"The early stages of a price increase offer a window of opportunity to enter or expand in the market before values climb even higher."
It seems that the property market has turned a corner. According to the recent Halifax House Price Index, annual growth has risen to 4.3% – the strongest rate since November 2022.
Nationwide has recently put annual price growth at 2.4%, which it says is the strongest growth for 18 months and, earlier this year, Savills revised its property price forecasts, predicting growth of 2.5% in 2024, whereas it had previously forecast a 3.0% loss in 2024 in predictions made in November last year. Over the next five years, Savills expects property prices to rise by 21.6% - an upwards revision from previous forecasts of 17.9%.
For property investors, this could present a pivotal moment. The early stages of a price increase offer a window of opportunity to enter or expand in the market before values climb even higher. Waiting too long could mean missing out on potential gains as competition intensifies and prices continue to rise.
This is good news for brokers as it should signal increased activity after a relatively subdued period. So, how can you help your investor clients to make the most of the opportunity?
Capital is the key to taking advantage of current opportunities and investors may want to consider releasing capital from existing properties, and increasing their leverage, to ensure they are best placed act quickly ahead of further price inflation.
At Castle Trust Bank, we offer bridging loans up to a maximum of 80% LTV net. This means that any additional costs, including the arrangement fee and any interest that is not serviced and added to the loan balance, can be added above the maximum LTV. And this enables investors to borrow more and increase their leverage, enhancing their ability to make the most of new opportunities.
Net LTV calculations are not available from all bridging lenders, so it’s worth considering how a lender calculates its maximum LTV when you are choosing the most appropriate option for your clients. By maximising their borrowing against existing assets in this way, a client may be able to access more attractive opportunities, or even purchase multiple properties as they expand their portfolio. This approach might be particularly attractive to the many property investors who have unencumbered properties and want to utilise their existing assets to purchase new ones.
Nobody knows exactly what will happen with the property market, but the latest data indicates that it may have turned a corner. This presents a window of opportunity for property investors and you can help your clients to make the most of that opportunity.
