Is Now a Good Time to Invest?

Is now a good time to invest during the Covid-19 pandemic? If you’re feeling cautious, read our in-depth guide to find out why you should still invest right now. 

Is Now a Good Time to Invest

Amid the uncertainty that currently surrounds both the property market and the economy as a whole, many investors are asking, ‘should I invest in property right now or wait?’ and ‘is now a good time to invest in the global stock market?’. 

Perhaps surprisingly for many, right now is actually a great time to invest if you want to maximise your investment returns.  

If you’re a frequent or first-time investor who’s feeling cautious about whether or not you should start investing during this time, make sure you read this guide.  

In our guide, we look at the resilience of the property market, compare investments in the stock market vs. property during this time, and examine opportunities available to savvy investors right now.  

We also give an informed answer to the questions – is property a good investment, and is now a good time to invest in the UK? Keep reading to find out more.  

What’s in this guide? 

  • Information on why property investments make a great investment option for building a diversified portfolio. 
  • Tips on whether you should invest in property or buy stocks. 
  • Past performance and future performance for the UK housing market. 
  • Whether now is a good time to invest.  

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Is Property a Good Investment?

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What Happened to the Investment Markets in 2020?

2020 was a year that prompted many people to question ‘is property a good investment right now?’.  

The coronavirus pandemic had affected many industries. Naturally, people became more cautious about whether they should put their money into property or buy stocks.  

Here are some of the biggest things that happened to the investment markets during Covid-19.  

On the 12th March, the Dow (Dow Jones Industrial Average) saw a downturn in stock and share prices, with a drop of 10%.  

This was the highest drop since the stock markets crash of 1987. Volatility also surrounded other investment assets such as gold, for which prices plunged during March.  

This stock market drop prompted many people to exit out of their investments in stocks and shares and buy property instead. Many also purchased property as a way to build a diversified portfolio. 

It wasn’t until June that the stock markets prices had risen to a three-month high. However, once it was announced that the UK was in a recession back in August, the FTSE fell once again, highlighting the instability of the stock market throughout 2020. 

UK property prices dropped following the national lockdown back in March 2020. With a slowdown in market activity, average UK house prices reportedly fell by 0.2% in April. 

However, the UK property market made a significant recovery, with prices having risen by 5% in September, followed by a rise of 5.8% by October.  

By May 2021, it was reported that house prices experienced an annual increase of 9.5%, with the strongest growth in seven years.  

Not only this, but rental market activity has seen a boost, with June 2020 seeing a 22% increase in rental market demand. 

In 2020, many mortgage lenders limited their availability of 95% mortgages, with some lenders requiring minimum deposits of up to 25%. 

This made buying a property more difficult for first-time homeowners and further boosted demand for rental accommodation.  

Lower than normal mortgage interest rates also boosted mortgage applications from both buy to let investors and residential buyers.  

Stamp duty tax is a tax that is usually payable on buy to let properties, second homes, or first-time properties depending on the price.  

Back in July 2020, chancellor Rishi Sunak announced new stamp duty tax rules in the form of a stamp duty holiday, requiring homeowners to only pay stamp duty tax on properties with a value of over £500,000.  

For buy to let investors, 3% tax is still payable on properties with a value of up to £500,000, which is significantly lower than the usual rate.  

Since the stamp duty holiday was announced, levels of UK property market activity and property investment during lockdown have soared. The stamp duty holiday will end in June 2021, with smaller discounts still available until September.  

The Stock Market Dropped Following the Coronavirus Crisis

On the 12th March, the Dow (Dow Jones Industrial Average) saw a downturn in stock and share prices, with a drop of 10%.  

This was the highest drop since the stock markets crash of 1987. Volatility also surrounded other investment assets such as gold, for which prices plunged during March.  

This stock market drop prompted many people to exit out of their investments in stocks and shares and buy property instead. Many also purchased property as a way to build a diversified portfolio. 

It wasn’t until June that the stock markets prices had risen to a three-month high. However, once it was announced that the UK was in a recession back in August, the FTSE fell once again, highlighting the instability of the stock market throughout 2020. 

