I had an interesting chat with a Gartcows landlord who owns a few
properties in the town. He popped his head in to my office as his wife was
shopping, we had not spoken before (because he uses another agent to manage his
Falkirk properties) yet after reading my blog on the Falkirk Property Market
for a while, the landlord wanted to know my thoughts on how the recent interest
rate cut would affect the Falkirk 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 Falkirk 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 Falkirk, of the 16,688
people who have a job, 1,839 are in the Manufacturing industry and 1,352 in
Construction meaning …
11.2% of Falkirk
workers are employed in the Manufacturing sector and 8.1% of Falkirk workers
are in Construction
The other sector of the economy the Bank is worried
about, and an equally important one to the Falkirk economy, is the Financial
Services industry. Financial Services in Falkirk employs 901 people, making up 5.4%
of the Falkirk 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 Falkirk 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 Falkirk 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 Falkirk 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 Falkirk). The severe undersupply
means that Falkirk 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 propeties being built.
A few more interesting articles about the
Falkirk property market:
- Is boiler insurance worth the cost for Falkirk landlords? http://bit.ly/2cTwXZM
- Where are the Twenty Somethings going to live in Falkirk? http://bit.ly/2cDGIio
- My Concerns About The Falkirk Property Market http://bit.ly/2bTnrov
- Investment properties in Falkirk come in all shapes and sizes http://bit.ly/2caGM6I
- A 0.95% Return with The Post Office or a 12.37% Return with Falkirk Buy to Let Property? http://bit.ly/2bH0IzW
- Post Brexit Life in the Falkirk Private Rented Sector http://bit.ly/2bOw05y
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