Prices for homes in the UK have recently shown signs of slowing down, with prices rising by just over 1% in June, following three consecutive months of falls. This national average, along with the annual rate of price inflation up to 3.1%, could appear to be a significant downturn in the housing market. However, like many statistical figures, the national average is in fact hiding regional variation across the country, as well as a lack of new housing, the ever-present demand for rental property and the cheap pound.
The lack of new housing
Despite political promises and first-timebuyer incentives, the lack of housing in the UK remains. There are fewer houses per person now than at any point in the past fifteen years, with more of the UK population looking to rent than ever before. This makes the rental market very attractive, given how lucrative buy-to-let options can be.
The demand for rental property
Despite government intervention in recent years, rising rents and more regulation for lettings agents and landlords, the private rental sector in the UK continues to thrive. Almost 60% of 20 to 39 year olds will be looking to rent by 2025, accounting for a fifth of UK households (source: ONS). These are figures that have been rising steadily since the 1980s, suggesting that the rental property is a safe and lucrative market to invest in.
The cheap pound
Since the results of the Brexit vote were announced, the pound has plummeted in value, losing 15.1% of its value in the past year (link). While this may not spell good news for UK-based investors, this highlights a fantastic opportunity for foreign investors, whose savings are now in an advantageous position to the pound. To put this in to perspective, buying a £300,000 property in November 2015 would cost around €425,000, whilst buying a similar £300,000 property in August 2017 would cost €331,000, a saving of just under €100,000. With this in mind, the current property market is fantastic for foreign investment.
This slight pause that the property market is seeing may spell disaster for some, but can be a perfect opportunity for someone with the opportunity to invest in the market, and particularly so for UK expatriates. However, this can involve a lot of bureaucracy and legal work, and we would always suggest seeking specialist advice when it comes to investing in UK property. If you have any queries or would like to Brunswick about any aspect of investing in UK property, please contact us.