In 2003 a newspaper carried the headline that Dundee was the property investment capital of Western Europe. Low entry prices, strong demand from tenants, good gross rental yields compared to price all contributed. This trend continued but as prices carried on their rise and rent stayed the same, yields dropped and with the credit crunch in 2008 the picture became somewhat different.
Well what about now?
There is still a lack of mortgage funds available for the buy to let investor with 60% to 70% loan to value becoming the max and stringent rent to interest coverage usually between 120% and 140%. However, in the last couple of weeks I have noticed an increase in property investors coming back to the market. Lower prices tied in with a very strong tenant demand have caused rents and rental yields to purchase price to increase – lack of mortgage funds available to the first time buyer can be attributed to this situation as they struggle to climb on the property ladder. This along with the attraction of potential Capital Gains in the short to medium term has got the sophisticated investor back looking at property.
In times of low interest returns on savings, a secure investment that can be liquidated is a good way to grow your savings with minimal risk – provided you take the right advice.
Whilst I think it is too early to expect returns of the headlines that we saw in 2003, I certainly think that as the economy recovers there will be a growth of property investors coming into the market.