The UK’s financial economy has experienced its peaks and troughs over recent years. After Brexit the future remained uncertain and threw much of the public into a state of turmoil surrounding the obscured vision for the future. Conditions of supply and demand throughout the UK are often considered as the creator of success across many macro-economic markets, and it poses no difference for the property sector.
On the whole, research shows that 1 UK property is wanted by an average of 12 buyers – an excessive demand that far outweighs supply. As supply is so limited and the UK population is rising exponentially with no signs of slowing down, cities across the UK are emerging as property hotspots due to the surge in appeal. Evidently, there is a prominent undersupply of both residential and student accommodation as more people flood to diverse popular districts and student numbers continue to accelerate.
Recent figures suggest that an increasing number of buyers are registering with estate agents. In actual fact, there has been a 22.1% spike in buyers in the past year compared with only a 6.5% increase in the number of properties available to buy on the market. This imbalance between the supply and demand has been fuelled by a multitude of influencing factors.
One of the most prominent factors is the change in stamp duty. New legislation means that the tax has been alleviated for first time buyers when purchasing a property for under £300,000, providing an incentive to make a primary purchase, with a total of 24% more recorded in the last year for this specific demographic.
Deposits have also presented a dramatic decrease after falling by 6.5% making purchasing a property easier and more affordable as it starts to become more within reach. Selling property will benefit from these market trends and changes which accumulate to the overall increased demand for UK property.
The amount of available housing is dwindling, therefore experienced a knock-on effect on house prices, which have rocketed as a result. Not only have house prices increased, but this adds value to the existing portfolio of property investments already purchased by investors.
Capital appreciation is admittedly one of the biggest driving forces behind making the choice to invest in property, it is a return completely out of an investors hands, providing they have chosen a lucrative location in the first instance. The potential for returns due to capital growth is probable, therefore choosing to sell in the future provides you with two robust returns on investment – your assured rental yields and the opportunity for capital appreciation. Just to talk numbers, the average rise in house prices across England and Wales is a staggering £6,898!
Figures of first time investors are also increasing as the resilient buy to let property market flourishes. Considering the niche sector of the market, property investment is dominating over other asset classes as it saw 22% more people enter buy to let investments over the last year, despite being a turbulent year following the referendum and government restrictions.
Landlords and investors are appreciating the value of the property sector as opposed to other market trends that are deemed unsteady and unreliable, for example, the stock market. The tendency to view the stock market as overvalued is common, as unstable faltering assets inflict loss of trust from potential investors. Whereas, buy to let properties present secure tangible and transparent assets in a rather solid property market where prices are only set to climb.
Yields of around 7% can be found in the buy to let sector due to the unique market, urging potential investors to invest in the current circumstances. Major cities are transforming into buy to let hotspots due to the surge of young professionals and the lack of adequate housing.
For example, in the UK, Manchester and Liverpool are front-runners in the modern property industry, receiving billions of pounds for regeneration. With investment opportunities throughout the Northern Powerhouse, property specialists such as Liverpool based RW Invest are finding they are able to represent a diverse array of buy-to-let opportunities.
But with the impact of BREXIT still perhaps difficult to be predicted, the property market, employment market and UK economy still looks cautiously ahead…
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