A recession, if it takes place, will curb demand for offices that comprise 74pc of the company’s portfolio, while tough operating conditions for consumer-focused businesses are likely to lower demand for the trust’s retail locations that make up 18pc of its portfolio.
This could lead to a slowing rate of rental growth, lower occupancy levels and higher default rates.
However, the company’s portfolio consists of high-quality assets that are likely to perform relatively well in an economic downturn. Its office properties, for example, are energy efficient, well located and recently developed in desirable areas that are likely to experience robust demand even during a period of economic decline.
Similarly, its retail assets are situated in prime shopping centres and outlets that are less likely to be vacated by major brands who are seeking to rationalise their portfolios as online retailing grows in popularity.
Furthermore, investors appear to have fully accounted for a challenging period across the commercial property sector by demanding a wide discount to the company’s net asset value. Land Securities currently trades on a price-to-book ratio of around 0.7. While its net assets per share declined by 4.4pc in the first half of the year, and are likely to fall further in the near term, Questor views the stock’s current market value as being significantly below its intrinsic value.
Since first being tipped by this column in June 2018, the stock’s price has fallen by around 23pc. This represents a hugely disappointing return when the FTSE 100 has gained 3pc over the same period on its way to a new record high.
However, with dividends paid by the company since being tipped equating to roughly 18pc of the original purchase price, the stock’s total return is far less dispiriting than its capital return. And with a dividend yield of 5.2pc, its long-term income prospects remain sound.
Undoubtedly, Land Securities faces a tough near-term outlook as further interest rate rises are likely to weigh on the commercial property sector. But with a solid financial position relative to its peers, a high-quality portfolio and the capacity to use the market cycle to its advantage, it remains an attractive long-term investment while it trades at a substantial discount to net asset value. Keep buying.
Questor says: buy
Ticker: LAND
Share price at close: 719.2p
Read the latest Questor column on telegraph.co.uk every Sunday, Tuesday, Wednesday, Thursday and Friday from 6am.
Read Questor’s rules of investment before you follow our tips
Buying a house is a complex and emotional process, and we don’t always make perfect decisions once we’ve determined a particular property is our dream house. But even if you’re careful to think of your home as an asset and an investment, it’s difficult to swing a down payment and harder to figure out how much house you can really afford. And here’s the real kicker: Even if you’re careful with your money, you can still wind up “house poor.”
Being house poor simply means the cost of owning and maintaining your home eats up most or all of your income, leaving you with very little to cover other bills or aspects of your life.
You might have calculated those costs before buying and judged yourself capable of meeting your financial obligations, but becoming house poor can sneak up on you. Purchasers tend to focus on the mortgage payment, but there are dozens of other expenses involved in home ownership, from property taxes and insurance to higher utility bills (due to a larger space), to new furniture purchases, and unexpected repair bills. Some of those costs can rise unexpectedly, too—and if your home loan has an adjustable interest rate, it can jump alarmingly.
You can also become house poor if other parts of your life go in the wrong direction, too—if you get laid off or go through a serious health crisis that drains your bank account, you may suddenly find yourself scrambling to pay the mortgage and other house-related bills. Here’s what to do about it.
How to figure out if you’re really house poor
Math is a crystal ball that can reveal whether you’re house poor or at risk of becoming house poor. The U.S. government advises that your total debt load (aka your debt-to-income [DTI] ratio) shouldn’t be more than 36%. That means that you shouldn’t be spending more than 36% of your gross income on debt maintenance—including your mortgage. If you make $120,000 a year, for example, your monthly gross income is $10,000, so your debt payments (including credit cards, mortgage, and everything else) shouldn’t be more than $3,600. Keeping track of your DTI after a home purchase can offer you an early warning sign that you’re at risk of becoming (or already are) house poor.
So let’s say you’re tracking your DTI and after a few rough months you realize you’ve achieved the American nightmare and become house poor. What can you do about it?
Increase income, lower expenses
First, let’s get the obvious out of the way: “House poor” is a fancy way of saying “poor,” so your first order of business is to change the money conversation. A second job or a side hustle to increase your income will help (at the expense of your sanity and enjoyment of your life, of course), as will reducing your expenses as much as you can stand. You can also consider selling some stuff if you have anything worth selling.
