Expert on real estate, Anna Clare Harper, asserts that the Labour party is unlikely to construct 1.5 million homes as promised.
Property chit-chat dominates British conversations, with everyone seeming to have an opinion on where house prices are heading, the next hotspot, or what areas should be developed. To truly understand the market, we should listen to the experts who deal with property every day.
That's why we're launching this new series, where we'll grill a property insider each month on all the hot topics – from the impact of mortgage rates and buy-to-let investments to housebuilding and their personal mortgage experiences.
This month, we spoke to Anna Clare Harper, CEO of sustainable investment advisor GreenResi. Anna is a property investment pro and a podcast host, with 350,000 downloads of her show, The Return, under her belt, and three books on property investing published. She began her property journey investing alongside her first office job, has her own buy-to-let portfolio, and, at GreenResi, has offered sustainability advice to property investors responsible for managing over 70,000 homes.
Let's get stuck in!
What will house prices do over the next 12 months?
Anna predicts a moderate rise of around 2.5% in average house prices over the next year, with various factors affecting different regions. Despite a slight increase, she emphasizes that after accounting for inflation, prices will still be stable. Demand is fueled by shrinking household sizes and population growth, while supply remains limited. In the absence of a surge of forced sales, the high demand will push the average prices up, keeping houses expensive.
What will happen to prices over the next decade?
Over the next ten years, Anna anticipates nominal house price increases of roughly 2.5% per year, driven by population growth and smaller household sizes, according to the Office for National Statistics. Over the next decade, there will likely be an additional one million households in England, aggravating the pressure on housing supply, as we aren't building fast enough to keep up.
What is the biggest threat to house prices?
According to Anna, policy and tax are the biggest threats to house prices, with such measures indirectly influencing prices. For example, the abolition of non-dom status might affect foreign investor demand.
Where will mortgage rates be in 12 months?
Mortgage rates are expected to drop slightly in the next year due to cooling inflation and reduced base rate expectations. Anna predicts the most competitive five-year fixed rates to be around 3.5% by this time in 2023. While rates should fall, they won't return to their previous ultra-low levels.
What mortgage do you have on your home?
Anna has a five-year fixed-rate mortgage, acquired in December 2024. She opted for a longer term to gain peace of mind, as the difference in cost compared to shorter-term products was minimal. It's a repayment mortgage, as that was the only option offered by her lender.
What is the most urgent property crisis?
Anna believes that excessive regulation is the most urgent property crisis. Regulations aiming to improve home quality and protect vulnerable people have made it harder and more costly for developers and investors to build new homes or upgrade existing ones. Simplifying and aligning regulations to balance needs, including speedy building and upgrading, could help create more affordable, energy-efficient homes.
Will Labour hit its 1.5 million home target?
Anna questions whether Labour will reach its goal of building 1.5 million homes by 2029. The goal is politically advantageous, blaming an outdated planning system for underperformance, but achieving such a target requires considerable investment and capacity, like enough skilled tradespeople.
Is buy-to-let a good or bad investment today?
Anna believes that buy-to-let depends on the investor's goals. While investments are more expensive, with around 170 laws and regulations affecting residential property and its management, buy-to-let still offers long-term stability, income, and capital growth. Ultimately, it depends on whether an investor wants to be hands-on or passive. Direct property investment may provide an attractive risk/reward with a solid return, but it requires time and effort.
Are landlords being unfairly targeted?
While landlords are often considered villains, Anna points out that they, like other property-related professionals, are simply people trying to do a good job. The language used doesn't help, as 'landlord' and 'tenant' indicate outdated, hierarchical roles. The industry has introduced many new regulations over the past ten years to discourage individual investors, making it easier to regulate and control professional property investors, who are expected to improve standards. This mixed climate has led some older landlords to reconsider their future in the industry.
If you could pick one area to invest in property for the next decade, where would it be?
Anna emphasizes that investing in property depends on the investor's primary goal, whether it's growth or yield. For growth, she recommends areas with strong inward investment, like Cambridge, with world-class research, global employers, and upcoming infrastructure. Demand is high, and supply is limited, with the Cambridge area presenting a promising setup for long-term capital growth. Lower-priced surrounding areas, like Ely, Waterbeach, and Cambourne, offer better entry prices and strong commuter appeal.
What one location would you be avoiding?
Anna prefers to exercise caution in prime London locations, which have low yields and a high reliance on taxes and regulations affecting international investors. Instead, she recommends looking at locations with strong demand and limited supply, but which may not receive as much attention from foreign investors.
Prime central London prices are below their 2014 peak: Will they boom again?
Anna acknowledges that prime London prices are unlikely to return to previous growth rates quickly but stresses that the area remains attractive due to its stability. London remains a global city with solid demand and tight supply. However, the days of frothy, speculative growth driven by low interest rates are gone.
If you were Chancellor of the Exchequer, how would you help first-time buyers?
Anna focuses on increasing supply as the most effective way to help first-time buyers. Measures such as unlocking more land, reforming planning, and investing in skills and training for trades could make building easier and more accessible, benefiting not only first-time buyers but also local economies.
Do you have any negotiation tips for buyers making offers to estate agents?
Anna suggests keeping emotions out of negotiations and staying open to other properties, as there are over 500,000 homes for sale at any given time. This approach provides bargaining power and ensures potential buyers will walk away if necessary, allowing them to negotiate effectively.
What's the best piece of advice you can give someone looking to get onto the property ladder?
Don't skimp on professional fees, as the cheapest options may lead to costlier issues in the long run. For instance, hiring a less established solicitor might lead to unnecessary delays and frustration in the property transaction process.
- Anna Clare Harper, CEO of GreenResi, expects a 2.5% increase in average house prices over the next year, with variations across regions.
- Over the next decade, Anna predicts an annual 2.5% increase in house prices due to population growth and smaller household sizes.
- Policy and tax are the biggest threats to house prices, according to Anna Clare Harper.
- Mortgage rates are projected to drop slightly in the next year, with competitive five-year fixed rates expected to be around 3.5% by 2023.
- Anna Clare Harper has a five-year fixed-rate mortgage, which she got in December 2024, and it is a repayment mortgage.
- Excessive regulation is the most urgent property crisis, in Anna's opinion.
- It's unclear whether Labour will reach its goal of building 1.5 million homes by 2029, according to Anna.
- Buy-to-let can be a good or bad investment, depending on the investor's goals, as per Anna Clare Harper.
- Landlords are often considered villains, but they are simply people trying to do a good job, according to Anna.
- If Anna were Chancellor of the Exchequer, she would focus on increasing supply as the primary way to help first-time buyers.
