Welcome to our first quarterly newsletter!
There are several factors at play behind the recent slowdown in market activity – not least the lack of available homes to purchase. The supply of existing homes for sale through estate agents was near record lows earlier this year, while buyer demand is showing signs of rising.
This trend has increased focus on the delivery of new-build homes across the country. The number of new homes being built in recent years has risen, but still remains some way below the number needed to meet current demand – not to mention the large historical shortfall.
The shortage of housing stock available to buy coupled with ultra-low mortgage rates have put a floor under pricing across the UK, but the question of affordability is becoming more pressing in some areas, especially as lenders still expect sizeable deposits from buyers. As the UK moves closer to Brexit, any economic uncertainty could have a knock-on impact on the housing market, especially if wage growth and employment levels across the country are affected.
Whilst the UK property market has shown a slowdown over the last couple of months, the fund’s performance has still been very satisfactory with a return, net of fees, of 1.6% for the first two months. This is an annualized return of 9.6%.
This high return is a result of activity over the summer months where we managed to close a couple of deals at exceptionally high rates, when some providers where either on holiday or unable to provide the quick turnaround required for completion.
These included a £700,000 loan against a property St John’s Wood at 5% per month (60% annualized) and a more typical £585,000 loan against a property in NW London at 0.83% per month (10.47% annualized).
As our reputation in the market becomes more established, we are increasingly getting more lending opportunities that come to us directly rather than through brokers and other introducers. This should usually allows us to provide better terms to the borrower and get a higher return for our investors. We will continue to use brokers where appropriate but if you know of anyone needing a loan do let us know!
The Whitehall Capital Team