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Something to think about is whether hanging onto the house is worth it. If you can sell it and pay off the remaining mortgage, it might be a better idea to admit defeat, even if you take a hit and lose some of your equity. It’s easy to become emotionally attached to a property, especially if it’s a dream home you’ve been working towards for years. But if you’re already house poor there is a risk that you will spend several miserable years working and scrimping—and still lose the house, possibly in a foreclosure situation.
It’s a different scenario if you’re years deep into a mortgage and have a ton of equity. The key here is to sit with the numbers and have a definitive plan for covering your housing costs—and for dealing with the emotional costs of devoting most of your energy towards paying your bills.
A possible alternative to increasing income is debt consolidation. Rolling up several debts into one big lump can reduce the overall monthly payments you have to make, and possibly reduce the overall interest you’re paying on multiple debts as well.
Another strategy to reduce expenses is to eliminate Private Mortgage Insurance (PMI) payments, if you have them. Typically PMI goes away when you achieve 22% equity in the property, but it sometimes takes time for your lender to realize this has happened, especially if it happens because of rising property values that give you more equity. If you think your house has increased enough in value to give you that magic 22%, having it appraised might be worth your time if you can stop making PMI payments on top of your mortgage.
Monetize the house
If you’ve done the budgeting work to increase income and/or decrease expenses and you’re still struggling, you can try to find ways to turn your property into positive income generator. This could be as old-school as getting a roommate or two to occupy your spare bedrooms and pay you rent (not to mention splitting up your utility bills), or you could rent the house part-time through a short-term rental platform like Airbnb.
Of course, most of us would like to think we’re leaving annoying roommates and hounding people for their share of the internet bill for good when we buy a house, so have a good think on whether going this route is worth it to you. Renting in any form can also put a lot of wear and tear on your house, as you’ll have more people using its infrastructure—and some of them simply won’t care as much about the property as you do, because they don’t own it.
Refinance your debt
A lot of folks don’t realize that if you have what’s known as a conventional mortgage, you can refinance that sucker just about any time you want to (if you have an FHA loan, a “jumbo” loan, a VA loan, or a loan through the Department of Agriculture, it’s a bit more complicated). Refinancing your mortgage essentially swaps your current loan for a new one. If interest rates have dropped since you bought your house, you can often get a much better rate. You can also extend or shorten the term, which can have a huge impact on your monthly payments. And if you have a lot of equity, you can sometimes cash out a lot of it, which can help with immediate expenses.
The rule of thumb here is pretty simple: If you can get an interest rate at least 1 point lower than your current rate, it’s probably worth your time. But there are other considerations. Even if the rate remains essentially the same, extending the term of the loan (from 15 years to 30, for example) might make your monthly costs more manageable even though you’ll be dealing with them for a longer period of time.
But! There are also a lot of fees associated with a refinance—as much as 6% of the loan balance. Be aware of what those fees will be before you pull the trigger, or you might find yourself right back in house poor territory.
The nuclear option
If the conditions that are making you house poor are likely to be permanent, or if the idea of rearranging every aspect of your life in order to afford your house exhausts you, you can always consider the nuclear option: Sell the house. Sometimes it’s just best to admit that mistakes were made. Do the math: Can you plausibly pay off the mortgage balance from a sale? Can you afford a Realtor’s fee or other expenses (e.g., necessary repairs)? Will you owe any tax for capital gains if you sell (especially if you haven’t owned the house for more than 2 years)?
Selling the property might give you the opportunity to buy a smaller, less-expensive home, or at least rent a place with a much lower monthly cost. It might be an emotional decision—it might feel like a defeat or setback—but when your other option is a few miserable months or years followed by a foreclosure or similar financial disaster, it might make the most sense.
While this will help meet net zero targets and bring down tenants’ energy bills, it represents a significant cost burden for landlords. Analysis by Outra, a data science company, found that over 3m of the UK’s rental homes have an EPC rating of D or below, with London and the West Midlands the worst-performing areas, with over 60pc of total rented properties rated D or below.
