Is Now a Good Time to Invest in the UK?

The last few years have been a turbulent time for the UK property investment market. From Brexit negotiations halting people’s faith in the market to the coronavirus outbreak changing how we live, work, and invest, there’s been a lot for investors to adapt to.

In the midst of 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?’ or ‘is now a good time to invest in the global stock market?’.

Contrary to common belief, and despite living through national and local lockdowns due to the coronavirus crisis, right now is perhaps the best 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 invest 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.

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Is Property a Good Investment? 

So, is buying property a good investment? If you’re interested in maximising your income through investment, you should already know that property investment is one of the best and most popular ways to do this.

Property investment has long been considered one of the best ways to make a sizeable return on investment, and it’s a common venture for everyone from first-time investors to overseas buyers.

If you’re still asking, ‘is property a good investment?’, here are some of the major benefits of buying an investment property.

Property Investment Can Bring High Return on Investment 

One of the reasons so many people choose real estate investment over other investment types is due to the returns property investment can bring.

Buying a buy to let property allows investors to make returns from both rental income and capital growth. Depending on the type of property they buy and the area they invest in, these returns can be huge.

Investors that search for the perfect property can make some significant rental returns if their property has high rental yields. They can also make long-term investment returns through capital appreciation if their property grows in value by the time they sell it. But what is a good investment property? And what is a good investment property return?

A good investment property is one that brings in rental yields of over 5% and is based in an area that has a lot of potential for capital growth.

A great investment property, on the other hand, is one that offers rental yields of 7% or over, and is located in an area that not only boasts strong property price growth predictions but also shows evidence of past housing market growth.

When you know where to look, it’s easy to find the best property deals on the market. Spend time researching the UK housing market to find out about the areas with the highest rental yields and fastest-growing house prices.

You’ll also want to think about buying a property in an area that will see consistent levels of rental demand. If you’re looking to buy a residential property in the form of an apartment, young professional renters will likely be your main target group.

Think about ways to make your property appealing to your target group. This could mean making sure the property is near transport links, offers some form of outdoor space such as a balcony or communal terrace, and comes with space for a home office.

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The Real Estate Market is Resilient 

The housing market has proved, time and time again, how resilient it can be. While one of the risks that comes with investing in rental property is the fact that property prices can fluctuate in line with real estate market trends, the property market has repeatedly shown its resilience.

In past times of economic struggle, both the stock market and the property market have inevitably been impacted. However, it’s important to also pay attention to the ways that the property market recovered following these events.

To put things into perspective, let’s look at two of the biggest obstacles the property market and global stock market has seen over the last twenty years.

Lloyds bank during the 2008 financial crisis Lloyds bank during the 2008 financial crisis

The Great Recession 

The Great Global Recession of 2007 – 2009 had perhaps the most profound impact on the property market to date.

According to data from the Land Registry Index, the average price of property in the UK dropped by 18%, with a fall from £189,193 in December 2007 to £154,452 by March 2009. Transactional levels also dropped from 1.65 million to 730,000 from June 2008 to 2009.

While these figures presented a dire outlook for the market as a whole, UK property prices began to recover quicker than expected. By August 2010, average property prices had risen to £173,417, and by mid-2014, had fully recovered to pre-crisis levels.

And what about the global stock market during this time? The Great Global Recession saw stock market prices fall by 49% over a period of 16 months. It then took about four years for the market to recover following the crash.

Brexit photograph with UK and EU flags Brexit photograph with UK and EU flags

Brexit

Brexit has had the biggest strain on both the stock market and the UK property market in recent years, although the impact that Brexit had on property prices was not as dramatic as first expected.

Following the EU Referendum on 23rd June, both a drop in average house prices and a dip in property market activity had been recorded. According to market data recorded by Halifax, property prices in the UK fell by 1% in July 2016 – a much lower drop than the 10% decrease predicted by the Treasury back in May of that same year.

Fast forward to October 2016, and there had been a sharp rise in the price of UK property, with house prices having risen by £2,623 in just one month. By October 2017, UK property prices had grown by 4.5%, and have continued to grow well into 2020, especially in key regions like the North West.

The stock market also experienced a rise in 2019 following the general election, with the share prices of FTSE 100 and FTSE 250 companies having grown by up to 3.4%.

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Investing in Property is Achievable

Buy to let is one of the most popular investment strategies for beginner investors due to property investment 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 can be a lot more affordable due to below-market rates offered by developers. This is common for off-plan properties, which are usually offered below-market value in a bid to entice more investors.

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.

Here at RWinvest, we also offer payment plans for our properties. This allows buyers to split the cost of the property into multiple chunks, to make the payment process more simple and manageable.

