Investing in property

The death knell for buy-to-let?

George Osborne bursting the buy-to-let bubble

Buy-to-let has been an investment phenomenon, with record low interest rates a boon for a generation of private landlords. But the party’s coming to an end, says James Ferguson.

Where to look for property bargains

New tax rules will make residential property in the UK less attractive to buy-to-let investors. But certain areas of the country have more potential than others, says John Stepek.

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UK house price indicators

To find out where Britain's house prices are heading next, we've hunted down what we believe are the best leading indicators for Britain's housing market. And for now, they mostly suggest that prices are heading for further falls.

We watch five indicators, all of which have proved useful guides in the past. These include the RICS Housing Market Survey and data on both mortgage lending and mortgage approvals. Consumer confidence is another useful data point we keep an eye on.

You can read in detail what each indicator suggests for UK house prices using the tabs above.
The Rics Housing Market Survey is arguably Britain's best house-price predictor. It's a monthly measure of how many surveyors are seeing UK house prices rise compared with those reporting falls.

What's the latest?June's Rics balance rose to 40, ie, 40% more surveyors saw prices rising than falling. The June Halifax UK three-monthly house price index saw a 9.6% year-on-year rise.

What does this mean for UK house prices? The Rics survey leads the Halifax index by around six months. With a balance of 40%, will Britain's housing market keep climbing?
The Bank of England provides monthly data on UK net mortgage lending growth (NMLG). Historically this has proved a handy guide to house prices.

What's the latest?June saw UK NMLG remain 5.2% higher. That compares with annual growth of 1.9% two years ago, 5.7% in December 2008 and 11.1% in February 2007. Meanwhile, the June Nationwide UK house price index is 3.3% higher year-on-year.

What does this mean for house prices? This long-term collapse in NMLG suggests UK house prices are standing at the cliff face. If they follow net lending trends, residential property values could slump by over 15%.

This gauges the monthly mood swings of Britain's consumers. It "tracks changes in personal finance, the general economic situation, inflation, unemployment, the current purchasing climate, and consumer spending and saving", say its compilers GfK/NOP.

What's the latest? For May, the GfK fell to 1. June's Halifax UK three-monthly house price index saw a 9.6% year-on-year rise.

What does this mean for UK house prices? This indicator leads the Halifax UK three-monthly house price index by some four months. The recent rise in the GfK indicates rising consumer confidence.

The UK CPI (consumer price index) is the most widely-used indicator of our cost of living.

What's the latest? July's UK CPI was 0.0% higher year-on-year, down from 1.0% the previous month. Meanwhile, RPI was 1.0% higher – the same as in June. The June Nationwide UK house price index is 3.3% higher year-on-year.

What does this mean for UK house prices? Higher CPI normally means higher interest rates. Despite the fall in UK CPI since 2010, inflation is still too high. It may drop more, but the historic relationship of higher CPI = less UK house price inflation will return at some point.

Property: the MoneyWeek view

August 2015: Look abroad London prices remain at sky-high levels, with the rest of the country also looking extremely expensive. We'd therefore suggest that you look to Europe for residential property investments. Markets worth considering are Ireland, Spain and Germany.

See our view on all the major asset classes here.

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Osborne is right to target buy-to-let: it only makes Britain’s housing woes worse

Tax relief on buy-to-let rental income has skewed the housing market, says Bengt Saelensminde. George Osborne was right to tackle it in his summer Budget.

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