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Budget gets Britain building while record property prices get buyers buying
March 20, 2014Article by Ray Withers
In light of the news that average property asking prices in the UK have risen to a record high of £255,962 in March, according to Rightmove, the Chancellor’s 2014 budget announcement yesterday was eagerly awaited by all those with a stake in the UK’s property market.
Record price rises
The Rightmove data shows a month-on-month increase of 1.6% in the average asking price for properties within England and Wales, which represents a rise of 6.8% when compared with prices this time last year. Across the wider UK, figures from Halifax reported an average property price of £179,872 in February – 7.9% higher than a year earlier.
While the figures mean that many buyers have been priced out of the market and decided to rent instead, savvy investors have stepped in as buy-to-let landlords, choosing prime city centre investment properties for their high yields and excellent potential for capital growth. Buy-to-let investment properties are increasingly popular with both domestic and foreign investors, despite Chancellor Osborne’s Autumn Statement commitment last year that foreign investors in the UK property market will be subject to capital gains tax.
A cautious budget
The Chancellor reconfirmed the capital gains tax levy in his March 2014 budget announcement, as part of a cautious raft of measures designed to create an environment conducive to steady long-term growth in the UK’s property sector. The emphasis was on preventing the formation of a housing bubble.
The budget announcement included a number of other elements designed to assure the stable future of Britain’s housing market. The equity loans part of the Help to Buy Scheme, which government figures suggest has been responsible for the purchase of homes by 15,000 buyers since April 2013, was extended to 2020.
The Chancellor stated that a further 120,000 new homes would be built as a result of the extension of the Help to Buy Scheme – in addition to the 74,000 already scheduled to be built by March 2016. The budget also provided £500 million of additional funding to address the 15,000 housing units that have been stalled due to financing issues, helping to unlock the projects and get them moving again.
Getting Britain Building
The push to Get Britain Building is certainly timely, as demand across the UK property market continues to outstrip supply. This is one of the main drivers behind this spring’s record price rises. Leading property investment specialists Property Frontiers have been at the forefront of the initiative to increase Britain’s housing stock for some years. Chief Executive Ray Withers comments,
“The UK’s cities desperately need new, high quality housing developments in order to cope with expanding urban populations. Thriving economic hubs such as Liverpool, Birmingham and Bradford continue to attract increasing numbers of young professionals and their families, resulting in a keen shortage of appropriate accommodation. Property Frontiers is proud to be offering high-end, new-build apartments to investors in all three of these fantastic locations.”
Property Frontiers’ investment opportunity in Birmingham is exactly the kind of development that the budget’s measures have been designed to promote. The studio, one and two bedroom apartments will be available from £95,000, with a pre-launch discount of 10% for those purchasing before 1 April 2014. Projected realistic yields of 9%, with developer underwrites available, mean that the properties are already proving extremely popular. Withers continues,
“It’s an exciting time for the UK housing market and the cautionary measures in the Chancellor’s budget are extremely welcome. Nobody wants to return to a boom and bust cycle; a stable fiscal background that enables investors to achieve high yields is the perfect environment.”