Rightmove House Price Index shows a positive market in the South West

Rightmove House Price Index shows a positive market in the South West
With uncertainty in the global markets, share prices and down and the price of oil at  a 10 year low, investing in property across the county and in Cornwall still seems the sensible choice.

The latest Rightmove Price Index has been released and has shown a positive increase in average asking price nationally in the last 12 months of 6.5% including a 0.5% rise in the last month alone. Even here in the South West we have seen the average asking price rise by 5.5% in the last year.

The most surprising figure is that the data released by Rightmove shows a rise of 3.5% in asking prices in the last month alone. If you didn't know the local market here you might conclude from this data that prices across the board in the South West are soaring at a higher rate than anywhere else in the country, however this is not the case and when you look closer at the property actually being listed for sale you can see that roughly 60% of properties listed within Cornwall currently are above £250,000.

The physical number of properties on the market in December 2015 was considerably lower and January has seen many sellers with an asking price of over £250,000 come to the market. These factors have skewed the average asking price leading to the reported 3.5% rise.

Another point to consider is that Rightmove only report on asking prices not sold prices and so the figures reported are only an indication of the market. Putting all this aside, the local market looks buoyant and the chancelleors imposed 3% stamp duty rise seems to have added a sense of urgency to buyers (at least until April that is and then I think we will see a calming in demand).
With average rents still on the rise both nationally and locally between 3-5% per annum, the data does seem to indicate that the rate of return on capital investment will increase in line with property prices, however the local Cornish market I feel will be directly influenced by the average wage. While home buying for the young appears to be getter further and further out of reach and renting being a long term eventuality for many, the afford-ability of rent will 'pin back' any major rises in rent levels unless the average wage in Cornwall increases.

What does this mean for the medium to long term investor in Cornwall? If rents are only  going to see small increases but houses prices are going to continue to rise at a higher rate then yields may not be the key influencing factor in investment - perhaps capital appreciation may be the reason to buy again?