Why Invest in Property in the UK?
Why Should Overseas Investors Invest In UK Property? Bricks and mortar have long been seen as a prudent way to invest with the phrase ‘an Englishman’s home is his castle’ revealing just how deeply entrenched in the British psyche investment property is.
The UK investment property business is a financially rewarding and exciting business which can produce great rewards. It can produce a consistent income, even once you have retired. Historically, property prices have been on a strong upward trend since the 1970’s despite some volatility during the recession and credit crunch . New research has revealed that houses prices have grown faster in the UK than any other Europeans country. In fact, since 1988 house prices have gone up by a staggering 333%. This represents an average rise of 12.3% per year. Many home owners have benefited from the rising housing market and have seen their property increasing in value over the years. No wonder property investment is now seen by many as the best way to provide long term financial security.
Why should you invest in property NOW?
1. House prices will carry on increasing
The UK still has a serious shortage of housing caused by a number of social and demographic factors. Unlike other European countries, our population is expanding significantly and it is predicted to reach 70 millions by 2020 compared to 63.7 millions today. More people living in the UK means that the demand for housing will carry on increasing therefore driving up the price of 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. This could mean a 1 million housing shortfall by 2025 if current trends continue.
2. High rental demand, high rental returns.
A number of factors have combined to push up rental demand including an increase in immigration, more people living alone and rising house prices stopping first time buyer onto the ladder. This is excellent news for landlords who are finding that their Buy to Let properties are being let extremely quickly while their rental income keeps increasing.
3. Low interest rates
Interest rates have been at an all time low for 6 years making borrowing increasingly cheaper. With mortgage payments currently at their lowest, and ever increasing monthly rent, landlords are enjoying significantly higher rental income making it an ideal time to invest in the property market in the UK.
In the long run, residential property still looks solid
Residential property is a cyclical market – like anything, it has ups and downs in the short-term. Uncertainty around Brexit has prompted many buyers and sellers to sit on their hands, choosing a wait and see approach to moving house.
As a result, the number of homes changing hands is a bit subdued at the moment and it’s putting some pressure on house price growth. However, the uncertainty in the housing market is being largely driven by depressed confidence.
It’s unlikely that will last forever.
Most of the experts point to longer-term trends that underpin the future performance of residential property investment.
The UK’s population is growing, our building rate – while improving – is not keeping up with demand, and the number of people per household is falling due to a rise in divorce and fewer families choosing to live intergenerationally.
In short, there are too few homes for our existing population and that’s a situation that’s likely to endure for the medium to longer term.
That means, investors who have exposure to property as an asset are highly likely to be able to generate a return from it – demand outweighs supply.
Investing in buy-to-let particularly is also about both capital and income.
Rental growth is strong at the moment and so long as landlords are prepared to keep their money invested for the longer term (a minimum of five years) then short-term fluctuations in house prices are really neither here nor there.
This is why there’s an abundance of evidence that investors are still keen on British property.
Political and economic uncertainty appear to have done little to dent investor confidence – particularly overseas investors.
A piece of research from Knight Frank recently found that the UK had reclaimed its position as Europe’s leading commercial property investment market in 2018.
Over the course of the year the UK overtook Germany to become the favorite destination for property investors.
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