Pension Plans

One of the most interesting developments in recent times has been the effect of pension investments on the property market, says Alan Carr.

The low performance of pension funds has encouraged people to look at property as a more tangible source of investment and income. In fact many people have decided to reduce their payments into pension funds in order to fund the purchase of a property, thereby gaining immediate rental income, well before they retire. Some are reinvesting this income in the acquisition of a further property and building up a portfolio of properties.

Property has always been a good investment and it you take the last 50 years you can see how impressively it has performed. Admittedly there have been a few dips, but they have been short lived and the market always recovers well. But like all good things a lot of people have jumped on the bandwagon, some a little late in the day, or have selected a particular type of property where there are already too many available. The secret is to find the gap in the market and bridge that gap by buying the appropriate type of property.

This is where Carr's of Ascot can help. Jane Williams, the Director of our Lettings Department has over 20 year experience in the financial sector and property management. Plus with our intimate knowledge of the area and our extensive experience, we can give expert guidance on what to buy, where to buy, when to buy and then provide a management service.

There will always be a strong demand for properties in and around the Ascot area. Ascot has so much to offer - an attractive village atmosphere, community spirit, some of the best schools in the country and excellent communications, both by road and rail.

So there are always large numbers of people looking to buy in the Ascot area. Whilst a little further, across the area that Carr's of Ascot covers, we have also experienced a high demand for properties in Englefeld Green, Egham, Warfield, Winkfield, Sunningdale, Sunninghill and Martins Heron with many sales completed in these areas throughout 2003.

The sector of the market to be most influenced by international events was the £1 million plus sector, as it was in the previous year by the stock market decline.

The sector that house prices have increased over the years now means that there is a much wider gap between the cost of a three bedroom semi-detached and a four bedroom detached house in the Ascot area. So for those who are keen to make such a move, the gap can now be as much as £100,000, and to purchases on average incomes this is a huge amount of extra mortgage to take on. Consequently we are seeing a lot of homeowners choosing to stay put and extend, sometimes managing to gain the same degree of space that they would have in a average detached home.

The Stamp Duty break at £250,000 has also bee an issue, especially for those with properties around the £265,000 mark, with buyers reluctant to pay stamp duty, and purchasers having to reduce their property below what it is really worth to attract buyers.

The starting price of first time buyer properties range between £150,000 and £160,000. Starting out with a £150,000 mortgage seems like a huge mountain to climb for any young couple, let alone a single person who would need to be earning £50,000 per annum. Salaries of that scale for young people are very rare and even more so since the decline of the I.T. Industry in recent years. So many are forced onto the rental market, creating a demand for smaller units and therefore providing an opportunity for buy-to-let investors, who ironically are keeping the bottom end of the market alive to feed the demand by the first time buyers who cannot afford to buy!

Some first time buyers are lucky, some inherit money form grandparents, some are helped by their own parents, who again see the property sector as a better investment than a pension fund. In some instances some parents are even prepared to take out a second mortgage to help their children, as this is the only way they can get a foot on the property ladder.

Unfortunately, some first time buyers have to move outwards to cheaper areas in order to have their first home. A few years ago they would have moved to adjoining areas like Bracknell, Tilehurst or parts of Slough, but as prices have now crept up in these areas as well and they are being forced to look even further afield.

Our outlook for the coming year is very optimistic, but I hear you say "All estate agents say that!" It is unlikely, though not impossible, that we will have a repeat of last year's events. Unfortunately international incidents and the health of the stock market will always have some influence over the property market. However, the outlook on the international front looks more stable and the stock market is beginning to recover. Plus there is always a demand for good property in this highly popular area. Consequently we are all readying ourselves for yet another busy and productive year.