Property prices remain stable amidst multi-decade high interest rates, and Novvy says investors can beat inflation with rental income
“The UK property market continues to capture attention and fuel speculation as interest rates reach multi-decade highs. Amidst these challenging economic times, the stability of real estate values in the UK stands out as an unexpected and heartening trend. Despite high borrowing rates, property prices have remained largely steady, offering investors and homeowners a sense of security.” says Ashish Saraff, founder and CEO of Novyy Technologies.
To understand the resilience of real estate prices amidst high interest rates, it is crucial to examine the current state of affairs. A recent study indicates a modest decline in UK home values, particularly in certain areas. However, this decline has not been severe enough to destabilize the overall real estate market. Property values in the UK have largely remained steady, providing investors and homeowners with confidence as they generate reliable returns through rental income.
Ashish Saraff further comments “the era of quantitative easing seems to be over for good and this is good for real estate as an industry; this will ensure serious players take a long term view as it should be rather than wannabes trying to make a quick buck from flipping as has been the case in the last decade.”
According to Halifax, annual house price inflation in the UK has reached its lowest level in a decade. April’s survey from Halifax shows a mere 0.1% increase in house prices compared to the same month the previous year, indicating a considerable deceleration from the 1.6% annual growth rate. The average house price decreased marginally by 0.3% on a monthly basis, slightly offsetting the 0.8% increase seen in March.
Statistical evidence demonstrates that while property values have seen some decline in specific locations, the decrease has been gradual and has not triggered a sudden market crash. This showcases the resilience of the UK housing market, which has withstood the challenges posed by the current economic environment. The stability of real estate prices encourages investors, assuring them of steady returns from rental income.
Amidst noticeable changes in real estate costs and interest rates, the value of rental income remains significant for investors. Recent data from Rightmove reveals a slight decrease in average home prices, indicating the onset of the summer real estate market slump. This price drop coincides with a sharp increase in mortgage rates, making it more challenging for buyers to afford properties and adding to market uncertainties.
The rise in mortgage rates has prompted lenders like HSBC, Nationwide, Santander, and Skipton Building Society to withdraw and reintroduce fixed-rate mortgage offers at higher rates. Over the last four weeks, the average rate for a five-year fixed-rate mortgage with a 15% deposit has risen from 4.56% to 5.20%. Consequently, potential homebuyers would need to pay an additional £117 per month for a mortgage with a 25-year term if they were to purchase a property at the current average asking price of £372,912.
To tackle excessive inflation, the Bank of England’s Monetary Policy Committee has increased the Base Rate to 5%.
Despite these challenges, some buyers can still afford higher mortgage payments and remain interested in property purchases. Rightmove data shows a 6% increase in buyer inquiries compared to the same period before the COVID-19 pandemic in 2019. However, the number of sales agreed upon during this period is 6% lower than in 2019, indicating cautiousness among prospective buyers.
Tim Bannister, director of property science at Rightmove, highlights the disruptions and uncertainties caused by recent mortgage sector developments. Increasing mortgage rates have led prospective buyers to carefully evaluate their finances, resulting in a frenzied rush to secure the best mortgage rates.
The average house price in the UK has recently experienced a slight dip, falling from £287,891 in March to £286,896 in April, according to recent data. Although average prices remain approximately £7,000 below their peak reached last summer, they still stand at around £28,000 higher than they were two years ago. These figures suggest a stable housing market climate, even amidst the increase in mortgage payments and the economic uncertainties brought on by recent policy changes.
Investors have been closely monitoring these developments as they assess the value of rental income in the current real estate market. Rental income holds significant importance and provides several advantages for investors. It serves as a passive form of income, generating consistent revenue without requiring active involvement. This stability is particularly valuable during times of economic instability or fluctuating house prices, as it helps reduce risks and protect investors from the full impact of market volatility.
Furthermore, rental income offers investors flexibility in determining the optimal time to sell their properties. By generating steady rental income, investors can choose to hold onto their properties until the market conditions are most favourable, maximising their profits and capitalising on advantageous opportunities.
Moreover, rental properties provide investors with the option to relocate if the need arises. This flexibility allows investors to adapt to changes in their personal circumstances, such as employment conditions, family demands, or lifestyle preferences. It serves as a safety net, ensuring that investors can modify their living arrangements as required while maintaining a valuable asset.
