The surge in property prices will reassure landlords and investors worried by reports suggesting the housing market faces a dramatic collapse.
Figures released by the Halifax yesterday also show how prices have rocketed over the past decade, giving property owners potential returns unmatched by any other form of investment.
Semi-dethatched properties have risen 111 per cent in ten years.
Halifax says the big winners over the past year have been detached houses which soared by 13 per cent – the equivalent of £91 a day – between June 2009 and June 2010 to stand at an average of £299,295.
But bungalows, flats, semis and terraced houses all spiralled upwards too, with price gains of between eight and nine per cent. The average cost of a detached home was 63 per cent more than the average house price during the second quarter of this year.
However semi-detached properties saw the biggest gains during the past decade with values soaring from an average £81,706 to £172,196 – and by £35 a day over past 12 months alone.
The average value of a terraced property jumped by 110 per cent during the decade while the price of bungalows rose by 109 per cent. In the past 12 months the average terrace house rose by £29 a day while bungalows went up £49 a day.
The value of detached homes rose by 102 per cent during the decade. Flats were the only property type not to double in value, though prices went up by an average of 81 per cent over the ten years and rose £35 a day in the year to June 2010.
Yesterday it was reported that house prices are set to rocket by 20 per cent in five years, fuelled by a shortage of homes. This would add £30,000 to the value of the average three-bed semi.
And last week July data from the Land Registry’s official House Price Index, based on actual sale prices, showed an annual increase of 6.7 per cent, taking the average property value in England and Wales to £166,798. The monthly change from June to July was an increase of 0.4 per cent.
Article adapted from the Daily Express, information from Halifax.
What does this mean in real terms for investors, firstly the long term capital gains from property are still strong, for the active investor the appreciation means that if they were to re-mortgage every year to pull out equity in order to reinvest (£91×365 daysx75%BTLmortgage=£24911) they can raise just under £25,000 per detached property or just under £10,000 per flat.
Using this appreciation, reinvested properly in finely selected properties that result in a cash flow surplus can support a great income stream as well as sustainable organic growth or your property portfolio.
If you want any advice or discussion of your options please email me Nirav@PropVestment.com
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