House prices have recorded their strongest year-on-year growth in nearly three years, as market activity increases, according to the Halifax.
The rise in house prices is in line with figures published last week by Nationwide, which reported that house prices were now 1.1pc higher than they were a year ago, marking the fastest annual increase seen since November 2011.
The number of mortgages on the market has increased sharply since the Government launched a scheme called Funding for Lending last August, which has given lenders access to cheap finance to help borrowers.
Lenders have been slashing their rates and they have also reported increased numbers of first-time buyers entering the market.
Government schemes called New Buy and Help to Buy have also been introduced to specifically give people with smaller deposits a helping hand. Under the scheme the government lends buyers up to 20 per cent of the value of a new-build home priced below £600,000, interest-free for five years. This also comes into effect for house buying on any type of property for any type of buyer (not just first time buyers) from the 1st January 2014.
QUESTION – is there money to be made?
For those of you who bought properties between 2005 and 2007 you may remember the days when there were plenty of mortgage products around, some allowing same day re-mortgages which meant that you could buy and then pull equity out of a property the next day if you had bought it below market value. Coupled with this banks were lending huge amounts of money with what seemed like no limitations. My brother and I are an example of this as we bought over 160 properties in 18 months during this time.
Well I have a similar feeling that we will never see the likes of HELP TO BUY again, which may cause the next property boom. The housing market is effectively based upon the idea that your “House is your Castle” and people always want that bit more. Human nature has GREED in it. A major factor that controls the housing market is finance. If it was possible to get that bigger, more expensive house while paying the same re-payments wouldn’t you? Effectively this is what HELP TO BUY will do. People will be able to get that bigger more expensive house because the government will be giving them an interest free deposit to do this. In the 3 years that this scheme is available from January 1st 2014, people are being given the opportunity to get interest free finance. I have a feeling this will NEVER HAPPEN AGAIN. It will be something you talk to your kids in the future about and they won’t be able to believe that the government offered interest free finance so you could buy a house.
My prediction – I strongly believe this will deliver a mini price boom. Low interest rates, gifted deposits from the government which are interest free – the perfect storm for house price increases.
I don’t know what will happen after the 3 years but during those initial 3 years it seems a perfect time to buy, renovate and flip a property. More and more people will be entering the market. Supply and demand – prices will go up!
If you are not in a position to buy, get yourself ready to have a strategy where you can buy, renovate and flip.
Are we putting our money where our mouth is – YES. My brother Nigel and I are waiting to see the final details of HELP TO BUY and then THERE IS SOME MONEY TO BE MADE!
Thanks for reading and if you wish to see read further articles see the links below:
My buy to let story and how I`m now living on a beach
How to get the right tenant
My top renovation tips
When your tenant gives notice