So, we’re all back at work, the remaining leftover turkey has long been assigned to the bin, or in my mother’s case the urban foxes (although I state here publically that I don’t approve) and we’re down to the absolute dregs of the Quality Street tin.
The pundits have been telling us what’s hot and what’s not for 2011 – but should we place any store in what they say?
Last year’s financial predictions, which centred on gold price; weakness in sterling; house price falls; and some stabilisation of the economy were widely on the mark. This year’s predictions seem similarly safe: a small – if any – rise in interest rates; a slight strengthening of the pound; further increases in the gold price; and continuing house price weakness.
So far so normal. Yawn….
Could the enfant terrible of 2007 be about to make a comeback, however? I refer of course to Buy-to-let, not any has-been celebrity, although BTL does bear similar scars to some so-called celebrities from that era.
With rents rising in real terms for the first time in a decade, first-time buyers now allegedly 37 years-old but heading fast towards 43; and lenders reluctant to lend without a muscular deposit; now could be the time when those with a bit of equity in their property (or those who have made a killing on the gold price) start thinking about investing in bricks and mortar.
Mortgage Strategy reported in November 2010 that Buy-to-let lending rose by 12% in Q3 2010 (source: CML) and is supported by ongoing demand for rental property against the backdrop of a dysfunctional owner-occupier market. Could it be set to grow further in 2011?
The fall in house prices since 2007 means that for those with the means, property as an investment might appear more affordable. Back then pre-crash, as now, interest rates were considered to be low (but we did not know how they would go) and BTL was viewed as a viable alternative to a pension. Interest rates are now really low, and if the 2011 predictions mentioned above are to be believed, not going anywhere soon. So could this be the year that people start looking to BTL for an investment return again?
No-one knows for sure, of course, what is in store, but if this prediction plays out we could be “Coming around again,” as Carly Simon would say.
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