Property investment guide for UK
The various property markets of the United Kingdom were in a slow movement in 2018. The investors kept away from investing in huge quantities in UK assets because of the anxiety that investment in property will continue to decline in value due to the adverse result on the market because of the consequences of Brexit.
The data collected from Royal Institute of Chartered Surveyors indicate that the situation is really pathetic. The properties available for sale in the market is very less and whenever sale takes place it take a prolonged time for completion of the deal. This results in to a situation in which the property remains on the market for a comparatively longer period of time than in the years before 2019.
Property investment in UK-mixed growth
The scenario of property investment for UK in 2019 is really very pathetic. In the first half of the year there happens to be a similar trend going forward. The markets continue inevitably but scenarios in debt and depth are unfortunate and results in properties get presenting in the market naturally. The demand for property is high because there is a considerable increase in students heading to universities and the number of people engaging in employment is getting increased. But the buyers argue that they have got fewer options available in the market.
The buying of property remains to be a difficult endeavour for many of the people due to strict and difficult criteria for lending and mortgages. The trend is that home owners are trying to renovate or extend their existing home structures rather than seeking new homes elsewhere. Due to this situation the property market continues to remain as “treading water”.
There are hope full news also noticed. In cities there is clear economic growth. Cities like Manchester, Liverpool etc are examples for this. There exists a general trend of coming out of an excessive growth in the northern part. But at the same time house prices remain low in London.
According to Mr. Burrell, the author of Capital Economics the prices will fall down by 5% in London in the next year. But there will be a rise in all other places. He says that the performance of the dominance of crime or a school etc can influence prices at a hyper local level.
The main cause for the fall in price is believed to be Brexit. The Royal Institute of Chartered Surveyors unanimously blame Brexit for the fall in value. They say that it is the uncertainty created by Brexit resulted in a peculiar situation causing sellers and buyers to sit tight in large numbers.
30% of the total amount will be reduced for house from a pre- Brexit level. At the same time prices of houses will decrease by as much as 14% during the current year alone. The bank of England put forward a forecast as above. The effects of the above dreaded fall are very clear. There is no chance for a recovery cost Brexit either for those who have assets outside the country. There exist an uncertainty throughout the country and the chance of recovery is practically nil.
Who are the buyers of property?
This is a hard time to those young people also who aim to get on the property ladder. There exist hard and strict criteria for lending as explained earlier. When question of a mortgage arises, or when there is higher turnover and there exist no security in employment people do not have the opportunity to save money for acquiring a house. This is true for most of people especially to those who want to live in metropolitan cities where prices of properties are considerably high.
In 2018 those who buy properties for the first time were really greatest energetic on the market. 10% of such buyers were eligible to receive financial support from government to buy properties which resulted in increasing the rate of buying. But as per the recent report published by property reporters it is found that half of the population between the age group of 18 and 40 are because of hiring privately owned properties by the year 2025 and one third of these people never forecasted to buy a house. This provides an opportunity to those who buy property for targeting the increasing demographic.
Increase in rental income
It is forecasted that by 2023 the capital growth will result in 30% of total returns across UK property. This forecast shows that the growth is 10% lower than that at the beginning of 2018. In addition the growth is down to the average 55% share obtained over the last ten years. Return in income is estimated to be increased to 70 % of the total return. This shows that the rental returns are very important for the appreciating values of properties.
The current political scenario is also really unpredictable. It is very much difficult to anticipate the housing market in UK. No one can predict exactly the fact about how the coming years will unfold. But one fact is certain that Sterling had an impact on picking up of property.
The Sterling effect
Sterling was sustaining comparatively strong against the US dollar during the beginning of 2018. Even though the level was not same throughout the past decade the maximum of£1=US $1.27 was sufficient to have a situation in favourable for those who hold Sterling.
Unfortunately in 2018, from April to August, the situation was reversed effectively. The falling down of the value of Sterling started rapidly with £1=US $1.27.when it reached December 2018 rapid falling continued due to hold up from the EU withdrawal from Europe. Sterling reached the low stage of £1=US $ 1.252.At present there is a tendency of a mini – resurgence of Sterling due to the situation created as a result of voting down of the Brexit deal, and reached the stage of £1=US $ 1.32.
Investment on UK property has become more attractive to those who hold foreign currencies like dollars or Euros. Many of the international buyers got opportunity for purchase of property holdings at a much reduced level of price. They are in the hope that the assets soon regain the value once the dust has settled. The highest benefit goes to those who hold US dollars especially in trusts which deal with dollar international investment.
Is it good to fund in UK?
If one is funding in UK property, there is nothing to lose for him provided he is holding Sterling. But how the comparative value of Sterling is going forward cannot be predicted easily.
But we can assume that the condition may become comprehensible within a few months of time, as a result of Brexit becoming more apparent. But it is clear that no guarantee can be assured that the financial resources will be finer after sometime. There is chance for the economics to become worse also.
