 12 months, only 6% of investors expect to buy additional UK residential property outside of London, compared to 50% who expect to add a London property to their portfolios. Perhaps surprisingly given perceived general public sentiment to the contrary, confidence in the buy-to-let sector remains high, at a similar level as at the end of 2007 with almost all investors (95%) intending to hold their property investments for at least the next 12 months, into 2009. This confidence is mirrored anecdotally by professionals operating in the market. Neil Young, comments; “Dealing with property and land agents, mortgage lenders and the major banks on a daily basis, it is clear that London stands apart from the UK as a whole and almost without exception, the sector is focusing on the capital. It is very much business as usual.” However, Neil Young, delivers a note of caution; “As with any investment asset class, it’s imperative to scrutinise each opportunity carefully and ensure that it is supported by sound fundamentals. In the case of buy-to-let, investors need to ensure that the balance between property supply and demand is in their favour and the strongest market for buy-to-let investments is London. Young Index figures show that confidence in the London market outstrips the rest of the UK by more than eight times, which is a consequence of the continued undersupply of property in the capital and London’s dominant position as the world’s leading centre for global business and finance.” London’s dominance is also reflected when looking at property prices. 86% of investors believe that property values in London will not fall over the next 12 months (and 29% expect prices in the capital to rise). This compares to just 1% of investors expecting the price of UK property outside of the capital to rise and only 38% expecting it to remain static. Of those predicting a drop in prices, a fall in value is expected to be more than four times likely outside of the capital than in London itself. “We always urge investors to take a long term view and ensure that they are financially able to accommodate any short term fluctuations in market conditions that may occur. The Young Index results clearly show that buy-to-let investors continue to have confidence in the sector.” With regards to the ongoing effects of the credit crunch, Neil Young concludes: “The world has not come to an end; mortgage funding has become more difficult to come by. Lenders have tightened their lending criteria, which has created a shakedown in the property sector. This is no bad thing as it encourages investors to think appropriately about their investment decisions and ensure that they approach buy-to-let with the same analytical mindset as they would equity or commodity investments.” Concluding, Neil Young, rounds off; “Buy-to-let property remains a solid medium to long term investment class, provided that people do their research and look at the facts and fundamentals of each opportunity, without being swayed by marketing spin or doom-mongering press reports.” Young Index figures for Q1 2008 show that 84% believe the proposed changes to Capital Gains Tax (CGT) has had no impact on their investment plans or behaviour. ________________________________________ Young Index: Detailed Results Purchase Expectations (12 month outlook) London • 50% of investors expect to buy London property (54% at Q4 2007) • 50% of investors do not expect to buy London property (46% at Q4 2007) UK (outside London) • 6% of investors expect to buy UK property outside of London (10% at Q4 2007) • 94% of investors do not expect to buy UK property outside of London (90% at Q4 2007) Overseas • 33% of investors expect to buy overseas property (21% at Q4 2007) • 67% of investors expect not to buy overseas property (78% at Q4 2007) Expectation of House Price Movements (12 month outlook) London • 29% of investors expect London property prices to rise (39% at Q4 2007) • 56% of investors expect London property prices to remain static (43% at Q4 2007) • 14% of investors expect London property prices to fall (19% at Q4 2007) UK (outside London) • 1% of investors expect UK property prices outside London to rise (3% at Q4 2007) • 38% of investors expect UK property prices outside London to remain static (33% at Q4 2007) • 61% of investors expect UK property prices outside London to fall (63% at Q4 2007) Holding Property Investments (12 month outlook) • 95% of respondents intend to hold their property investments (93% at Q4 2007) • Only 5% intend to sell property and move investment funds to other asset classes (7% at Q4 2007) Interest Rate Expectation (at Q1 2009) • 100% of investors expect the Base Rate to be at or below 5.75% (95% at Q4 2007) • Average Base Rate expectation is 4.88% (5.18 at Q4 2007) • 93% of investors expect the Base Rate to be at or below current level of 5.25% • 89% of investors expect the Base Rate to be at or below 5.0% • 75% of investors expect the Base Rate to be between 4.75% and 5.0% -ends- Michael Oakes Communications Manager - Young Group t: +44 (0)845 356 1000 m: +44 (0)7932 021 993 e: moakes@ # # # Young Group specialises in providing Property Portfolio Management services to private investors, offering the best off-plan direct investment opportunities in London, as well as access to indirect, development fund investment opportunities through its development arm, Young Property. Young Group manages the entire investment process. For direct investments this spans from sourcing the opportunities through to financing, furnishing and letting. Website: www.younggroup.co.uk End
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