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Demand for property remains high, fuelled by the housing shortages across the United Kingdom at this moment in time. Zoopla claims there are still 293,000 deals which are expected to close in 2022. Therefore, adding to the sales pipeline. This is a positive sign for investors. As a result of higher market activity, the property market will strengthen significantly.
It could be the perfect time to buy off-plan, as the housing market readjusts to accommodate the new interest rates. Investing in a new build property often means you can secure a mortgage at a later date. This will enable you to escape the rising interest rates. A mortgage is often secured when the development moves towards completion.
Interest rates have shot up to 6% and there has been a lot of coverage around this. However, the impact this has on cash buyers has been discussed far less. The rising interest rates will have less impact on people buying a property with cash or a smaller LTV (loan to value) mortgage.
Cash buyers face less competition in the property market because they are better positioned. Sellers are more likely to accept an offer from a cash buyer than someone who has yet to secure a mortgage. In the current market, banks are also becoming reluctant to offer mortgages. This could work in favour of cash buyers, as they do not have to wait for a lending decision and can purchase a property immediately.
-Cash buyers can sometimes offer below the asking price, in return for a quick sale.
-Some listings are targeted at cash buyers only. Therefore, these buyers can benefit from a broader choice of properties.
-Transactions are less likely to fall through because cash buyers are not relying on a mortgage offer.
-Less risk to assets, if personal circumstances change, the property is still secure. Cash buyers do not have to worry about keeping up with mortgage repayments if financial circumstances do change.
House prices in the UK have increased by 8.1% over the last year, with demand high, and supply of homes short. It is expected that house prices will stagnate or decline slightly into 2023 if the interest rates continue to rise. The UK has seen healthy growth, particularly in the Midlands, Northwest and the North of England. Nottingham has seen over 10% growth year-on-year. Liverpool, Leeds, Manchester, Leicester and Birmingham all appear in the top 10 list for strongest growth in 2022.
Manchester – 9.3% Annual Growth
Manchester has seen significant growth in property prices, placing it as one of the top three cities for growth. Property prices in the city increased by 9.3% between September 2021 and September 2022. This growth is a result of the successful, large-scale regeneration across the city. This includes Salford’s Media City and improvements to the rail services. The projects reinforce Manchester as an economically strong and growing city, with industries attracting professionals from around the country.
Manchester is a growing business hub, attracting industry professionals and boosting rental demand in the city. As a result of the elevated levels of rental demand, vacancy periods will be low. As Generation Rent continues to grow, there is now a larger pool of tenants in the market. Property prices will continue to appreciate because of increasing demand, which makes Manchester a perfect city to invest in if you’re looking for capital growth. Manchester is a thriving city full of opportunities.
Birmingham – 9.2% Annual Growth
Birmingham also made the top 3 strongest growing property markets in the UK, with a strong annual increase of 9.2%. Firmly establishing it as an increasingly attractive city to invest in. The 2022 Commonwealth Games and the Big City Plan are just a couple of the projects fuelling property price growth and interest in the area.
CityRise recently launched an exclusive off-market development with a selection of 1,2 and 3-bedroom high-specification apartments. Situated between Birmingham city centre and Birmingham International Airport. If you would like to find out more about this development, check out our listing or get in touch.
Sheffield – 8.6% Annual Growth
Sheffield is currently delivering the £470m large-scale regeneration project, Heart of the City II. This city centre regeneration scheme will welcome new developments creating 7,000 new jobs. This successful scheme has played a part in the 8.6% annual house price growth. As the regeneration project continues, Sheffield is expected to become a lot more desirable for residents. With the ‘Levelling Up Sheffield’ scheme, transport across the city will improve. If you would like to find out more about the schemes, read our article about the Heart of the City regeneration.
Liverpool – 8.6% Annual Growth
In the Northwest, Liverpool’s house prices have climbed by 8.6% year on year. This is partially thanks to the Liverpool Waterfront regeneration which will see the relocation of the Everton Stadium to the river Mersey. This will also lead to Goodison Park becoming a mixed-use space for attracting business. As a result, demand for rental accommodation will heighten. The increasing levels of rental demand can be beneficial, as rents will follow a similar suit. Also, with a £100 million transformation of Central Park, the city is going to see a ripple effect throughout, so we expect property prices to rise year on year.
The market has taken some short-term hits due to interest rates increasing, although not at the heights they have seen in years past. However, this has opened some immediate opportunities for cash buyers and buyers opting for smaller mortgages. This will allow buyers to snap up attractive investment opportunities almost immediately.
House prices are increasing. This is a positive sign for investors looking for a long-term investment, benefitting from capital growth. Cities which have successfully delivered regeneration schemes, or cities with upcoming redevelopment schemes, will have strong economic growth, perfect for investors to get a strong return on investment.
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