This year is expected to be a crucial year for property and the private rented sector is expected to gather pace. Many regional cities throughout the UK are expected to step up and try to take the shine off London.
What is expected this year?
In the same way as 2015, the supply of property is still not expected to meet demand and this means that the average house price is expected to rise by £17,000. Last year saw an increase of £20,000 and this shows exactly how the property market in the UK is performing. Some regions will see continued growth which is great news for investors and during the first quarter of 2016, there will be a significant increase in property sales. This is all down to the new stamp duty coming in to effect in April. The property market in London will suffer as a result of the new stamp duty and this will see investors moving into other areas.
How will London perform?
London hasn’t provided investors with the perfect environment for some time. This year the same is expected. House prices are increasing and taxes will ensure that any yields are minimal and this will leave very little left of the capital. Areas such as Kensington and Chelsea see returns of around 2.7 but this year they could fall to as little as 2. However, this does not mean that uk property investment will fall backwards; in fact it is likely to lead to investors targeting regional cities.
What areas should investors target?
Investors have already been turning their interest to purpose-built opportunities that are targeted at a certain demographic such as students or young professionals; it is expected to continue to grow throughout 2016. Purpose built accommodation come with an element of appeal and they have more of a pull than the private rented sector because they are built to target their needs. They are built to a high standard and when compared to other properties on the market they will be in high demand which will mean high yields.
Are there any cities that will stand out?
Manchester has a strong jobs market along with other cities and this will attract young professionals as well as businesses. Manchester had the highest yields and the fastest rate of job growth in the UK last year which means that investors will more than likely continue to benefit from its excellent value. The government is backing a number of long-term plans and projects and this will benefit the economy and build relationships with other UK cities. This will mean that Manchester is going to continue to thrive and grow making it ideal for investors.
In what way will the private rented sector develop in 2016
The popularity of the private rented sector will grow as young professionals continue to benefit from its flexibility as they still have no requirement to own their own property. Around 20 of properties will be part of the private rented sector by the end of the year and this is likely to continue for at least the next ten year. As it does grow, it will grow in diversity and many will choose rental as a way of life with tenancy length increasing to more than two years.
(Original Post: http://www.propertyowl.co.uk/will-property-investment-flourish-2016/)