Reasons to continue investing in the UK property market despite the pandemic
As we all are aware the UK property market has remained strong despite lock down. As a result, we have created a mini boom in demand.
According to Sevencapital, the amount of time it is taking for properties to sell has reduced by 31%.
The assumption that the property market would suffer because of the pandemic span from what happened during the 2008 pandemic. But the thing to remember is that the 2008 crisis was economically driven while 2019-2020’s pandemic was the result of a health crisis.
This means that it was the government’s decision to suspend the economy, so they put procedures in place to support UK residents and businesses. Procedures were also in place which protected the property market.
So why should you continue to invest in the property market?
- UK house price predictions remain hopeful
According to Savills, house prices are set to rise by 15% within the next 4 years. However, London’s property prices are set to reduce by 5%, so ensure you do your research on location before purchasing a property.
- Demand is driven by UK undersupply
As we are recovering from lock down demand to purchase property has increased dramatically. The supply and demand imbalance has resulted in the time it takes to sell a property reducing by over a third.
- Rental returns set to increase
As the cost of houses rise, the cost of rent will subsequently increase. It is predicted that in the Midlands rental prices are set to increase by 12.5% within the next 3 years.
- Stamp Duty Land Tax reductions until March 2021
The government announced a break in tax payments for properties purchased under the £500,000 mark. Any properties above that price benefit from reduced tax prices too. For investors, the 3% additional tax is still in effect. This means investors will only pay 3% SDLT on any property purchased under £500,000.
- More people set to enter the rental market
The resolution foundations data shows that 4 in 10 millennial’s are renters under the age of 30. A third of people are still renting well into retirement. It is argued that by 2039 the amount of people renting will outnumber the numbers of homeowners.
- Low interest rates
In today’s climate buy to rent mortgages are being offered at incredibly competitive rates making the investment process much more affordable.
- Increasing population
Within the next 20 years the population of the UK is set to reach 74 million. From this figure we can see that there is going to be a surge in demand for places to live in the coming years.
- London is one of the top areas for property investment
Aside from Los Angles in the US, London is the top city to invest in property according to Global Cities 30’s index. Areas across the London commuter belt have also benefited from a surge in investment due to being ranked so highly on this list.
- The UK is the most transparent market
In JLL’s Global Real estate transparency Index the UK was named as the ‘most important’ country. According to JLL the most transparent countries push boundaries through technology, sustainability and regulation.
- Foreign exchange value
For international investors, the weakness of the pound can be an opportunity to save money in the long run. Market prices in the UK are affordable compared to many other global markets.