You’d be forgiven for thinking that UK property is in a bad place at the moment given the furor surrounding Brexit and the news coming out of parliament day-by-day. But the reality is that UK property is continuing to provide buyers with the opportunity to invest in great deals giving them high returns and good growth prospects.
In today’s article, I will outline some of the reasons why it’s still profitable to invest in the right kind of UK property even in spite of the political ramifications surrounding Brexit.
The supply and demand issue involving UK property has not disappeared simply because of Brexit. The most recent population forecast predicts that 4 million more people will live in the UK within the next decade. This will take the current population of 65.8 million to 70 million by 2028. Where are an extra 4 million people going to live? This naturally will put a premium on existing property and that which is in the pipeline, leading to people paying higher prices for UK property.
Homebuilders are simply not able to build enough properties to meet this overwhelming demand. Recent figures have shown that 165,000 new builds are in the pipeline across the UK, yet in the 2017 winter budget, there were supposed plans to build 300,000 homes a year.
Brexit hasn’t affected the supply side of the equation. There haven’t been any drastic government measures to address the housing crisis for a long time and I don’t see that changing regardless of how the UK leaves the European Union with the Brexit situation.
Gross rental return averages are at 6.3%
This is the same as the average for the last decade. There’s been no major changes in this regard even with Brexit thrown into the mix. London house prices have stagnated, but that’s largely down to public confidence in the capital’s markets, which is why Tarquin Jones and thousands of investors are focusing heavily on other areas with regards to UK property to expand their property portfolios.
Pound bouncing back
Pound Sterling was being devalued even before the Brexit vote but it’s true the pound got weaker since the UK’s decision to leave the European Union back in 2016. Since then however, public confidence increasing has led to a resurgence in the currency in the last couple of years.
Savvy investors are using the temporary volatility to snap up UK assets. Most of the £4.3 billion of commercial property acquisitions were carried out by overseas investors. Savills reported “To date in 2016 Asian purchasers have accounted for the highest level of turnover (44%), followed by UK purchasers (22%) and European (16%).
The fact that property was being purchased at such a rate even back in 2016 when market confidence was at its lowest just goes to show the resilience and trust that investors have for UK property investment. The markets have stabilised since then and the wide variety of property sectors to buy into make UK property flexible and features varied locations for investment- for both domestic and overseas buyers.
Ultimately, the huge supply and demand gap will continue to make UK property a viable option to invest in even in spite of Brexit. We’ve seen the effect that Brexit has had with regards to property prices stagnating in London, but there are various other UK cities in which sustainable returns and capital growth is occurring.
Cities like Liverpool, Manchester, and Birmingham are proving to be where the smart money is going in terms of UK property investment currently. They are proving that UK property remains a thriving asset class to invest in defying the worst Brexit fears so far.
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