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Inflation hit a 4-decade high: What does this mean for the property market?

As inflation hits a four-decade high, numerous markets across the country have been hit hard. The impact of rising interest rates on the real estate market includes:

  • Higher mortgage rates.
  • Increasing asset prices.
  • Devaluation of long-term debts.
  • Rising property construction costs. 

Continue reading this blog to get a more in-depth view of the abovementioned factors. We’ll also highlight how investors can enter the real estate market profitably, despite the current market situation.

 

Higher Mortgage Rates

There is a direct link between rising inflation and interest rates, meaning mortgage loans are now more costly. More and more people are struggling to get suitable mortgages, and those who get them often pay interest rates higher than their net returns. 

Why do interest rates go up alongside inflation, though?! Simply because central banks tend to raise short-term rates to sustain the inflationary environment. As a result, borrowers suffer. 

 

Increasing asset prices & rising construction prices

As inflation increases, it only makes sense that the cost of things increases. As a result, entering the real estate market becomes harder. Not only are buyers faced with pricier land but building and renovating homes have become less affordable as well. 

 

Below average net return on Buy To Let investments.

The average rental yield on traditional Buy To Lets is 3.6%, whereas inflation currently stands at 9.1%. We cannot take capital appreciation into account as that differs based on the area of the property. However, the rental yields are becoming less attractive as inflation continues to rise.

 

How can you beat inflation in the real estate market?

Simple! Invest in alternative buy to let opportunities that offer higher returns. Concept Capital Group’s Buy To Let opportunity is fully managed and offers yields of up to 11.1% through a steady passive income.

Furthermore, the homes we sell are only for £39,999 as they’re prefabricated homes. This means the homes are built in a factory and then transported to a site. However, you only own the home, whereas we access to land through exclusive partnerships.

On top of that, our homes are utilised to house low-income or government-assisted tenants. So apart from yields up to 11.1%, you get the opportunity to serve a greater purpose.

You’re probably thinking about the restrictions this opportunity has, or whether the opportunity sounds too good to be true. However, the only drawback is that you can’t live in the home yourself. This is simply because the opportunity resolves around housing low-income / government-assisted individuals.

If a hassle-free, high-yielding, and socially impactful opportunity sparks your interest, book in a call with one of our consultants today.