So, is now a good time to invest?
As demonstrated here, while statistics have shown that in the past property prices tend to drop following unstable periods, they also show that this period of low growth is often shorter than originally forecasted.
There’s a lot of evidence to suggest that right now is the best time to buy property for investment purposes. The property market has shown time and time again how resilient it can be, and many savvy investors are taking advantage of recent economic changes that can help them get the most out of their investment.
With the value of the British Pound against the Dollar having fallen following the worldwide coronavirus outbreak, overseas investors have been able to take advantage of huge discounts on UK property and maximize their investment returns.
While the stock market saw a turn for the worst in March, the property market has opened up new opportunities for investors wondering what to invest in now.
A lot of investors who had tied up money in the stock market have instead chosen to purchase property, and are reaping the benefits.
International investors aren’t the only group benefiting from below-market rates.
Savvy investors who are prepared to negotiate will find that they’re able to get the most for their money on top of the already below-market rates that come with off-plan properties.
Those who recognize that now is the best time to invest in property will find that by the time the Covid-19 pandemic has ended, the property market will recover and investments will have grown significantly in value.
It would be wise to keep in mind, while choosing where to invest, that London is retaining a top spot in Schroders’ latest Global Cities 30 index in Europe (listed second-best city in the world to invest in real estate. Paris is the only other European city mentioned in the top 15) making London still the hotspot of Europe.
Why should you invest in UK property NOW?
A strong economy
Despite initial economic concerns following Brexit, the UK economy proved that pre-vote predictions of a recession were off the mark: instead, the six months following the referendum were significantly stronger than experts foresaw.
With the Bank of England cutting interest rates following the vote in an attempt to stabilize the economy, households are in a position to buy property now, able to fully profit from the low rates. Those who can afford to pay a big deposit are also now able to borrow at exceptionally cheap rates.
For the overseas investor, it’s the weakness of the pound that creates the most significant opportunity: the depreciating Sterling triggered a whole new level of investment from Indians living abroad, as well as Turkish and Middle Eastern investors aiming for London’s big-budget properties.
And let’s not forget that with UK unemployment at record lows, renters are guaranteed to be good for their rental contract, making any investment of any size a stable long term investment with a steady return.
The UK housing shortage- rental prices will carry on increasing
Demand for UK housing is outstripping supply, with UK housing listings at an all-time low.
With an average of 43 properties per estate agency, unparalleled demand is maintaining high and growing house prices.
Many of the major ‘first’ cities are falling behind on delivering housing quotas, increasing the impact of the ongoing residential undersupply.
As a result, first-time buyers and 18-34-year-olds no longer see buying a property as a viable next move and have accepted renting as the only realistic option for the foreseeable future while real estate prices continue to grow.
In addition, a number of factors combined have pushed up rental demand including an increase in immigration, more people living alone, and a change in lifestyle.
Even before the pandemic hit, an increasing amount of people were choosing to rent over buying.
While affordability is a key factor, this growing trend is a social one as much as it is economic, as for many, renting is a much easier alternative that provides a way to save, even if rents are also raising – averaging up 2.7% year on year in May 2020.
Over a longer period, as more people choose to rent over buy, this could lead to a reduction in demand for homes to purchases, taking the strain off supply and resulting in making prices more affordable for everyone, from first-time buyers to people selling up or downsizing.
Finally, unlike most European countries, the UK’s population is expanding significantly: It is even described as an unsustainable growth
The forecasted growth by 74 million people in the next 20 years, has an immediate repercussion on demand for housing.
More people living in the UK mean that the demand for housing will keep increasing, driving up the price of the property for the foreseeable future.
According to the Office of National Statistics, there will be an annual shortfall of housing in the UK of over 100,000 properties each year for the next decade.
For investors, residential undersupply is an opportunity.
With the right investment property in the right location, investors are realizing both rental income and capital growth, taking advantage of a competitive market to deliver returns.
To get the full picture of what is going in the UK property market, read “Reasons to Invest in UK Property. Part 3“.