The UK has always struggled to match property demand with the available supply, but this problem is most apparent in low cost areas. All kinds of buyers are out there for low cost property and with first-time buyers, student landlords, housing associations and developers all out for their next big investment, it’s becoming tough for young homeowners to climb up the property ladder.
Cheap Access to Credit
One of the great difficulties the market has struggled to deal with is the fact that landlords and developers have much cheaper access to credit than first-time buyers and, in general, they’re able to pay more for lower value properties. High deposits and tough interest rates are providing a real obstacle for first time buyers at the moment.
Confidence in Low Risk Letting
We’ve also seen a trend over the last few years that people are moving from traditional ‘investments’; that’s stocks, bonds and savings, towards property. Tools like rent guarantee insurance make letting much lower risk than many typical investment tools, and poor returns on savings are enticing people to buy tangible assets rather than staying in the stock market.
A Change in Times?
There has been speculation that these trends could be here to stay and that first time buyers are going to have to wait even longer before buying a property of their own. For landlords that means more demand and longer tenancies. It could be however that the government will step in to help out first time buyers in the future, but at the moment the market for cheap property distinctly favours the investor rather than the homeowner.
Low cost property has hit something of a rut in the UK, but we’ll expect to see improvements in the next couple of years as the construction industry picks up again. For now, however, low cost might be the way to go if you’re looking to expand your portfolio.