While the lockdown caused the British economy to contract, the property market is doing far better than expected. This is despite increased unemployment and many people being unable to pay their rent or mortgage payments. Furthermore, there has been a mini-boom in the real estate market as the UK is preparing to emerge from the lockdown, and it’s clear that many people think this is a great time to buy. Here are 5 reasons why real estate is still a great investment.
The Fundamentals of Supply and Demand Are Unchanged
While the ability of many people to afford to buy a home has been hindered by the economic recession caused by the lockdowns, this doesn’t change the fact that they need places to live. Furthermore, the lockdowns did nothing to address the chronic under-supply of homes relative to those who want to buy, nor the rapidly increasing British population.
This is why the 5-year house price forecast is expected to grow 15% over the next five years, while rents are expected to rise 11% in the Southeast and 12% in the West Midlands.
Rental Demand Is Skyrocketing
The UK is shifting from a nation of homeowners to a nation of renters. This is partially due to high home prices, but it is also a cultural shift.
One study found that 40% of Millennials are renting by age thirty, and a third of them are expected to rent for the rest of their lives. Studies suggest that British renters will outnumber homeowners by 2039. This creates a great opportunity for real estate investors, since many of these would-be renters would be happy to rent but not commit to owning a home.
More importantly, a record number of over-50s are renting. This trend is especially notable in major cities. They’re choosing to downsize, often selling their homes and then renting a flat or a smaller home.
The Government’s Stimulus Makes This an Even Better Time to Buy
The government wanted to protect the property market. This is why they announced a Stamp Duty holiday on all property up to half a million pounds between July 2020, and March 31, 2021. However, real estate investors will still have to pay a three percent property rate.
The Bank of England has also cut interest rates to a historic low of 0.1%. This makes buy-to-let mortgages and luxury mortgages very competitive.
If you’re looking for a large mortgage, you can work with a service such as Enness Global. They are specialised mortgage lenders and only deal with large mortgage loans. They connect their clients with a network of over 500 lenders, ranging from global private banks to small building societies.
The UK Remains Friendly to Property Investment
The UK is a top choice for property investors. It is the second-best city on the planet for investing in property, beaten only by Los Angeles, California. The only other European city to make the top 15 list is Paris.
JLL named the United Kingdom the most transparent property market in the world. While that makes the British real estate market more trustworthy, the current weakness of the pound makes the British market more appealing to international property investors as well. It makes UK properties relatively affordable compared to other global property markets.
Long-Term Projects Will Bolster Local Property Markets
To put things in perspective, there were roughly £1.5 trillion of foreign direct investment in 2018. The UK achieved a 5% increase on top of that in 2019.
Investment into UK infrastructure projects like Crossrail will give people outside of the London Greenbelt unprecedented access to London. This is why home values around planned stations have increased by two thirds. Home prices around the HS2 will do the same thing in the Midlands while boosting the local economy.
The British housing market is expected to see long-term growth for a variety of reasons, while many factors make this a great time to buy. That is why real estate continues to be a great investment.
