With the new year starting, we can now have a look at the best performing areas over 2017 and give a view on where we think are going to be the best areas to invest in throughout 2018.
2017 was an interesting year with the UK starting the process of leaving the EU in 2019 as well as the continued reduction in landlord mortgage tax relief. It was also a year where we saw the most mortgage products available since the recession 10 years ago but increasingly stringent checks on affordability. With buy to let mortgages having stronger stress testing came the reduction in properties qualifying for lending or refinancing – particularly in London and the south east. This last part has been a killer for the investment market in expensive and low yielding areas as the rents simply don’t cover the repayments needed because of the stress testing and you can see the affects from this in the areas that have seen the largest growth.
The highest percentage rise in house prices of any major UK town or city in 2017 was in Cheltenham with an increase of 13%. The next two highest growth areas were Bournemouth and Brighton with 11.7% and 11.4% respectively – a direct result of being university towns. The average house price throughout the UK increased 2.7%.
At the opposite end of the scale the largest annual price fall in house prices was in Perth in Scotland with a decline of 5.3%, according to the research from lender the Halifax.
Other areas in the top 20 highest increases include Peterborough up 10.1%, Gloucester up 9.5% and Exeter up 9.1%.
‘A number of towns and cities have recorded significant rises in house prices over the past year, with all of the top 20 performers recording growth of at least double the national average,’ said Russell Galley, Halifax managing director.
‘Unlike last year, the top performers are not exclusive to London and the South East, with the top spot now belonging to Cheltenham in the South West, and towns in East Anglia, East Midlands, North West, Wales and Yorkshire and the Humber also making the list,’ he added.
It is expected that growth over 2018 will follow trend with some areas in London and the south east performing well in overall capital growth. This isn’t necessarily a good thing for the buy to let landlord however as there becomes an increasing likelihood with prices going up that yields will go down. If this happens it becomes even more difficult to get your money out of the property even though there is capital there to release. By investing in other towns and cities in the UK, where you could in fact see higher growth than London, you still have the opportunity to be within the stress testing as well as obtaining higher yields from your money. With rent paying the bills and capital growth being your pension, it is becoming more and more important to purchase properties with good yields in areas with potential for growth.
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