The average cost of upgrading a rented property to EPC C stands at £7,646, according to the Department for Levelling Up, Housing and Communities. But 63pc of landlords surveyed by Shawbrook Bank said the burden of EPC improvements made them more likely to sell their properties in the next five years.
Yet selling isn’t always possible, especially if it means banking a loss. Lawyer Richard Cooper bought a one-bedroom new-build flat in Shad Thames, central London, for £650,000 in 2005. “At the top of the market it was worth £850,000, but it is now worth little more than I paid for it,” says Cooper, 55. “Over the time I have owned it, the rent has gone up 18pc and the majority of that was over the last year.”
When he adds up all the costs, including rising interest rates and service charges, Cooper estimates he has lost about £28,000 being a buy-to-let landlord over the past three years. “If it weren’t for falling capital values, I would have exited the market 18 months ago,” he added.
And it’s not straightforward for landlords who’ve made a gain, either. In his Autumn Statement in November, Chancellor Jeremy Hunt announced that the annual capital gains tax allowance would be cut from £12,300 to £6,000 in April this year and reduced again to £3,000 in April 2024.
The average landlord who sold in 2022 in England and Wales sold their buy-to-let for £98,050 more than they paid for it, according to Hamptons. After deducting 10pc for costs, this would leave the average 20pc taxpayer with a £13,670 CGT tax bill, rising to £21,260 for a 40pc taxpayer.
When the threshold is reduced to £6,000 in April, Hamptons found that, at today’s prices, a 40pc taxpaying landlord who cashes in will pay an extra £1,770 in tax; from April 2024, their bill will rise by a further £2,610. Matthew Rowne, of The Buy to Let Broker, said: “This might make private landlords more reticent to sell.”
Increasing numbers of investors are opting to hold their properties in a company, with the number of companies set up to hold buy-to-lets doubling over the past five years to 300,000. Although the dividend allowance is being reduced, incorporated landlords are still able to offset mortgage interest before they’re taxed.
And some investors are even looking to buy – though only if they have deep pockets. “There are simply more people wanting to rent homes than there are homes available,” says Amelia Greene, of Savills estate agency. “Investors, particularly those with cash to hand, could take advantage of price falls over the coming months to secure stock with less competition from mortgaged buyers.”
Home buyer demand plummeted 50% at end of 2022, says Zoopla… while those who did buy sought smaller homes to keep mortgage costs down
- House prices grew 6.5% over 2022, says Zoopla, following stagnant final months
- Buyer demand in January is down 23% on the five-year average
- The difference between sellers’ asking and achieved price is now around 4%
A stagnant final three months of 2022 slowed house price growth to 6.5 per cent for the year, according to Zoopla, as demand for properties plummeted 50 per cent from October to the end of December.
It marked a slowdown compared to the 8.3 per cent growth recorded in 2021, according to the property portal, as higher mortgage rates impacted buyers’ decisions.
Buyer demand in January this year is down 23 per cent compared to the five-year average, it added.
Slowing: House price inflation stalled at the end of 2022 dragging down the figure for the year
Its data suggested that buyers are negotiating harder on price, with the difference between sellers’ asking and achieved price now around 4 per cent.
Zoopla warns that if the gap between asking and sale price continues to widen, sellers will feel under pressure to further reduce their asking prices, exacerbating the downward trend.
The research tallies with figures from the Bank of England that show demand for new mortgages fell by 75 per cent at the end of 2022, as homeowners were hit by increased interest rates and the rising cost of living.
Regionally, Zoopla said demand and sales remained strong in the North East of England, Scotland and Wales where homes are priced below the national average.
Market conditions remain weaker in the South East, South West and the East Midlands, where prices are higher or have grown rapidly over the last two years, adding to affordability pressures.
Richard Donnell, executive director of research at Zoopla said, ‘The start to 2023 will be more of a slow burn than in recent years. A portion of households hoping to move in the coming year will be waiting to see whether house prices start to fall more quickly in Q1, as well as how much further mortgage rates are likely to fall back.
