The UK property market in its most basic form is simply an information exchange because for every buyer there is a seller both with very different opinions of the market. At this moment in time there is some short-term uncertainty surrounding the UK property market in light of the Brexit vote. In a perfect example of how a modern day property market works, the reluctance of buyers to chase prices has seen some softening in asking prices and drifting in certain parts of the country.
So, is this short-term uncertainty scaring long-term investors or are they just keeping their powder dry?
Reading the market
If you have a positive long-term opinion of a particular property market then your purchase price is literally down to timing. This is where property experts with experience are able to know when to sit back and when to push forward with a property purchase. At the moment it is not difficult to see why some buyers are holding off as uncertainty continues to build in the UK but the markets will turn at some point. It may seem a no-brainer to hold off at the moment but when would you push the button to begin purchasing property for the longer term?
Value is value
Property prices fluctuate all the time and for many it is simply a case of formulating a value for money figure in your head and then acting when this price is available. This strategy works on the upside and the downside and while your timing may not be perfect you will never buy at the very bottom of the market like you will never sell at the very top. Working on “good value” investments at the very least gives you a foothold in the market and a potential opportunity to buy at a cheaper price if the market continues to fall.
Rental income is the key
The headlines surrounding the worldwide property market tend to focus on large capital gains often ignoring the importance of long-term rental income streams. If you are looking at a long-term career in property investment you will need to consider rental income. In difficult markets it can be possible to pick up properties offering double-digit rental yields with the possibility of long-term capital gains. In theory it should be possible to increase your rental income year by year, at least in line with inflation, allowing you to pay down a buy to let mortgage and increase the equity content in a property.
Don’t be afraid of debt
The vast majority of us have a negative reaction when we hear the word debt which is perfectly understandable. However, it is worth noting that while we need to respect debt, if used in the right circumstances it can prove to be extremely lucrative. There are obvious downsides to using debt but if you have a sensible approach, a structured plan and some “financial headroom” to cover unforeseen circumstances, there is no need to be overly concerned about using debt to fund investment.
Uncertainty breeds uncertainty in difficult times and it is no surprise to see many experienced property investors sitting on the sidelines. They will be waiting for signs that the market is stabilising, that the worst may be over although they will have a “value tipping point” in their mind. The fact is that if you have long-term confidence in a particular property market then your next purchase is really just a matter of timing and maximising long-term value for money.
We may look back on current volatility in the UK market as a “blindingly obvious” buying point but sometimes it is difficult to see the woods for the trees when you are in the moment.