You may think that you need to remain cautious when it comes to property investment in the UK because of the coronavirus pandemic and the recession. But we believe that now is a very good time to invest.
After lockdown easing, the UK property market has really bounced back. You could describe this positive reaction as a “mini boom” as the level of enquiries have skyrocketed. Seven Capital claim that the average selling time for properties has reduced by a factor of 31%.
You may be tempted to compare the current state of the property market with the recession in 2008. But you need to understand that this was a global financial recession. What we have going on now is a global health crises.
The government intervened with the Covid-19 pandemic by closing down specific markets. It also provided financial support to individuals and businesses affected by the pandemic. There have been a number of measures introduced to secure the housing market and help it to restart well too.
Here are 6 reasons why you need to consider UK property investment right now.
1. House Price Positive Predictions
Savill’s latest 5 year house price estimates show a 15% growth in house prices across the UK on average. Not all areas of the country are predicted to grow at this level though – they predict that the growth in London will only be 5%. So you will need to invest in other areas of the country with higher growth predictions.
2. Rent Prices also expected to rise
Not only are house prices expected to rise but rent prices are expected to follow suit. Between now and 2023, areas like the West Midlands are expected to see an increase of 12.5% in rental prices. Even the hard hit South East will likely experience a rental price growth of around 11.5%.
3. Demand High due to undersupply
The UK property market is fast recovering from the Covid-19 lockdown and as a result the demand for properties has increased. The headline factor for growth is still the imbalance with supply and demand according to the latest report from Hometrack. This has influenced the 31% reduction in the average time to sell homes in the UK.
4. Stamp Duty Holiday
One of the most significant moves made by the UK government to reinvigorate the property market was the introduction of a stamp duty holiday until the end of March 2021. There is still an additional rate of 3% for property investors, but overall everyone wins with this stamp duty holiday.
5. Interest Rates Low
At the time of writing this post, interest rates are at a record low of 0.1%. The Bank of England made two cuts in succession to the base rate in March 2020. This means that you can find some great mortgage deals for buy to let properties for example. Lenders have reduced their interest rates to all time low levels.
6. Private Rental Market is the future
In a survey by the Resolution Foundation, around 4 out of every 10 Millennials aged 30 are renting in the private sector. The survey also states that they expect around 33% of the wider generation to continue renting into their retirement. Other research suggests that the number of renters in the UK will outnumber home owners by the year 2039.