Housing Market Predictions for 2007
The question is can house prices continue to surge upwards? Most commentators believe that moderate growth of 3-4% is likely. Although previously these low key predictions have subsequently appeared pessimistic, this time we have to agree - the market must slow down in 2007. The recent interest rate increases have definitely dampened the market and property investors are being more cautious. However, the UK economy is generally buoyant and in our opinion, there are many reasons why the UK remains an attractive investment proposition despite the possibility of higher rewards overseas (see our website for 10 reasons to invest in the UK).
Discussion about average price increases can be misleading as there are massive variances between different locations. Certain places such as London and various regeneration areas have seen exceptional growth yet many regions have in fact remained flat. This emphasizes the importance of a top down approach to investing i.e. sourcing areas where the economic outlook is positive and indicates that demand for housing will exceed supply. If you want better than average returns - don't be an average investor.
Overall, at Armchair we anticipate an average increase on property values of 5% in 2007.
Another factor influencing investor behaviour is the fact that prices have been rising faster than rents so yields have fallen to 4.6% (RICS) and investors are therefore being more cautious. However, tenant demand remains high driven by immigration and a mobile work force.
We predict a shift in popularity away from the major city centers to secondary cities and towns where prices are lower and yields slightly higher. In the North West, areas outside Manchester City Centre such as Lower Broughton in Salford are worth considering as well as towns such as Bradford, Crewe, Stalybridge and Wigan which are undergoing significant regeneration.
Further a field both Northern Ireland and Scotland represent good areas for growth in 2007. House prices in these countries are likely to match this year's growth of 10%.
For further information about property investing in the UK or Cyprus please visit www.armchairpropertyinvestor.com or call on 0845 230 5195
Related Tags: property, investment, housing
Frazer Fearnhead is co-founder of the Armchair Property Investor, an investment consultancy he set up when he realised that there was a gap in the market for a company that could source excellent below market value property deals combined with a high level of advice and personal service. He has over 10 years experience in property investment and a personal portfolio of 19 properties. www.armchairpropertyinvestor.com
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