Last week, you may have seen that the British Bankers Association (BBA) said that mortgage approvals have fallen to an 18-month low, suggesting that the housing market will slow for the rest of the year. Overall the BBA said that house purchase approvals fell 19% year-on-year to 37,622 in July, down 5.4% from the 39,763 in June, to the lowest level since January 2015.

However, gross mortgage borrowing hit £12.6bn in July, up 6% year-on-year, the BBA said, while net mortgage borrowing was 3% higher compared to last year. So there are fewer mortgage approvals but at higher borrowing rates. In addition to this, house prices nationally have dropped by 2%.

So does this mean that investing in Medway property should be put on hold, or is this just a dip?

Actually, Medway is bucking the national trend. The latest figures from Medway Council show that house prices have gone up. There are more three-bedroom properties advertised for sale in Medway than properties with one, two or three bedrooms. The graph below shows the average advertised price for a three-bed terraced house for each year from 2010/11. As you can see, target prices have risen to a five-year high of £187,578.

The statistics also show that 18% of all homes advertised for sale were terraced properties, which make up 40% of all housing stock in Medway. Terraced housing also makes up 32% of all sales, which forms the highest proportion of all housing types.

So what does this mean for the HMO market in Medway?

The figures show us that there are plenty of three-bed terraced homes available, which are ideal for HMO conversions. Demand is also on the up as the population of Medway is increasing more rapidly than the national and south-east averages. In 2012 and 2013 the majority of this increase was from people moving out of London in the face of spiralling living costs in the capital, and the relative accessibility to London that Medway provides; in 2014, the increase was mostly from births outweighing deaths and from international migration. As more people rush to Medway with its prime position in the commuter belt, increasing birth rates and life expectancies mean that demand for housing will inevitably increase.

The statistics also show that Medway has a larger working-age population at 65% than nationally (63%), while also having a larger population of young people (20%).

Therefore, it is clear that Medway is a prime location to invest in HMOs. Particularly as house prices are still increasing and there is a large market of young or more-established working people who are unable to get on the housing ladder looking for somewhere to live.

There are of course start-up costs in buying and setting up a HMO, but they remain profitable over a long period of time with a good return on long-term yields. With the prospects for good capital growth this makes HMOs even more of a viable proposition.

If you wanted to talk about anything in this article please feel free to give me a call.