The UK property investment market has changed considerably in the past 10 years. It’s no secret that Brexit is affecting all sectors of the UK economy and the property market is no exception. But while buyers shied away from investing in UK assets altogether, when news of Brexit first broke out in 2016, the outlook for the remainder of 2019 is looking a bit different.
In the wake of UK leaving the EU, the private rental sector is increasing in popularity while home-buying is taking a back seat. Regional cities are experiencing a true renaissance with flat prices rising to an all-time high since 2013. An influx of foreign investments shows strong confidence in UK’s property market as a global hot spot for lucrative buy-to-let opportunities.
The economic growth in cities such as Manchester and Liverpool are part of an emerging trend of high growth in the North. At the same time, the fall in value of London house prices is expected to create plenty of opportunities for investors looking to capitalise. This is in part due to the tighter lending criteria for taking out a mortgage, which will make it harder for people aiming to get on the property ladder. Something, which will drive the demand for rental property in the next years.
Property Reporter’s recent forecastfound that over 50% of those between the ages of 18 – 40 are due to be renting privately owned property by 2025, with one third of those predicted to never buy a home. For potential buy-to-let investors, this is a perfect opportunity to target this increasing demographic.
Mixed growth across the UK
Even with Brexit looming and the current weakening of the pound, the UK property market is still seeing positive growth across a number of regions. And the continued rise in foreign and domestic students going to university and increasing numbers of people moving for employment is only fueling greater demand for property.
This is especially true for London, where despite property prices continuing to decline, prices of properties in the Commuter Belt have risen by 313% in the past two decades. This momentous increase, amidst continued rising in London property prices, has seen a second belt develop that is growing at a similar rate (344%) over the same time frame.
The area dubbed the Crossrail is a new high frequency, high capacity railway that will create a ‘door to door’ connection to key locations across the heart of London. Some of these include Heathrow, the West End, the City and Canary Wharf. Speeding up journey times in and out of the Capital, Crossrail will result in an extra 1.5 million people being within 45 minutes of central London.
Besides having a major effect on mitigating the main pain point of the commuter belt by reducing travel times to London, Crossrail will be a goldmine for landlords and property investors. Several locations will experience transformational growththanks to the new development, benefiting from unprecedented access into the Capital. Naturally, Crossrail won’t put an end to workers and families moving away from London to areas with lower living costs, but it will offset their numbers to some extent.
While regional cities are proving to be even more affordable, for many London workers a shorter commute whilst maintaining their current role is ideal. Areas in the commuter belt such as Slough and Basingstoke have seen a huge rise in popularity as commuting towns become an increasingly attractive prospect for living and investing in. They also offer closer access to London. This has created a desirable combination that has resulted in rapidly increasing tenant demand.
Figuresfrom the Office of National Statistics (ONS) revealed the North West of UK had the highest annual house price growth at 3.4%. The average house price in the region has increased from nearly £159,000 in May 2018 to over £164,000 in May 2019.
The West Midlands come second with an annual price growth of 2.7%. Despite a drop in prices, London also remains in the region with the highest average house price at £457,000.
Is 2019 a good year to invest in the UK property market?
When looking at the UK property market as a whole, average house prices have been on the rise. Overseas property buyers are seeing the value in the fall of Sterling since the announcement of Brexit, and target areas in the North due to the ongoing effects of what we call ‘Northshoring’. Northshoring is the result of companies moving to the North to cut operational costs and improve business.
Foreign investors, or people paid in a foreign income, are taking advantage of the exchange rate against the pound at the moment. This means investors are getting more for their money than they have in previous years, but this won’t last forever.
Another area that has seen an increase is rental yields. This is especially great news for potential investors who are interested in property on a buy-to-let scheme. ONS data showed an increase of 1.3% in the 12 months to May 2019.
While it is difficult to forecast how the coming third quarter will be for the property market as a whole, there are a number of areas in the UK that demonstrate stable growth. London and areas in the North continue to hold high value properties. In the end, what is perceived as political and economic uncertainty surrounding the country is opening many opportunities in the property investment scene.
