According to The Policy Exchange, the average home could cost £780,000 in 2040.
To predict such price rises over a 25 year period may have involved complex Government formulas and housing forecasts, but it fails to take into account many other housing market affecting factors, including a property bubble and burst during this time.
As with any economic cycle, negative economic growth periods, or worse still another recession, is inevitable after periods of increasing growth unless there is a correct combination of fiscal and monetary policy to stabilise the economy for continued growth, which brings about inflation.
Properties may well be worth in excess of these amounts in 2040, but wages and the cost of living may well have increased also, meaning in REAL terms that value may seem affordable today.
This calculation by The Policy Exchange got the office thinking about the rental markets in the South V the North. Fish V Chips.
From talking with our Landlords they express their interest in the London market and the gains available if they were to purchase a property there, but are you REALLY getting good value for your investment?
A three-bedroom, semi-detached property in Mansfield in the Berry Hill area recently sold for £145,000 and currently they are achieving £675pcm, meaning a 5.5% yield.
In London a 3 bedroom, semi-detached property sold for £650,000 and you would be looking at around £2,000 – £2,500pcm (according to market data). Taking the midpoint of £2,250pcm, around the 4.2% mark would be the achievable yield.
The huge difference in property price allows for a lower outlay if invested in the Mansfield property, and a higher yield.
Salt & vinegar with your Chips?
