Reasons to Invest in UK Property. Part 3.

UK property

Investment in Infrastructure-Crossrail 2 project and high speed rail2 (HS2) 

In the coming years, the significant investments made into infrastructure projects in the UK will begin to bear fruit and are set to considerably change and improve connectivity, employment by easy commuting, affecting house prices across many parts of the UK.

Crossrail 2 is set to be a game-changer in the South East for access in and out of London, and since its launch in 2009, it has seen house prices within a radius of one-mile of its programmed stations increase in value by 66% on average. 

The line should be fully operational by mid-2022, and is expected to support the regeneration and development of up to 200,000 new homes across London and the South East and support 60,000 new jobs across the UK while under construction and 200,000 jobs across London and the South East once operational

invest in UK Property

 Source: House prices near Crossrail stations have risen as much as 82% since it was announced

HS2, a £106 billion project which will connect eight major cities between the Midlands, the North, and London, is projected to create around 25,000 jobs by the time it arrives in 2040, and fuel economical benefits.

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house prices

Source: HS2 route

The line of the HS2 will be built in a “Y” shape, with London positioned at the bottom of the ”Y”, Birmingham at the center, Leeds at the top right, and Manchester at the top left. 

The project has been divided into two steps: Phase one, London to Birmingham, and phase two extending from the West Midlands to cities in the north.

Phase one is expected to start running from 2029 to 2033, and full services by 2036, and phase two should be ready between 2036 and 2040.

The whole network, which is expected to be completed by 2040, will cut down travel times immensely between some of the most sought-after British cities. 

On top of that, HS2 will bring new business opportunities and continued growth to the cities along its route. Rising Tenant Demand.

What should you take into consideration to make a wise choice while looking into an investment property?

An investment property is a property that is purchased with the sole purpose of generating a return on investment. 

The two ways investors can benefit from making an investment in property are based on regular rental returns, returns from an ulterior resale after it grew in value, or both.

If you want to get into property investment, you need to ask yourself two questions — what kind of property should I buy? (detached house, Semi-detached house, terraced houses, flats, buy to let, etc),  and where are the best places to buy an investment property?

Keeping in mind that certain cities are expected to gain in value due to the ongoing infrastructure projects, it is clear that some cities are preferable over others.

The question is: is it due to a consumer habit? And will the post- corona crisis change the trends and patterns and shift statistics to rural areas?

Despite falling since Q2 2017, the average house price in London remains 52% higher than at its peak in 2007. 

Below are the regions with higher property values than their 2007 peak prices:

  • Outer Metropolitan London is up 38.5%.
  • Outer South East is 29.1%.
  • East Anglia is up by 26.5%.
  • South West is up by 20.6%.
  • East Midlands is up by 19.3%.
  • West Midlands is up by 17.8%.
  • North West is up by 4.7%.
  • Wales is up by 2.8%.
  • Yorkshire and Humberside is up by 2.6%
the affordability index

Source: Affordability Index

  • For the second year running, Durham is the only city where houses are ‘affordable’ to buy, their price could rise by 16% and still be affordable for someone on an average wage with a 20% deposit and a mortgage of 3.5 times salary.
  • The remaining regions have a lower property value than their 2007 peak prices. 
    • Northern Ireland had the weakest performance, with prices still 36.8% lower than at the 2007 peak. 
    • Home prices in the North, and in Scotland, remain 5.2% and 1.4% below their peak.
  • The average 2019/20 England house price stands on  £251.711
most affordable cities in the uk

Source: Affordability Index

It is important to keep in mind that those trends show consistency in the pre-corona state of mind, at times were proximity to work where overruling considerations such as access to a garden, a close by park, etc.

Statistics are now being published during the Corona Crisis depicting a window of opportunity for buyers, predicting that property values will drop 7.5% this year but then claw their way back in the very near future.

Source: Savills Research

London and the South East will likely lead the housing market recovery because these regions have more jobs in resilient employment sectors

Source: Savills Research June 16th, 2020

The price value is of course also in direct correlation with the price growth, which is expected to get back to its original forecast and even exceed it in less than 6 months.

As hinted above a lifestyle shift is taking place, which may also affect where people choose to live, and therefore, it should be taken into consideration while choosing the kind of property you should invest in. 

The lockdown has encouraged the working class to reevaluate what they want from their living circumstances; with many working from home, the value of a garden or proximity to green space is in higher demand, and Rightmove found last month that out-of-city inquiries were higher than previously registered.  

Source: House Price Index May 2020

“Peoples’ housing preferences seem to be impacted. Indeed, 15% of people surveyed were considering moving as a result of life in lockdown, with 34% stating they think differently about their home as a result of the pandemic, especially the importance of a garden and the need for more indoor space.

The buyer priorities will apparently shift after COVID with a desire for a less centralized city lifestyle and commute facilitated with work from home tech making it possible. This could mean an adjustment to where people choose to move. If an increasing number of people choose to move to more affordable areas, or cities, outside of the common zones, it could bring down prices in the less affordable areas, somewhat rebalancing the housing market.

Source: Home-movers will carry on after lockdown & buyers look out-of-city

Rightmove, UK’s largest property portal is supporting this claim by publishing the following statistics: April last year, 42% of Londoners were looking to move outside of the capital, this April this number has risen to 51%. A similar trend is detectable in Edinburgh, where 60% of residents are now looking to move outside versus 53% in April 2019. The same trend includes Liverpool, Sheffield, Glasgow and Bristol.

Although it is not unusual for people planning to buy outside the city they’re in, looking to get more for their money, since lockdown we’ve seen a notable shift of more people contemplating a move outside their city.

We explored in this article the consideration that should be made prior to investing in the UK properties market.
There is a window of opportunity to be taken advantage of, while considering the sets of variables that could make your investment more or less lucrative.

It is now up to you to make the first step in contacting your expert real estate or property agency and inquire about your options.