‘Mortgage rates for new business are now generally below 5 per cent and look set to remain in the 4 to 5 per cent range in 2023. This is a much better prospect than the 6 per cent to 6.5 per cent levels at the end of last year but buyers will remain cautious in the next few weeks.’
Small is beautiful: Demand for smaller properties has increased as buyers look to move back to cities and aim to find the best value for their money
The number of homes for sale has also increased, according to Zoopla.
There are now an average of 23 homes for sale per estate agent, up from a low of just 14 homes in early 2022. However, the level remains 6 per cent below the five year average.
And data from Nationwide suggests first-time buyer homes are the least affordable they have been since 2008, as the average mortgage payments now eat up 39 per cent of salaries.
Activity in the housing market stalled in late 2022, but has picked up since the start of 2023
At the same time buyers are opting for smaller properties with 27 per cent of new buyers looking for one and two bed flats, a 22 per cent increase from a year ago. However, three-bed homes remain the most in demand property across the country.
The difference in pricing between flats and houses is stark in many areas, supporting this shift in demand as buyers at the start of the property ladder look for better value for money.
Outside London, the average 2-bed flat is listed for sale on Zoopla at £196,000, which is almost £100,000 cheaper than an average 3-bed home (£293,000). One-bed flats are £150,000 cheaper.
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Foxtons warns of ‘challenging’ months ahead as inflation and interest rate hikes weaken property transactions
- The firm said its annual turnover for 2022 are set to exceed market forecasts
- Foxtons boss: ‘The economic outlook for the year ahead remains uncertain’
- Mortgage rates escalated in the aftermath of a controversial ‘mini-budget’
Foxtons has warned of a ‘more challenging’ trading environment in the months ahead, as it reported a strong market-beating performance for 2022.
The estate agency told investors on Thursday that rising interest rates, inflation, and harsher economic conditions would lead to a more ‘subdued’ sales market in the first half of this year.
Britain’s property sector has slowed since mortgage rates spriralled in the aftermath of the controversial autumn ‘mini-budget,’ which caused chaos across the markets.
Outlook: Foxtons said that rising interest rates, inflation, and harsher economic conditions would lead to a more ‘subdued’ sales market in the first half of this year
According to the banking group Halifax, the estimated number of first-time buyers fell by 11 per cent last year, while average house prices have declined for the last four consecutive calendar months.
However, Foxtons said its annual turnover and adjusted operating profit for 2022 are set to exceed market forecasts, with the former increasing by around 11 per cent to £140million thanks to growth in its lettings, sales and financial services divisions.
The London-focused firm attributed much of the earnings boost to the divestment of the loss-making sales portfolio of Douglas & Gordon, having only acquired it the previous year.
It held onto and integrated D&G’s rental arm and spent £10.6million purchasing two estate agents – IMM Properties and Stones Residential- with around 2,500 tenancies three months later, in line with a strategy to buy up lettings businesses.
Foxtons said lettings revenues are anticipated to remain resilient going forwards despite the broader economic backdrop.
Rents in England’s capital have soared to record levels amid surging mortgage costs, skyrocketing energy bills, and a return of office workers and students after Covid-19 restrictions were relaxed.
Prices have also been pushed up by a slump in the availability of rental properties as landlords exited the market following the introduction of new taxes, such as stamp duty changes on buy-to-let homes, and changes to tenancy regulations.
‘Much has been achieved in a short period, and it is great to see some of the team’s hard work reflected in the 2022 results,’ said Guy Gittins, who became Foxton’s chief executive last September.
‘The economic outlook for the year ahead remains uncertain, but we have a growing portfolio of non-cyclical revenues, and a refreshed operational strategy to rebuild Foxtons’ estate agency DNA and return the business to its position as London’s go-to estate agency.’
Gittins succeeded Nick Budden, who faced a major shareholder rebellion in 2021 over his compensation package after the company received almost £7million in publicly-funded furlough payments and business rates relief.
Foxtons also raised £22million from investors during the early stages of the Covid-19 pandemic when lockdown restrictions led to a collapse in property transactions.
Sales rebounded significantly after the first national lockdown ended as Britons sought more spacious homes, and demand for mortgages was spurred by low interest rates and the introduction of a temporary stamp duty holiday.
