Cornwall prices are therefore almost exactly the same as the national average but Truro continues to grow at a faster rate than the rest of the county with a house price roughly 30% higher than the average. With more new developments being built on every scrap of land and the promise of further house price rises because of the new Waitrose (it is rumored that properties within "easy reach" of a Waitrose cost 12% more than other homes in the same area!) are we going to continue to see house prices rise?
The recent introduction of an extra 3% stamp duty on second homes and buy to let properties is certainly being felt in the sales market as transactions have taken a sizeable hit and some landlords are seeing their 'bottom line' being dramatically affected because of the changes to the tax system.
At present landlords can claim for interest on buy-to-let mortgage payments when they complete their tax return, allowing them to offset mortgage interest against rental income. Changes are being made to this system gradually from April 6 2017, with full implementation by 2020. In effect, landlords will be taxed on their turnover rather than profit.
Should interest rates rise dramatically the average landlords mortgage will rise steeply, perhaps pushing them into a loss rather than a profit, however, remember property is also not just about the rate of return of the capital invested, there is also the gain in capital that comes along with the value of the property.
Imagine if you were lucky enough to buy a property in Truro in 1995 when the average house price was just £57,846. Today you would be looking at a more than 300% gain in value! I'm not confident that we will see the same rate of house price increase in the next 20 years but even if we continue with the current trend of 3% per year the average house price will reach £420,000.