Property Prices Dipped Due to Covid-19 Lockdown Before Rising to Record Levels

UK property prices dropped following the national lockdown back in March 2020. With a slowdown in market activity, average UK house prices reportedly fell by 0.2% in April. 

However, the UK property market made a significant recovery, with prices having risen by 5% in September, followed by a rise of 5.8% by October.  

By May 2021, it was reported that house prices experienced an annual increase of 9.5%, with the strongest growth in seven years.  

Not only this, but rental market activity has seen a boost, with June 2020 seeing a 22% increase in rental market demand. 

Interest Rate and Mortgage Changes

In 2020, many mortgage lenders limited their availability of 95% mortgages, with some lenders requiring minimum deposits of up to 25%. 

This made buying a property more difficult for first-time homeowners and further boosted demand for rental accommodation.  

Lower than normal mortgage interest rates also boosted mortgage applications from both buy to let investors and residential buyers.  

Rishi Sunak Announced a Change In Stamp Duty Tax Rules For UK Property

Stamp duty tax is a tax that is usually payable on buy to let properties, second homes, or first-time properties depending on the price.  

Back in July 2020, chancellor Rishi Sunak announced new stamp duty tax rules in the form of a stamp duty holiday, requiring homeowners to only pay stamp duty tax on properties with a value of over £500,000.  

For buy to let investors, 3% tax is still payable on properties with a value of up to £500,000, which is significantly lower than the usual rate.  

Since the stamp duty holiday was announced, levels of UK property market activity and property investment during lockdown have soared. The stamp duty holiday will end in June 2021, with smaller discounts still available until September.  

Right now in the UK, prices are rising at record-levels but are still affordable when you know how to get the best deals. Many of our properties are available to buy for less than £100k, with huge growth expected over the coming years!

Amy Jackson, RWinvest

Is Property Still a Good Investment in 2021?

Merchant's Wharf - Exterior Merchant's Wharf - Exterior

Should I Invest in Property Right Now or Stocks and Shares? 

So, is property still a good investment right now, or should you look at investing in the stock market as an alternative?  

The type of investment you choose to make largely depends on your risk tolerance and the type of returns you want.  

Typically speaking, stock market investments are more high-risk than property. Since the stock market is highly volatile, the potential losses investors can experience tend to be higher than those seen through property investment 

So aside from the risk factor, why is property a good investment right now? Why invest in property at a time of such uncertainty rather than buy stocks?  

As previously mentioned, when you look at property market predictions, all signs point towards a strong future for UK property investments 

For those looking to maximise capital growth through their property investment venture and benefit from high long-term returns, this future growth in house prices means that now is a great time to invest.  

The amount of money needed to spend on a property investment purchase is currently lower than usual due to discounts and tax savings.  

Take our latest Manchester investment opportunity, Merchant’s Wharf. This property is available to purchase at up to 55% below market value and comes with up to 6.5% rental yields 

When you purchase property at a lower price than usual, at a time when property prices are expected to rise, the greater your potential returns will be in the future. 

If you have the funds available, rather than simply leave your money untouched or dwindle away huge amounts on home improvements, getting started with investing could help you build wealth over time.  

For high rental returns, enhanced capital growth, and the lowest possible rates, don’t hesitate to explore UK buy to let opportunities. 

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Find a Buy to Let Opportunity With RWinvest 

If you’re still wondering ‘should I invest in property now or later?’, asking ‘why invest in property right now?’, and feeling unsure about what to invest in when it comes to UK property opportunities, contact us today.  

We’re happy to talk you through the fantastic offers currently available and help open your eyes to the fact that the time to start investing is now.  

We have some fantastic opportunities for property investors to take advantage of, with below-market value investments in key cities like Liverpool and Manchester. With high yields and prices to meet all budgets, we can help you meet your investment objectives. 

To find out more about how the property market could perform in 2021, look at our house price predictions 2021 guide, containing a summary of what happened in 2020 and expert insights on what to expect. 

Disclaimer: 

This guide was last updated in June 2021.  

The content in this guide is offered as guidance only and is not financial advice. For expert advice on making smarter financial decisions, seek out the financial services provided by a financial advisor.