Foxtons Group shares were 0.7 per cent lower at 37.75p on late Thursday afternoon, yet they have still expanded by around a quarter so far this year.
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As house prices begin to go down according to many measures, the property market is at an impasse.
There are increasing numbers of sellers setting unrealistic asking prices, perhaps buoyed by higher valuations received in months past. And meanwhile, prospective buyers are standing by and waiting for the cost of a home to fall.
Seven in 10 estate agents say home sellers are being unrealistic about what their properties are worth, according to estate agent membership body, Propertymark.
Agents say sellers are overvaluing their homes, either because they think they have the best house on the street, or because they want to sell at a price which will enable their next move.
It means many are listing for more than their property is actually worth.
High expectations: 71 per cent of estate agents believe sellers are being unrealistic in how they price their properties, according to Propertymark
Sellers might get away with that in a hot market, but at the moment demand among those buying homes is on the wane.
According to Zoopla, home buyer demand fell by 50 per cent in the final three months of last year. The number of sales agreed was also down by 28 per cent year-on-year.
This chimes with what estate agents have been reporting to Propertymark.
Its latest figures show the number of prospective homebuyers registering with agents fell from 2.5 per available property in December 2021, to 1.4 per property in December 2022. That’s a 45 per cent decline year-on-year.
Propertymark also reported that the average number of viewings per property fell by 71 per cent between April and December 2022.
This is not stopping sellers from listing their properties for sale, however. Propertymark found that estate agents saw a fairly steady stream of available properties over 2022, with no change recorded year-on-year between December 2021 and December 2022.
The year 2022 started as a seller’s market, and ended the year back to normality as a buyer’s market
Nathan Emerson, Propertymark
Nathan Emerson, chief executive of Propertymark said: ‘The largest shift we have seen in the sales market is prices agreed, compared to normal asking prices.
‘The year 2022 started as a seller’s market, and ended the year back to normality as a buyer’s market.’
Emerson urged sellers not to pay too much attention to how much other homes in their area were being listed for, as those homes may have been lingering on the market, or could fail to actually sell for the advertised price.
‘The best price is usually achieved in the first four to six weeks of marketing, so we urge sellers not to compare their property to other homes on the market which may not have sold yet, and ensure they receive valuations from a qualified and accredited estate agent,’ he said.
When will sellers accept the new reality?
Higher mortgage rates combined with wider economic uncertainty have forced many Britons to place their home-buying or moving plans on hold.
Demand for mortgages to purchase a home fell sharply in the final three months of last year, according to data from the Bank of England.
It found that new mortgages for property purchases dropped 75 per cent compared with the previous three months.
Starved of buyers, sellers are having to come to terms with the reality that their house price may no longer be worth what it was six months ago.
Mortgage shock: ONS and Bank of England data shows the rapid rise of mortgage rates over the past year
House price indices are beginning to suggest that prices are turning. Halifax and Nationwide both recorded consecutive falls in the final months of last year. However, the data tends to lag behind what is actually happening in real time.
Consequently, it may take time for many sellers to accept the reality of what their home is now worth.
Henry Pryor, professional buying agent says: ‘Usually about 1.2million homes are sold every year, but I am expecting a few as 800,000 this year as sellers sit on their hands waiting to see if they can hold out for the price they had hoped they would have got last year.
‘The housing market is like a supertanker – it takes a long time to change direction or speed, and most of 2023 will be taken up with sellers holding out for last year’s price before realising that what they want to move to has fallen in value just like theirs.
‘So, I’m not yet seeing a Mexican standoff, but I expect to. At the moment, it’s just too early, but the penny will drop by the summer.
‘As always some will get it sooner and some will take until Christmas. Others will cling on for too long as some estate agents try to buy new business by being optimistic for longer.’
How to sell your home in 2023
Sellers need to be careful how they price their property, according to experts.
It can be tempting to match what other properties in the area are on the market for, but the advice is to speak to local estate agents to ensure the house goes on the market for a price that will attract interest, rather than one that’s purely speculative.
