Since the UK began to emerge from lockdown, we’ve seen the property market reacting positively, with recent reports confirming a ‘mini-boom’ in activity and the average time to sell for homes coming to market reducing by 31%.
Why is this, when the previous recession saw property prices crash? The key differences between today’s recession and the previous is that whereas the 2008 recession was financially-driven, this time it is driven by a public health crisis, during which the Government made a conscious decision to shut down certain markets, whilst putting measures in place to support businesses and individuals affected. Importantly, measures were also introduced to help prop up and restart the housing market.
Whether this quick recovery from lockdown continues across the remainder of the year remains to be seen, however regardless, there are still numerous more reasons why investors should continue to buy into the UK market as leading UK developer SevenCapital points out in their list of 19 reasons why. Here is our pick of the top 10:
- Positive UK House Price Predictions – Savills five-year house price forecast predicts UK prices to grow 15% on average by 2024. Although London falls well below this at 5%, so investors looking for higher growth will want to look to the regions, particularly regional cities. Additionally, the majority of UK PLC’s have described ‘long-term optimism’ in various property market forecasts.
- UK Undersupply Drives Demand – The UK already has a well-documented undersupply of homes versus demand. As the UK started to come out of lockdown, this demand appears to have increased, and Hometrack’s latest report states that the supply/demand imbalance is supporting the headline rate of growth – resulted in the time to sell a home falling 31% since the lockdown.
- Rental Returns Set to Rise – it’s not just house prices that are forecast to grow, rents are also expected to rise. In the South East, rental growth is expected to hit 11.5% and in Birmingham in the West Midlands we’re looking at around 12.5% between now and 2023. (Source JLL)
- Reduced SDLT until March 2021 – In a move designed to protect and revitalise the property market, the Government announced a Stamp Duty holiday on all property purchases up to the value of £500,000 between July 8 2020 and March 31 2021. Although for investors the 3% additional property rate is still in effect.
- Living Trends Point to Renting – According to the Resolution Foundation, nearly 4 out of 10 ‘millennials’ are still privately renting at age 30, while nearly a third of the wider generation are expected to be renting well into retirement. In fact, research estimates that UK renters will outnumber homeowners by 2039.
- Low interest rates: After two successive cuts in March 2020, the Bank of England Base Rate remains at a historic low of 0.1%. This means that many lenders are offering incredibly competitive Buy-to-Let mortgage rates and a raft of new products, making the entire investment process much more accessible.
- Rapidly Increasing Population: The UK’s population is forecast to reach 74 million people in the next 20 years, a clear sign of the vast housing demand building within the market.
- Top European City for Property Investment – Missing out only to Los Angeles in the US, London is the second-best city in the world to invest in property, according to the Global Cities 30 Index. Paris is the only other European city to make the top 15. This success has caused a ripple effect on the wider UK market, particularly over recent years, with areas across the London Commuter Belt as well as major cities further north of the M25 such as Birmingham seeing a surge in investment (and not just in property).
- No. 1 for Transparency: The 2020 Global Real Estate Transparency Index by JLL named the UK as the ‘most transparent’ market in the world.
JLL describes the top transparent markets as being the ‘world’s leading investment destinations… pushing the boundaries of transparency through technology, sustainability, regulation and tracking of alternative sectors’.
- Value through foreign exchange: For international investors looking to invest in UK property, the current weakness of the pound continues to be an opportunity to save money in the long-term, especially in the a market where prices are relatively affordable compared to some other global property markets.
For more information on SevenCapital visit www.sevencapital.com.