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What do people think is a realistic CG rate going forward in their area(s) of investment?
I operate in the SE and think 2% YOY average across a 25 year mortgage term moving forward is about as good as it will realistically get - that's the figure that I'm working to now.
A £400k investment now in 25 years will be over £650K. Will it happen? Who knows, but it's good to have the figures down on a spreadsheet. Even a 1% PA increase would still result in the property worth £510k+
Every decade since WW2 has had a different rate of nominal price growth - and as you know on occasions we had positive nominal growth but negative real growth.
Growth or lack of it has also differed radically by location.
The macro economic factors as well as global economy makes future forecasts at best an educated guess.
If 2% is the average rate, which is lower than the average going rate for inflation, why are you even investing in a constant depreciating asset class that requires so much effort to sustain ie. constant remortgaging, remortgages fees, mortgage applications, dealing with tenants and void period, let alone difficult tenants etc....
What I am trying to get at is, if your area of interest is only predicted to have 2% average growth, I would just invest in a index tracker funds, no effort needed, no tenant issue or remortgaging fees and average return of well over 6% pa.
I feel the inflation rate given by the Govt is just carp. Property is above the realms of a pack of fags, loaf of bread etc.
The 25 year figure is an extremely conservative figure. It still provides several hundred thousand £ potentially.
Not too worried about the tenant side of things, as I self manage its down to me. This game isn't for the easily offended!
Because Capital growth is but one part of the equation for property investors
Because leverage at 75% LTV makes that 8% pa CG
Because rental yield can additionally produce 20% ROI
Because you can additionally buy @10% BMV
Because you can additionally add 10% value
Also if you notch CG up to 3% pa over 25 years the property doubles
4% or 5% pa CG is not unheard of historically
In 2016 it was 10% growth where I was
Beats index trackers easily in my view
And yes extra work needed but that equals extra rewards
Jonathan Clarke. http://www.buytoletmk.com
2017 and 2018 growth figures?
I expect it will depend on what index you look at.
2017 + 2 or 3%
2018 flat lined for first 6 mths then dipped maybe 2% or 3%
yes I always take zoopla with a pinch of salt
they are out by 100K on their valuations on 2 x 4 beds I`ve got
I have to agree with you BTL for a couple of percent growth is not worth the effort
on top of that more taxation and Licenceing to come
give me equity investment over BTL going forward
Learn Change and Adapt ?????
All comments are for casual information purposes only. If you wish to rely on any advice I have given please ensure you obtain independent specialist advice from a third party. No liability is accepted for comments made.
With the nightmare that is known as Brexit, nobody can predict anything about the property market until the dust settles - if it ever does.
I voted to leave as most of the north and even I now see the mess the uk is in
I wish Cameron had never started this off
the uk is now so devided
property in terms of capital growth as an investment is now over
if I was like you sitting on huge gains in the SE I would get out and invest in something else with far less hassle
I never thought I would see BTL as I do now
i have to hang on and live on my yeild because I have no choice
it will take a very long time to sort the uk out now
JC sees growth of around a few percent a year if you take into consideration inflation it’s an asset standing still with the work and stress of running it
Cameron and osbourne killed BTL and I am not just talking about S24
its grim and its not just in the North
I thought the UK would leave and we would prosper away from the EU
IM not sure as we move into 2019 this is the case
The country gets divided every time there is a general election though?
Someone wins and someone loses. But usually those who lose don't ask for a second vote! What a mess.