‘Sellers need to listen to their agents’ advice and price accordingly,’ says Henry Pryor. ‘The best are still selling and selling well, but you are likely to be punished if you are over-ambitious. Price is what you ask. Value is what you get.
He adds: ‘Sellers would do well to remember that an asking price is not a statement of value. It’s part of the marketing, there to attract potential purchasers to view.
‘Don’t judge an offer with reference to the asking price. If you get more than the asking price, then it did its job well.’
Rob Dix, co-founder of the property forum, Property Hub, suggests sellers might be wise to hold firm or delay selling until later in the year.
‘The market isn’t bad enough that the big sellers are dropping prices,’ says Dix. ‘If you look at the major housebuilders in the UK, they’re not talking about reducing prices.
‘They’re sticking to their guns and carrying on selling at the same price point, so sellers should feel boosted by this.
‘If you can afford to hold off selling in the first quarter, I can see things improving throughout the year.
‘You’re probably going to do better in the second and third quarters of the year than you are now.’
Know what’s happening in your area
It’s worth understanding what buyer demand and house prices are doing in your local area, rather than focusing on the country as a whole.
House prices are not determined by a single market, but rather a plethora of markets across the UK, and the experience can be different right down to the very street or road you live on.
The property market in the UK’s more expensive areas can be less attractive when buyers budgets are constrained – as they are now by rising mortgage rates.
Liana Loporto-Browne, a London based estate agent, said a four-bed terraced house had been unsuccessfully marketed by several other agents before it landed with her.
The original asking price of the property was £1,150,000 and had already been on the market for several months before it was reduced to £950,000 by her agency, selling in the same month for £925,000.
Grey skies in the housing market: Savills expects double-digit house price falls in 2023, in a year when discretionary movers will sit on their hands
However, quieter and more affordable areas such as the North West are holding their value, according to Propertymark.
Bolton based estate agents Miller Metcalfe reports that 99.5 per cent of its properties are being sold at the asking price.
It sold a two-bedroom terrace house in Bury, Lancashire at the initial asking price of £127,000 in early January, just three days after it went on the market.
However, it conceded that this month’s sales thus far have on average taken 16 per cent longer from instruction to sale agreed compared to last year.
Cooling market: Last month, seven in ten estate agents saw most sales agreed at below asking price, according to industry body Propertymark
Zoopla estimates that close to half of all UK homes increased in value over the final three months of last year, highlighting differences in trends between local markets.
Richard Donnell, executive director at Zoopla said: ‘The profile of gains and losses varies right across the country, knocking any notion of a single market that moves in unison across the country.
‘Housing markets vary by geography and price band. The value of a home is important in unlocking that next home moving decision.
‘While the headlines might talk of UK house price falls in 2023, each home will have its own trajectory – so speaking to an agent or tracking your home value online are ways households can stay in touch with the value of their largest asset.’
What’s the advice for buyers?
Most predictions for 2023 have house prices falling anywhere between 5 and 20 per cent.
The advice to buyers is therefore simple – good things come to those that wait. However, that doesn’t mean putting their lives on hold in order to try and time the market.
‘My advice to buyers is to be patient,’ says Henry Pryor, ‘if you have to buy now then you will have to pay more to do so as it will take time for sellers to understand the new norm.
‘If you want to move later in 2023, start looking now and when you find the right thing, buy it if you can afford it.
‘It may be cheaper in 12 months’ time, but I expect that in three years time it will be worth what you paid for it.
‘Don’t put your life on hold. Judging the top or the bottom of a market is usually down to luck, not expertise.’
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Earlier this month, healthcare artificial intelligence (AI) company Paige announced a new partnership with renowned technology giant, Microsoft.
Paige describes itself as a company at the forefront of technology and healthcare, especially in the field of cancer diagnostics and pathology. The company explains its mission: “Led by a team of experts in the fields of life sciences, oncology, pathology, technology, machine learning, and healthcare…[we strive] to transform cancer diagnostics. We make it possible not only to provide additional information from digital slides to help pathologists perform their diagnostic work efficiently and confidently, but also to go beyond by extracting novel insights from digital slides that can’t be seen by the naked eye. These unique tissue signatures have the potential to help guide treatment decisions and enable the development of novel biomarkers from tissues for diagnostic, pharmaceutical and life sciences companies.”
