With Bank of England governor Mark Carney stating that a 35% decline in UK house prices could become more advanced if Brexit without agreement becomes a reality, the prospect of buying-to-let investors might be precarious.
Of course, an agreement can be signed between the UK and the European Union, and this could lead to improved performance for the British economy. The reality, however, is that the UK housing market may struggle to produce the kind of growth that has been seen in the last 20 years. Rising interest rates, affordability problems, and political risks can mean that growth in housing prices disappoints to some extent.
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Assuming the Brexit agreement is signed, interest rates tend to increase at a rapid pace in the medium term. The Brexit agreement can provide consumers and businesses with greater confidence in the outlook for the UK economy, and this can lead to stronger economic performance. And with the rest of the world economy providing high growth at the moment, the Bank of England can try to cool inflationary pressures in the medium term.
Thus, the availability and affordability of mortgages can decrease. Higher interest rates will also make mortgage payments less affordable, and this could drive the pace of growth in slower housing prices.
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Of course, there are no assets that continue to increase. After two decades of growth, UK home prices may experience a period of difficulties, with markets being driven by favorable government policies in recent years. The Assistance for Buying Scheme has enabled many first-time buyers to own their first property without having large deposits, while the stamp duty assistance scheme can also have a positive impact on housing prices.
Given the precarious political outlook for Britain, a change in policy in housing will not be a big surprise. That is mainly because the purchasing power of housing has become a bigger political problem – especially among young voters who struggle to enter the property ladder. As such, rising prices that buy-to-let investors have become may be less impressive over the coming years.
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Despite the lack of supply of new homes, their demand could be under pressure, due to rising interest rates and changes in government policy. Thus, investing in a wider range of assets than property can be a wise move, because the risk / profit ratio for buy-to-lets can be less attractive now than for several years. And with changes to the applicable tax, stocks may offer a simpler and more profitable view.
<p class = "canvas-atom canvas-text Mb (1.0em) Mb (0) – sm Mt (0.8em) – sm" type = "text" content = "Given that the FTSE 100 has dividend yield more than 4%, and has recently experienced a setback, perhaps offering the best value for money in the long run. Even though it is potentially more unstable than home prices, it can ultimately result in higher returns in the long run. "Data-reactid =" 32 "> Given that the FTSE 100 has a dividend yield of more than 4%, and has recently experienced a setback, it might offer good value for money in the long run. While potentially more unstable than house prices, at finally it can generate higher profits in the long run.
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