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According to Steve Coyle, operations director at Cullen Property, with less people now able to invest in larger properties - thanks to the typical buy-to-let mortgage requiring a 40% deposit - those investors with adequate funds are in a good position because people selling properties are often keen to make a deal as soon as possible, resulting in a significant reduction on the original price.
“Less people investing means more choice for active investors, who are now able to push for much better deals than would have been possible previously,” he said.
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“For example a recent client purchase sourced by us was valued at £380k, but we acquired it for £325k. With a rental yield of 6.75%, this property was a hugely successful purchase for our client.”
Mr Coyle’s comments come shortly after it was reported by the Association of British Insurers (ABI) that the number of people viewing property as the best long-term investment fell by almost a third towards the end of last year.
He is confident however that mortgages will become more affordable again in future and believes that the 110 year trend for property values, which have increased at circa 9% per annum since 1900, is unlikely to cease.
He added: “The population is rising and more homes are required but, with little current investment in new builds, if you already own an investment property then the market is fully in your favour.
“The Edinburgh housing market has coped well so far but sellers have to be realistic about the buying power of the purchasing audience and, until the return of more sensible mortgages with a requirement of around 15-20% deposit, the market will be low in activity. This doesn't mean that property isn't still a very good investment over the longer term though and, combined with investment in other assets such as pensions and shares, the best way to prepare for your retirement.”
(GK)