The company offers a variety of solutions. On the clinical front, Paige’s AI tools enable advanced diagnostics in the lab with computational pathology, which can be leveraged to identify complex tissue patterns. On the pharmaceutical front, the company’s tools offer new ways to identify and analyze tissue biomarkers, pushing forward diagnostic and predictive capabilities.
Given its new partnership with Microsoft, the goal will be to use the latter’s incredibly robust resources in healthcare and technology to further unlock value in Paige’s tools. Andy Moye, CEO of Paige explained: “In Microsoft, we’ve really found a partner that shares our vision in how healthcare is going to be transformed … For us, the vision we talked to Microsoft about is, how do we help create the digitization of pathology? How do we ensure that these tools are being used to get better patient care, to get better patient outcomes?”
SAN FRANCISCO, CA – MARCH 30: Microsoft CEO Satya Nadella delivers the keynote address during the … [+]
Rightly so, Microsoft’s work in healthcare has grown tremendously in the last few years. The company has invested billions in developing important hardware tools such as HoloLens, which have genuine potential applications in the future of care delivery. Moreover, the company has also invested significant time and resources on the software side. The company’s robust Cloud offering in healthcare is the backbone of some of the largest healthcare organizations in the world. Through these services, Microsoft has helped unlock significant value in the areas of “enhance[ing] patient engagement, empower[ing] health team collaboration, improv[ing] patient-provider experiences, boost[ing] clinician productivity, improv[ing] health data insights, and protect[ing] health information.”
This partnership also comes at a time when the entire world is shifting attention to artificial intelligence. The world’s largest tech companies, ranging from Google, to Amazon and Apple, have unequivocally agreed that AI is the next frontier in technological innovation. Healthcare is just one of the many sectors that AI can potentially disrupt in a positive manner. At the very least, AI will likely enable novel ways to analyze, learn from, and utilize the terabytes of healthcare data that is generated annually.
Of course, AI technology is still largely immature for the most part, especially when it comes to applications in healthcare. Innovators still need to invest significant time and efforts in creating safe, ethical, and patient-centered use-cases for the technology. However, if developed correctly, the technology may change the face of healthcare for generations to come.
Sharesies co-chief executive Leighton Roberts has tips for those interested in property funds. Photo / Supplied
Each week BusinessDesk and the NZ Herald’s Cooking the Books podcast tackles a different money problem. Today, it’s how to get started in real estate investing when you don’t have much spare cash. Hosted by Frances Cook.
We all know that New Zealanders have a mild property investment obsession. For decades now, it’s been one of the favourite ways for Kiwis to build their wealth.
But as prices went up, fewer and fewer people found property investment to be a realistic option for them.
When you need tens of thousands, or even hundreds of thousands of dollars, just to get started, well, that’s a pretty big ask.
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So what if you could get into property investment for just $5?
Even better, what if it’s not just the standard residential property options that most New Zealanders opt for, but getting into the commercial or industrial property investments that can take more expertise to get right?
Well, you can.
There are property funds that are listed on the sharemarket, that let you get into property investment for less money upfront, and also less day-to-day management from you.
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For the latest podcast, I talked to Leighton Roberts, founder and one of the 3EOs of Sharesies.
For the interview, listen to the podcast here.
• If you have a question about this podcast, or a question you’d like answered in the next one, come and talk to me about it. I’m on Facebook here, Instagram here, and Twitter here.
• Listen to the full interview on the Cooking the Books podcast. You can subscribe on iHeartRadio, Apple Podcasts, or Spotify.
A house price crash risks “crushing” homeowners’ long-term finances, as those banking on property wealth in retirement will see their later life resilience fall seven times further than those who rent, new analysis shows.
The bigger the fall in house prices, the more significant the projected damage to retirement financing, as those who hoped to release equity from their homes to fund later life see their potential returns tumble.
Experts warn that retirees must be prepared to accept that they will not have the funds for the lifestyle that they had hoped for.
