For those of you who are fascinated in the average UK house price then I have news for you!
There have been 2 reports within 7 days that have been released predicting 25% growth and 30% growth respectively:
National Housing Federation: 25% increase in 3 years
Centre for Economic and Business Research: 30% increase in 2 years!
Now how they can predict this I am not sure. A lot can happen in 5 years! I can tell you one thing: No one predicted the boom we saw from 2000 to 2007. If someone came out and said house prices were going to increase by 200% in the next 7 years they would have been laughed at.
So where do I think house prices will be this year? I have no idea! Do I care? Absolutely not.
Lets think about it. If property prices fell by 50% what does that mean? Well it would mean that any properties that I own I can buy the next door properties on both sides for half the price. This would mean if I own a property that rents out for £500 and the mortgage is £250, then I can now buy a property that still rents out for £500 but the mortgage cost will be half price i.e. £125.
So if house prices fall I am set to make more on a monthly basis than I did before. Okay I am in negative equity but so what. My net worth goes down to minus £10m but my monthly cashflow goes up by £500,000 per year.
My net worth is completely irrelevant to me. It is only relevant to the tax man when I die so the tax man can sting me for inheritance tax. If I die in negative equity the tax man gets NOTHING.
My monthly cashflow is totally relevant to me as this is what I live on.
So I am going to make a prediction and please do not laugh:
BUY TO LET HOUSE PRICES WILL RISE BY 100% IN 5 YEARS
What I mean by buy to let house prices are properties that are suitable for letting purposes. So you can ignore properties in leafy suburbs and private semi-detached in the nicer parts of town which make up the bulk of the average property prices as they are so expensive.
I am talking about the little flats and terraced properties I present to my clients and you see on my site that start from £25,000 and rise up to £75,000 for a single dwelling and £50,000 up to £150,000 for the HMOs.
Do I think a flat costing £35,000 will rise 100% to £70,000 in 5 years? Quite frankly YES.
All the economic reports point their fingers to one thing in respect to the UK property market: SUPPLY. We simply do not have enough properties. Even at the peak the government were aware that house builders were not building quick enough. Now builders have effectively stopped. Whoops. We are heading for a housing drought with only one winner. Property owners.
If you want a supply of cheap properties then have a look at some of my advice books.