Now that we’ve looked at what happened to the UK housing market in 2021 and 2022, it’s time to assess if now is a good to invest to invest in property and if you should invest in property now or wait.
Below you will find reasons why it is a good time to invest in property and why it may not be the best idea for you in 2023.
Yes, It’s a Good Time to Invest in Property
1. Substantial Capital Growth In 2023 and Beyond
Thanks to the huge capital growth potential in the UK, real estate investors can earn some serious landlord profits in 2023 and beyond.
Over the past year, UK prices have increased by over 4.1%, and this can get even higher depending on where you buy the property.
For instance, in Liverpool, property prices increased by over 7.19%.
This is why research is vital for a property investor, as you can find a seriously profitable investment in 2023 depending on what city you buy your property.
2. High Rental Demand and Rising Rental Prices
Alongside the huge capital growth, buy to let property is also thriving in 2022 and 2023.
Over the last 12 months, rental income reached a record-high of £1,213 PCM, thanks to high demand seen across the UK rental market.
Rental demand has been high in the UK for several years, particularly in areas popular with students and young professionals.
In 2021, however, the housing market saw a surge in demand for rental accommodation due to changing attitudes during the pandemic.
Renters are now more focused on finding apartments and homes that they’re comfortable in, allowing them to efficiently work from home.
This has meant that properties with qualities like high-speed internet and desk space have risen in popularity.
Due to this higher annual rental income and affordable prices, the average UK rental yield has exploded, with cities like Manchester offering almost 9% gross rental yields.
The future of the rental market seems safe, too, with research estimating that by 2039, the number of UK renters will exceed the number of homeowners.
3. The Real Estate Market is Resilient
Despite some concerns surrounding investment in 2023, it’s important to note that the housing market has proved time and time again how resilient it can be.
While one of the risks of investing in rental property is that property prices can fluctuate with changing real estate market trends, the property market has repeatedly shown its resilience.
With the likes of Brexit and Covid-19 decimating the stock market and causing the worst crash since 1987 in 2020, property has remained strong, providing a welcome boost of certainty in the face of Covid variants like Omicron.
- Brexit – Despite the huge economic uncertainty following the Brexit vote, property prices only fell by 1% in July 2016 despite a 10% decrease predicted by the Treasury. Soon after, property prices rose by £2,623 in October 2016 alone. We’re now firmly in post-Brexit Britain and property prices have never been higher, reaching a record-high of over £250,000 according to Nationwide.
- Covid-19 – After the UK property market closed between March 26th and May 13th 2020, property prices only fell by -1.02%. They then saw a huge uplift after the market reopened, experiencing an overall increase of £37,621 since the start of the Covid-19 pandemic.
Thanks to this resilience, property investors can feel confident that their rental property will remain an income-generating investment for many years to come.
4. Positive Property Price Growth Ahead
Another reason why you should invest in property now is the considerable property price growth anticipated in the coming years.
Industry experts Savills recently updated their renowned long-term huge growth predictions up to 2027, with the UK expected to see a 6.2% rise in property prices by 2027.
This gets even higher in certain locations, with the North West and Yorkshire and The Humber expected to see an 11.7% rise in prices.
Rent is also set to rise, with the same report finding that rent will increase by 18.3% by 2027.
Again, this is why research is important in UK property to maximise your investment and choose areas with high growth potential.
5. Amazing Opportunities Available in 2023
Maybe you’re a first-time buyer in the UK property investment market. Or, you could just be an investor who usually invests solely in the stock market but is looking for a way to build a diversified portfolio.
Whatever your reason to explore investments in the UK property market, the time to start investing in UK property is now.
As Warren Buffet once said:
‘Be fearful when others are greedy and greedy when others are fearful.’
When others who would normally be buying and selling their own investments are behaving cautiously, the most successful investors act fast and take advantage of every opportunity to build wealth.
There’s a lot of evidence to suggest that right now is the best time to buy property for investment purposes. Property prices are set to continue rising massively, and many UK developers have started offering temporary deals for their properties.
Savvy investors who are prepared to negotiate will find that they’re able to get the most for their money on top of the already below-market rates that come with off-plan properties.
6. Investing in Property is Achievable
Buy-to-let is one of the most popular investment strategies for beginner investors due to property investments being a lot more achievable than some other types of venture.
First-time buyers of investment properties will often have lower budgets available than those who are more experienced.
Compared to the process of buying a home to live in, purchasing buy-to-let properties, particularly those that are off-plan, can be a lot more affordable due to below-market rates offered by developers.
For those who can’t afford to pay for their investment in cash, buy-to-let mortgages are available.
Investors can use part of their rental income to meet their monthly mortgage payments, which often still allows for a significant rental income depending on rental yields.
Payment plans also allow buyers to split payments into smaller chunks to make the payment process more manageable and straightforward.