Modelling the impact of a house price crash scenario, where prices fall by 18pc, investment firm Hargreaves Lansdown found that average later life resilience – the extent to which working-age households are on track for a moderate retirement – among homeowners would drop seven times further than renters in the coming year.
Although homeowners have a stronger later life resilience score than renters, house price falls will strike a much more severe blow to their long-term financial prospects, spelling further gloom for those who have already had to contend with mortgage rates skyrocketing and other rising living costs.
Sarah Coles, of Hargreaves Lansdown, said: “House prices are heading for a fall in 2023, which risks crushing our finances. People with mortgages will still be reeling from the short-term blow of higher interest rates when they’re hit with the horrible news about the damage to their long-term financial resilience.”
Gary Smith, of Evelyn Partners, told The Telegraph: “For a lot of people, part of their retirement strategy is to downsize or enter into equity release to supplement the state pension and any other pension they’ve built up, so this will definitely impact upon their retirement plans, and the lifestyle that they hope to have might not necessarily be what they’ve planned for as a result of falling house prices.”
One in seven of those over the age of 50 will be forced to sell up or release equity from their homes as a result of the cost of living crisis, according to the LiveMore Barometer, an indicator of the financial priorities of older people.
For the 15 pc of those surveyed by LiveMore, a lender for the over-50s, saying that raising more cash to live on by downsizing or releasing equity was their top financial priority, precipitous falls in house prices would lead to ever-diminishing returns.
Capital Economics has forecast a house price fall of 12pc this year, with Halifax proposing a more conservative estimate of 8pc.
The recent findings were found as part of the Hargreaves Lansdown Savings & Resilience Barometer, which measures financial resilience out of a score of 100. The current average resilience score for later life planning is 49.1 out of 100 – but a house price crash would see a drop of 1.4 points among homeowners, compared with 0.2 points for renters.
The average fall in the score of Gen Z and Millennial homeowners was almost three times steeper than that of their Baby Boomer counterparts – down 2.2 points compared to 0.8.
Mr Smith said that many may consider opting out of workplace pension schemes in order to increase their income quickly to meet urgent living costs, with their later life financing taking a further hit.
The couple used a property sourcer to help select houses, although Wilkinson went to view each one before committing. In order to rent properties in Wales, landlords need to be licensed and Wilkinson had to attend a training course in order to qualify.
“If you want to succeed you have got to be prepared to do the things that other people are not, like giving up your weekends to go to Wales to look at a house or do a test,” he said.
They spent £25,000 upgrading their first property, got it revalued at £100,000, and remortgaged it in order to take capital back out and buy the next one. The couple use a letting agent to manage their properties, which means that their day-to-day involvement is limited to decision making if something needs fixing in one of the properties.
Their tenants, said Wilkinson, have been exceptionally reliable and the yields are good. A three-bedroom house in Tonypandy currently rents for about £600 per month. Less mortgage costs and agent fees the monthly income is around £450 (before any maintenance work required). Multiplied by eight properties, the annual income from the portfolio is more than £40,000.
Wilkinson says that managing the homes involves little more than a monthly call with the agent.
“I know you get horror stories, but I think that some people get into buy-to-let with the wrong attitude and expectations,” says Wilkinson. “I want to be professional and for my tenants to be happy because then they will not be a problem. You get what you give.”
A rental that will become a lifestyle change
Vic Paterson, and her husband Greg Pritchard, are long-distance property investors – somewhat accidentally. The couple live in Spalding, Lincolnshire, where they run a pain and injury rehabilitation clinic. In the depths of the pandemic the pair headed to the Scottish Highlands for a staycation.
“It was just incredible,” says Paterson, 48, a hypnotherapist. “I had the strangest feeling that I had come home.” They decided to purchase a holiday let and rent it out for a few years, with the medium-term goal of being able to relocate, mortgage-free, to Scotland.
In December 2021 they paid £180,000 for Tig Cottage, a two-bedroom worker’s cottage near the coastal town of Ballantrae, 70 miles south-west of Glasgow. It was badly in need of some TLC – a new boiler, damp work, redecorating and new doors were all required. But finding people to do the work was not as easy as they thought it would be.