I had an interesting chat with a Sutton Coldfield landlord who owns a few properties in Walsall. He said he was in town shopping with his wife. Whilst she was shopping for clothes he thought he would call me whilst taking a break over a coffee. In his words he went on to say; “Talking about the Walsall property market is a lot more interesting than clothes shopping”!
We had never spoken before as he uses another agent in the town to manage his Walsall properties, yet after reading my blog on the Walsall market for a while, the landlord wanted to know my thoughts on how the recent interest rate cut would affect him and the property market in general.
Well, it’s been a few weeks now since interest rates were cut to 0.25% by the Bank of England, fuelled by the belief that Brexit could lead to a materially lower path of growth for the UK, especially for the manufacturing and construction industries. You see, for the country as a whole, the manufacturing and construction industries are still performing well below the pre credit crunch levels of 2008/09, so the British economy remains highly susceptible to an economic shock. This is especially important in Walsall, because even though we have had a number of local success stories in manufacturing and construction, a large number of people are employed in these sectors.
In Walsall, of the 112,260 people who have a job, 16,280 are in the manufacturing industry and 9,780 in Construction meaning:
14.5% of Walsall workers are employed in the Manufacturing sector and 8.7% of Walsall workers are in Construction
The other sector of the economy the Bank is worried about, and an equally important one to the Walsall economy, is the Financial Services industry. Financial Services in Walsall employ 3,460 people, making up 3.1% of the Walsall working population.
Together with a cut in interest rates, the Bank also announced an increase in the quantity of money via a new program of Quantitative Easing to buy £70bn of Government and Private bonds. Now that won’t do much to the Walsall property market directly, but another measure also included in the recent announcement was £100bn of new funding to banks. This extra £100bn will help the High St banks pass on the base rate cut to people and businesses, meaning the banks will have lots of cheap money to lend for mortgages… which will have a huge effect on the Walsall property market (as that £100bn would be enough to buy half a million homes in the UK).
It will take until early in the New Year to find out the real direction of the Walsall property market and the effects of Brexit on the economy as a whole, the subsequent recent interest rate cuts and the availability of cheap mortgages.
However, something bigger than Brexit and interest rates is the inherent undersupply of housing – something I have spoken about many, many times in my blog and the specific effect on Walsall. The severe undersupply means that Walsall property prices are likely to increase further in the medium to long term, even if there is a dip in the short term. This only confirms what every homeowner and landlord has known for decades; investing in property is a long term project and as an investment vehicle, it will continue to outstrip other forms of investment due to the high demand for a roof over people’s heads and the low supply of new properties being built.
If you are thinking of getting into the property rental market and don’t know where to start, speak to us for impartial advice and guidance to get the best return on your investment. For more information about other potential investment properties that we could introduce you to, or to ask about our thoughts on your own investment choices, call us now on 01922 311016, you can always email me on firstname.lastname@example.org
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