To read the headlines you would think that UK property was so far out of the reach of everybody that the market was in freefall. We see regular headlines suggesting that property prices have moved to a level which is unaffordable for the general public and only investors are picking up stock. Is this really the case?
First-time buyers
It would be foolish to suggest that all first-time buyers are able to afford UK property at this moment in time. The rules surrounding mortgages have changed, greater deposits are required and house prices have moved ahead at a faster rate than wages. However, there are areas of the UK which are still well within the grasp of first-time buyers and offer a means of stepping onto the ladder.
One of the main issues holding back many first-time buyers from moving to more affordable areas is often a lack of employment opportunities. In general employment hotspots bring additional spending to local economies, more demand for accommodation and are associated with highly rated property markets.
Buy to let investors
Over the last few weeks we have seen some very damning headlines regarding buy to let investors and the assumption that we are on the verge of an economic crash as and when UK base rates rise. While there may be some truth in the suggestion that buy to let investors are heavily involved in the UK market could they really bring it crashing down?
The vast majority of buy to let investors are in for the long term, using cash flow and assets to further gear up their borrowings and investments. Would they jump ship as and when UK base rates increase? If you listen to some of the suggestions you could be mistaken for assuming they are looking to give their properties away, rather than the fact the UK property market is one of the most buoyant in the world at the moment!
Upsizing and downsizing
The subjects of upsizing and downsizing in the UK property market are not often spoken about but when you bear in mind the performance of UK property since the 1980s there are some significant paper profits out there. The make-up of society, families and the growing number of people living alone has changed the look and feel of the UK property market in many areas of the country. So, while on paper some areas of the UK may seem out of the reach of first-time buyers, many of those upsizing and downsizing already have significant equity to work with.
There has been pressure placed upon those with large houses with bedroom numbers which may not be fully utilised. Quite how any government or any local authority would go about effectively “evicting” those with unused bedrooms is unclear. Then again local and national authorities have always been keen on using taxes as a lever to push people around the UK property market. Could this be a tool they might consider in the future?
Conclusion
You would be forgiven for assuming that the vast majority of UK property is now out of the reach of first-time buyers. Some of the more affluent areas of the UK may well have moved beyond the reach of first-time buyers but there are many areas still attracting interest from those taking their first steps into the market. Buy to let investors have pushed markets higher in the short term, those upsizing and downsizing add liquidity and perhaps the only ingredient missing is an increase in wage inflation?