In addition to rental income, investors can benefit from the appreciation of property values over time. Historical data shows that property values tend to rise over extended periods, offering potential long-term growth. By combining rental income with property appreciation, investors can enhance their overall return on investment (ROI).
To optimize their real estate investments and navigate the rental market effectively, investors can leverage PropTech solutions. PropTech has revolutionized the rental process by addressing various challenges faced by landlords, including time-consuming procedures and paperwork. These technological solutions streamline the leasing process, provide automated rent due date reminders, simplify invoicing and receipts, offer convenient document storage, enhance inventory management, and facilitate online customer service. Additionally, PropTech platforms foster community building among tenants, creating a vibrant and cohesive rental environment.
In summary, despite the recent minor decline in UK house prices, the real estate market has exhibited stability, demonstrating its resilience to economic headwinds. Rental income has become a vital component for investors, providing a steady, passive income stream that can outpace inflation. Furthermore, the adoption of Proptech solutions has transformed the rental process, enabling landlords to streamline operations, enhance productivity, and foster tenant satisfaction. With the right tools and strategies, investors can navigate the current market environment and seize the opportunities presented by the rental market.
For those unfamiliar, Novyy is an investment platform designed to facilitate private market investing for individuals and family offices globally who wish to invest in the British Buy-To-Let market. The platform offers access to curated real estate opportunities with a focus on Co-Living segment via SFRs (Single Family Residences) and HMOs (Houses in Multiple Occupation / Multi Family Residences) by aggregating individual demand through a SPV (Special Purpose Vehicle) / feeder fund structure that invests directly into the underlying target assets.
Every asset is levered with lender finance as well. We also offer secondary market investment, portfolio-level reporting, simplified annual tax reports and proprietary research, thereby enabling individual investors to access private market real estate transactions with lower barriers to entry.
To directly contact the Founder and CEO of Novyy, Ashish Saraff just email firstname.lastname@example.org
eXp UK Estate Agents, a leading estate agency brand with one of the fastest growing networks across the United Kingdom, is pleased to announce a strategic partnership with proptech supplier nurtur.group. Under the agreement, nurtur.group will become the exclusive supplier of Google Local SEO, Facebook Advertising and LeadPro, across eXp UK’s extensive network of agents.
Richard Combellack, Chief Commercial Officer at nurtur.group, says that collaboration between nurtur.group and eXp UK combines the expertise of both organisations to drive enhanced online visibility, targeted marketing campaigns, and high-quality lead generation. “With this partnership, eXp UK will be able to leverage the exceptional digital market and lead generation products provided by nurtur.group to strengthen their presence in the highly competitive UK property market,” he adds.
Combellack says that Google Local SEO will be a key aspect of the collaboration, ensuring that eXp UK Estate Agents’ listings and services gain maximum visibility within local search results. This powerful tool will optimise eXp UK’s online presence, driving organic traffic and improving search engine rankings to reach potential clients more effectively.
He notes that furthermore, nurtur.group’s expertise in Facebook Advertising will enable eXp UK to harness the immense potential of social media platforms. “By leveraging data-driven strategies and targeted advertisements, eXp UK will connect with their target audience, increasing brand awareness and driving leads directly to their network of agents,” Combellack comments.
The LeadPro platform provided by nurtur.group will revolutionise eXp UK’s lead generation capabilities. According to Combellack, with LeadPro, eXp UK agents will have access to a streamlined and automated system that captures, nurtures, and converts leads more efficiently. The integration of this comprehensive lead management platform will empower eXp UK agents to deliver exceptional customer service and drive higher conversion rates.
“We are thrilled to partner with nurtur.group to take our digital marketing efforts to new heights,” says Adam Day, Head of eXp UK Estate Agents. “Their extensive experience in Google Local SEO, Facebook Advertising, and LeadPro solutions will be invaluable in expanding our reach and driving tangible business results.
We refer to these nurtur.group products as the ‘making it rain’ element for our agency network due to the volumes of leads generated. We believe this partnership will not only benefit our network of agents but also deliver exceptional experiences to our clients.”
Andrew Stanton is the founder and CEO of Proptech-PR, a consultancy for Founders of Proptechs looking to grow and exit, using his influence from decades of industry experience. Separately he is a consultant to some of the biggest names in global real estate, advising on sales and acquisitions, market positioning, and operations. He is also the founder and editor of Proptech-X Proptech & Property News, where his insights, connections and detailed analysis and commentary on proptech and real estate are second to none.