I had an interesting chat with a Valleyfield landlord who owns a few
properties in the town. He popped his head in to my office as his wife was
shopping at the Friday market, we had not spoken before (because he uses
another agent to manage his Penicuik properties) yet after reading my blog on
the Penicuik Property Market for a while, the landlord wanted to know my
thoughts on how the recent interest rate cut would affect the Penicuik property
market and I would also like to share these thoughts with you …
Well it’s been a few weeks now since interest rates were
cut to 0.25% by the Bank of England as the Bank believed Brexit could lead to a materially lower
path of growth for the UK, especially for the Financial Services and Construction
industries. You see for the country as a whole, the Financial Services 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 Penicuik because, even though we have
had a number of local success stories in Financial Services and Construction, a
large number of people are employed in these sectors. In Penicuik, of the 8,028
people who have a job, 602 are in the Financial Services industry and 594 in
Construction meaning …
7.5% of Penicuik
workers are employed in the Financial Services sector and 7.4% of Penicuik
workers are in Construction
The other sector of the economy the Bank is worried
about, and an equally important one to the Penicuik economy, is the Manufacturing
industry. Manufacturing in Penicuik employs 409 people, making up 5.1% of the Penicuik
working population.
Together with a cut in interest rates, the Bank
also announced an increase in the quantity of money via a new programme of
Quantitative Easing to buy £70bn of Government and Private bonds. Now that
won’t do much to the Penicuik 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 Street 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 Penicuik 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 Penicuik 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 times in my blog and
the specific affect on Penicuik). The severe undersupply means that Penicuik 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.
A few more interesting articles about the
Penicuik property market:
- Penicuik landlords remember your “Consents to Let”! http://bit.ly/2cyCGra
- Penicuik’s ‘Generation Rent’ to grow by 1,790 households by 2021 http://bit.ly/2ccSv5P
- Penicuik property prices set to drop £18,000 in the next 12 months due to Brexit? http://bit.ly/2cetZzW
- 18% of Penicuik Homes Are Three People Households http://bit.ly/2bl12X4
- Post Brexit property disaster - more like a ‘soft landing’ so far Nationwide claims
- http://bit.ly/2bkpS3D
- It’s summer time .... and there are burglars about in Penicuik http://bit.ly/2bkzzAz
Great market research about property management. Thanks for sharing this post.
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