Thursday, 1 January 2015

Amber Valley and Erewash Property Market – What is going to happen in 2015?



 


I had an interesting chat with a landlord who uses another letting agent in the Heanor after he popped into our offices for a coffee whilst his wife was doing some last minute Christmas shopping. We got taking about both the Amber Valley and Erewash property markets, as he lives in Heanor but his buy to let properties are in Heanor, Ilkeston, Eastwood and Belper and I thought other homeowners and landlords might be interested in what was discussed. Whilst the housing markets are so different, with average property prices in Belper being as high as £210,400, in the middle, Ilkeston £139,700 and Heanor £133,700 with Eastwood at a very respect £115,600 there are a alot of similarities between the four town’s property markets .

You see, property values didn’t stop dropping in Amber Valley and Erewash until December 2009 (and even then, after a small recovery in the proceeding years, there was a minor dip in property values of 4.1% in early 2012), so after a strong run over the last 15 months, the ever upward drive of house price rises has started to turn with increases now at a standstill (and in some locations a minor drop) for the first time since the middle of 2013. Now it could be said this easing of the housing market in Amber Valley and Erewash can be attributed partly to the time of year (in 2013 property values in Amber Valley and Erewash dropped by 0.1% in December), it is obvious that estate agents in Amber Valley and Erewash are wary about the direction of the market as a result of the not as strong demand and fewer house sales.

With the uncertainty of a possible interest rate rise, new mortgage rules, a general election on the horizon and recent warnings of a house price bubble. Although the main indicators suggest that buyers will start to gain the upper hand, especially with the new stamp duty rules announced recently by George Osbourne. However, there are many homeowners who don’t need to sell and won’t bother unless it’s economically beneficial to do so, but most homeowners are homebuyers, so what they loose with one they gain with another.

 
On the one hand going for high yielding Amber Valley and Erewash property to rent out seems an obvious choice but high yielding property often doesn’t go up in value that well and in some circumstances doesn’t keep up with inflation, meaning in real terms you have a depreciating asset (I spoke about this a few months ago in ‘The Spruce Lettings Property Blog’). So surely you should pick a property that has great capital growth then, because of the obvious potential to generate long term capital profit, especially with inflation eating away at our savings. However, rental yields on high capital growth properties tend to be low meaning if you are taking a high percentage mortgage, the rent doesn’t pay the mortgage payments.

This is all good news for landlords looking to buy rental property with the changes in stamp duty and later in 2015, the new rules regarding pensions, where you will be able to take money out of your pension pot to invest in property. However, at the same time, I would say don’t just buy any old property in Amber Valley and Erewash. First time landlords need to be cautious. The doubling of house prices every seven to ten years which has taken place since WW2 doesn’t seem to have been seen since the mid 2000’s. The property market is shifting with more properties being built and restrictions put on mortgage lending, the likelihood of the property market increasing at the same levels as the past are questionable. But investing in property is also about receiving the rent.

If you want to chat about property investment in the either Belper, Ilkeston, Heanor or Eastwood, either pop into our offices Heanor or email direct on lettings@sprucetree.co.uk

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