What Happened to the Investment Markets in 2020? 

2020 was a year that prompted a lot of people to question ‘is property a good investment right now?’. The coronavirus pandemic had affected a number of industries across the world, and naturally, people became more cautious about whether they should put their money into an asset such as property or stocks.

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

Wall Street in New York Wall Street in New York

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 1987 stock market crash. 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.

It wasn’t until June that stock market 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.

Graph showing The Stock Market Dropped Following the Coronavirus Crisis

The Stock Market Dropped Following the Coronavirus Crisis

March 2020

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

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

April 2020

Graph showing Interest Rates Are Lowered and 95% Mortgages Become Limited

Interest Rates Are Lowered and 95% Mortgages Become Limited

Throughout 2020

Graph showing stamp duty holiday

Rishi Sunak Announces a Stamp Duty Tax Holiday for UK Property

July 2020

London aerial London aerial

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

Due to market uncertainty, 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, in contrast to an increase of 2.1% throughout April 2019.

As of November 2020, however, the UK property market has already made a significant recovery, with prices having risen by 5% in September, followed by a rise of 5.8% by October. According to Nationwide, this is the highest annual rate of growth the UK property market has seen in four years.

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

Interest Rates Are Lowered and 95% Mortgages Become Limited 

Mortgages have undergone a number of changes throughout 2020. Due to the coronavirus pandemic and the financial uncertainty it brought, 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 led to a boost in mortgage applications from both buy to let investors and residential buyers.

No stamp duty poster No stamp duty poster

Rishi Sunak Announces a Stamp Duty Tax Holiday for UK Property 

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

Back in July 2020, chancellor Rishi Sunak announced a stamp duty tax break to last until March 2021, 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, with both buy to let investors and homeowners keen to take advantage of tax savings.

Fantastic Baltic Triangle Location

The Summit

Stylish Baltic Triangle Living

Liverpool Prices from £139,950

Assured 7% Rental Yields

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New Block Just Launched!

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New Luxury Property Investments

Liverpool Prices from £149,500

7% NET Rental Return

Cherry Pick New Units

New Launch

Merchant's Wharf

Salford Waterfront Apartments

Manchester Prices from £249,950

Up to 6.5% Projected Rental Return

55% Below Market Value

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Is Property Still a Good Investment in 2021? 

So, with the events of last year in mind, and the fact that the UK is still feeling the effects of Covid-19 with a third national lockdown in place, is property a good investment for UK investors to make in 2021?

The fact is that right now is a great time to invest in property. If you’re wondering is buying property a good investment to make, read below for some reasons why property investors should purchase property in 2021.

Why is Now a Good Time to Invest in Property? 

1. Amazing Opportunities Currently Available 

Maybe you’re a first-time buyer in the UK property investment market. Or, you could just be an investor who usually invests solely into the stock market but is looking for a way to bring their investment portfolio some diversification.

Whatever your reason to invest 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.’

This quote perfectly summarises the significance of investing during times of economic uncertainty. When others who would normally be buying and selling investments of their own are behaving cautiously, the most successful investors are those who 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. While past statistics have shown that property values tend to drop following rocky periods, this period of low growth is often short-lived.

Liverpool Waterfront Liverpool Waterfront

While the stock market saw a turn for the worse back in March of last year, the property market has opened up new opportunities for investors wondering what to invest in now in the UK. A lot of investors who had tied up money in the stock market are instead choosing to purchase buy to let property and reaping the benefits.

A number of UK developers, including those behind upcoming off-plan projects available with RWinvest, have been offering temporary discounted rates on 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.

Those who were already thinking about investing have found that by buying property in today’s market, they were able to use the extra cash they’ve saved from discounted property rates and put this towards another investment, or save the lump sum of cash for future ventures.

Be fearful when others are greedy and greedy when others are fearful.

Warren Buffet

Vector map of UK Vector map of UK

2. Positive Property Price Growth Ahead

Investors who recognise that now is the best time to invest in property will find that by the time the Covid-19 pandemic has ended, their investments will have grown significantly in value. As previously mentioned, the property market already made a speedy recovery in 2020, and with predictions for huge growth expected by 2024, UK property prices are showing no sign of slowing down.

In October 2020, Savills updated its Residential Market Forecast. While previously predicted a growth rate of 15.3% for the UK by 2024, Savills now expect average property prices in the UK to rise by 20.4% over the same period.

The North West, which was previously predicted to grow by 24% by 2024, now expects growth of 27.3%. London house price growth is still expected to be the lowest in the country, but with a 12.7% growth by 2024 – up from just 4% in the previous report.