The pitfall that most of investors face is the political situation and time management of the market. Markets sometimes react in an entirely different way even though we anticipate a positive result. So the best policy is adhering to what you can monitor and control what you cannot control. Adapt a lasting strategy in investment. It will help for getting return even if it is passive.
Where should be the UK property investment?
As mentioned earlier it is very much difficult to predict the situation in the coming year for property market. But at the same time there are lot of areas where we can declare with confidence that there will be definite economic growth.
For finding out where to fund in UK property, we consider the year 2018 as a guideline. London is an area where there was maximum uncertainty in market especially to those who hold high value properties. The house prices were highest in London the properties had the most to lose. We can proclaim that as the political situations settles, London could have gained the most.
When we consider UK as a whole the average house prices have grown especially in northern areas. Most of the overseas property buyers selected areas in the north due to the existing effect of “North sharing”prevailed there and also due to the value in the decline of Sterling.
Many companies shifted their programme to the North with the objective of reducing the operational cost and improving the business. This is what is called “North sharing”. Inward migration has increased due to North sharing and due to increased job opportunities talented youths from overseas reached there. The cost of living was lower in this region when compared with the Capital. Cities like Manchester took advantage of this income in demand and effectively used the situation and grow accordingly. When we analyse the data gathered by Savills, we can assume that the following are the areas that are likely to have a high growth rate.
One of the highest lovely of growth all along the United Kingdom is noticed in Northampton. In the year 2018 there was a considerable increase in house price in this region which is very much greater than the national average. In 2018 house prices increased by 5.3% in this area. Similarly house purchase took place on an average of 33 days. This shows that there will be a continued high demand of houses in the locality.
Leicester is only under one house drive away from Northampton. The city of Leicester has the best year on year growth rate among the all major cities of the United Kingdom. Home tracks have considered this city as being the most suitable city for investment in 2018. Here since the turn of the century, prices of properties have been enhanced by over 250%.
Leicester is a prime location in the United Kingdom. It is just one hour away from both Birmingham and London. This city has fantastic links with other major cities. The future investment of Leicester comes up to £ 3bn. All over we can say that Leicester is fantastic location for property investment in the whole of United Kingdom.
This small Essex town was on the receiving and of extremely higher development in the recent period. This town is also provided with great transport links. Leisure facilities and schools are also there in this city. All these factors boost the cost of property in this locality.
According to the report of House Simple the house prices for the last three years have increased and reached for an average of £ 55000. The rental price and rental yield has been increased in the case of capital growth. Hence we can definitely say that the city of Colchester is one of the most attractive places for investment purpose in the year 2019.
It is not possible to neglect the UK capital and there are areas in London that help you to get a return on your investment on property in UK. The North-East is such a place one should look at for investment.
Leytonstone is London’s latest up and coming area. One third of the estate agents have declared this area as the best area to fund in London. This argument of estate agent is based on the investment. Leytonstone has easy access to the central line. Beside there is future regeneration in future years. Hence the Leytonstone and surrounding areas are going to become the focus of attraction among buyers in the years to come.
According to property experts like Savills, still there is hope for London properties because of the lower prices than in the capital along with an increase in average house prices of 83% for the last five years.
Various property types
Generally there is a mindset among the investees that the only property investment available to them is residential property. There are large numbers of alternative property assets, when one think more broadly. One can see large number of opportunities to turn a profit. To find this out one should focus on the importance of demand and supply in the existing market.
The reported maximum forecast return in the property market year to Urban logistics for a second year functioning. It is forecasted that the annual return will be as high as 10% until the year 2024. The number of investors in the property sector has been increased considerably due to the considerable rental growth over the past years. So there is a considerable growth in this sector.
There is chance for a very high growth in the sector because of the under supply of space for Grade-A officers in London in the coming future. There is a chance for re pricing in the retail sector. Hence opportunities are going to be increased in the coming twelve months. The investors should have a close watch on this.
The demand in the sector of build-to-rent will continue and there will be an increased growth rate in this sector over the coming year. This is because this sector has become an attractive one in the prevailing market. There is consistent return in this sector and the sector has got familiarity in the market. Since there is competitive returns through large scale operations and due to the increased demand for private rentals, build – to- rent sector continues to be a great investment opportunity.
Because of the existing economic and political uncertainty prevailing in the country the property market may appear to be the best avoided in the UK. but when one goes deeper in to the market an investor can notice a wide variety of opportunities waiting for him. For the success of investment seek the value in the market and recognise and select an investment which receives growth and located in high demand area like the North. Similarly consider the diversification of your property investment. That means invest in a wide variety of property types if it is within your age.
As mentioned in the beginning it is not easy to predict the future of property market for the coming year. So focussing on the long term strategy is very important.