Thursday , October 21 2021

When will the next big price catastrophe hit buyers?


Governor of the Bank of England Mark Carney claims that a 35% fall in house prices in the UK may be better if Brexit without a contract becomes a reality. Prospects for investors with buy-to-let rights may be uncertain.

Of course, the agreement between Great Britain and the EU can be signed, which may lead to an improvement in the results of the British economy. The reality is, however, that the UK housing market may have difficulty generating the kind of growth that has been observed over the last 20 years. Rising interest rates, affordability problems and political risks may make housing prices disappoint somewhat.

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Assuming the signing of the Brexit agreement, interest rates are likely to increase at a rapid pace in the medium term. The Brexit agreement can give consumers and businesses more confidence in the UK's economic outlook, and this can lead to better economic results. And with the rest of the world economy, which currently provides high growth, the Bank of England may try to reduce inflationary pressure in the medium term.

Therefore, availability and affordability of the mortgage may be reduced. A higher interest rate would also make mortgage repayments less affordable, which could result in slower real estate price growth.

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Of course, no resource has ever grown indefinitely. After two decades of growth, home prices in the UK may face a period of hardship and the market has been strengthened thanks to favorable government policy in recent years. The purchase assistance program has allowed many buyers for the first time to own their first property without large deposits, while the tax relief system may also have a positive impact on home prices.

Given the precarious political situation in the UK, a change in housing policy would not be a big surprise. This applies in particular to the situation in which the availability of housing becomes a bigger political problem – especially among younger voters who are struggling to enter the property ladder. Therefore, the increase in prices to which they have become accustomed to invest, so that investors can get used to it, may be less impressive in the coming years.

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Although there is a lack of supply of new homes, the demand for them may be under pressure due to rising interest rates and changes in government policy. Therefore, investing in a wider range of assets than real estate can be a wise move, because the risk / return ratio of buy-now investments may be less attractive than for many years. With the entry into force of tax changes, shares may offer a simpler and more profitable perspective.

<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Given that FTSE 100 has dividend rate Over 4%, and recently experienced a decline, can offer good value for money in the long run. Although potentially more volatile than house prices, it can ultimately generate higher profits in the long run. "Data-reactid =" 32 "> Given that the FTSE 100 has a dividend yield above 4%, and recently experienced it may offer good value in the long run, and potentially more volatile than home prices, ultimately may generate higher profits in the longer term perspective.

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