Other regions that are set to see attractive growth include Scotland with 25.4% growth, and Yorkshire and the Humber with an increase of 24.1%, while the North East, the Midlands and Wales all anticipate growth of over 20%.

Media City in Manchester in sunlight Media City in Manchester in sunlight

3. High Rental Demand and Rising Rental Prices 

Due to the Covid-19 pandemic and the financial and economic strain it had, many investors were left wondering, ‘is rental property a good investment right now?’. In actuality, now is a great time to invest in rental property thanks to high demand and rising rental prices.

Rental demand has been high in the UK for a number of years, particularly in areas popular with students and young professionals. In 2020, however, the housing market saw a surge in demand for rental accommodation as a result of changing attitudes during the pandemic.

Renters are now more focused on finding apartments and homes that they’re comfortable in, allowing them to easily work from home. This has meant that properties with qualities like high-speed internet and desk space have risen in popularity.

Aerial view of Manchester Aerial view of Manchester

Recent research has estimated that by 2039, the number of UK renters will exceed the number of homeowners. This will be partly due to rising house prices, making homeownership out of reach for a lot of first-time buyers, along with a shift in attitudes towards renting, with many people favouring the flexibility that comes with it.

A number of property experts have predicted that in 2021 and beyond, rental costs in the UK will rise significantly. Savills, for instance, expect rental costs to see a large rise in 2021 before doubling by the end of 2024.

JLL have also predicted some exciting rental market growth. Manchester and Birmingham are expected to lead the way for rental price growth between 2021 and 2025, with a predicted growth of 19.5% in Birmingham and 18.5% in Manchester.

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4. Foreign Investment is Booming 

The property market has shown time and time again how resilient it can be, and many savvy investors have taken advantage of recent economic changes that helped them get the most out of their investment.

Many international investors, for instance, have been investing in the UK property market as of late. With the value of the British Pound against the Dollar having fallen in March 2020 following the worldwide coronavirus outbreak, overseas investors have been able to take advantage of huge discounts on UK property and maximise their investment returns.

The temporary stamp duty tax break, which began in July 2020, also encouraged more foreign investment in the UK housing market. Research taken in July showed that mortgage searches made by advisers for ‘expat not in the UK’ and ‘foreign income’ appeared in the top five search terms.

This has no-doubt contributed to the strength of the UK property market over the last year, and helped make 2021 a good time to invest in property.

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 whether you want longer-term returns or short-term returns.

Following any dips, the stock market tends to fully recover fairly quickly based on past performance. However, since the stock market is highly volatile, the potential losses investors can experience tend to be higher than those seen through property investment. This is why stocks and shares are considered more of a high-risk strategy compared to property.

So aside from the risk-factor, why is property a good investment right now? Why invest in property at a time of such uncertainty? As previously mentioned, when you look at property market predictions, all signs point towards a strong future for UK property investment. In five years, Savills predicts that UK property prices will increase by 20.4%, with an even higher growth of 27.3% expected within the North West region.

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. The covid-19 pandemic led many property developers to offer their properties at below-market value rates as a way to encourage investments.

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.

Stamp Duty Holiday Rishi Sunak Stamp Duty Holiday Rishi Sunak

By purchasing property at a lower price than usual, at a time when property prices are expected to rise, you can significantly boost the value of your investment.

Thanks to the introduction of a stamp duty holiday in July, those who invest in the UK property market as of late have been able to make savings on their stamp duty tax. Until March 2021, buy to let investors are currently able to save as much as £15,000 in stamp duty tax depending on the price of the property.

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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How to Invest in 2021 – Five Things to Keep in Mind

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 now when it comes to UK property opportunities, get in touch with RWinvest.

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.

During this unprecedented time in the market, we’re utilising all online investment tools, allowing potential buyers to take a virtual tour of their property with the help of virtual reality in order to keep our staff and investors safe.

If you would like to enquire about getting started with property investment and want to take a virtual tour or viewing of one of our properties, please contact us today for more information.

We have some fantastic opportunities for property investors to take advantage of, with below-market value apartments in key cities like Liverpool and Manchester.

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

Fantastic Baltic Triangle Location

The Summit

Stylish Baltic Triangle Living

Liverpool Prices from £139,950

Assured 7% Rental Yields

15-20% Below Market Value

New Block Just Launched!

Parliament Square

New Luxury Property Investments

Liverpool Prices from £149,500

7% NET Rental Return

Cherry Pick New Units

New Launch

Merchant's Wharf

Salford Waterfront Apartments

Manchester Prices from £249,950

Up to 6.5% Projected Rental Return

55% Below Market Value