3 Crucial Times the UK Property Market Has Proven its Resilience

Property investment is still widely viewed as one of the safest long-term investment strategies, thanks to the resilience of the UK housing market through multiple economic cycles.

Currently, the UK is emerging from a period of high inflation and elevated interest rates, and many investors remain cautious about where to place their capital. House price growth has cooled slightly, leading some to question whether now is the right time to invest in UK property.

Yet the market continues to demonstrate time and time again its ability to adapt and recover, with forecasts pointing to modest price growth and improving affordability over the next few years.

With that in mind, the following sections look at three key periods in the past when the UK property market proved its strength and resilience, offering useful lessons for today’s investors.

The financial crisis, often referred to as the ‘Great Recession’ has arguably had the biggest impact on the UK economy in the past twenty years, and naturally, an effect on the property market.

A combination of rising house prices, loose lending practices and higher rates of subprime mortgages in the USA caused property values to rise to unsustainable levels. This led to a large amount of foreclosures and defaulted mortgages, which caused the US housing market to crash.

Due to the impact of this, banks around the world began to fail as the world entered into a massive recession.

The UK housing market was affected by this ripple effect, with the average UK house losing 20% of its value through to February 2009.

Industry experts Savills have stated that the effects of the recession were still being felt ten years later.

However, the UK housing market managed to gain momentum over the years following the 2007 crash.

For example:

• House prices bottomed out at £154,452 in March 2009, falling from £190,032 in September 2007. However, this rose by over £10k within six months, suggesting that the property market recovered quickly.
• By April 2010, growth exceeded 10%, a faster rate than before the Great Recession.

This shows that the housing market was able to bounce back far quicker than expected, and despite seeing the worst economic climate of recent memory, the UK property market was able to stay resilient and endure the troubled times.

On the 31st of December 2020, Britain finally took the leap into becoming an independent country as the separation from the European Union was finalised.

The period between the 2016 referendum and the decision being finalised saw many changes to the UK property market. The number of homes being listed for sale in 2018 on Rightmove was 19% lower than in 2017, as sellers waited for concrete news about how Brexit would affect the market.

However, despite the upheaval and uncertainty that this caused, the housing market remained resolute throughout Brexit, as high rental demand led to stability and growth in the sector.

This is because, as a physical asset, property is unlikely to fall in value massively over time. Therefore it is a safer method of investing during periods of economic doubt.

Rising levels of renters meant buy-to-let remained in high demand, rising by 13.9% from 2017-18.

• According to MFS, 77% of investors in 2018 believed that Brexit would likely not affect their investment strategies and that the 2016 referendum did little to affect them either.
• The study conducted by MFS in 2018 also revealed that 18% of investors would consider investing in at least one property in the next 12 months.
• House prices rose by over £8,000 in the 12 months following the 2016 Brexit referendum, suggesting that it did little to affect confidence in the housing market.

The most recent major event to shake up the UK economy, the COVID-19 pandemic,effectively shut down the entire country for several months in 2020.

This naturally affected the property market as transactions dropped sharply in 2020, as many chose to save their money whilst being cooped up in their homes.

However, as lockdowns ended, the property market bounced back in a massive way as investors looked for more stable ways of investing their money. Stocks, shares and cryptocurrencies were hit hard by the pandemic, while property remained relatively stable.

Renters became far more aware of the space they were living in, and as such, demand for high-quality rental properties rose fast. Savills found tenants were looking for larger properties with more outdoor space as many began working from home long-term.

• This meant in 2021, property shot up in value by record-breaking levels. Prices rose by 10% on average over 2021, the highest growth seen in several years.
• In the two years since the first COVID lockdown in March 2020, house prices rose by over £40,000. This is a growth of 18.3%, a massive leap in value.

These reveal how much the property market managed to thrive during the COVID-19 pandemic, as demand for housing caused prices to rise and buy to let investments in the UK to remain a lucrative prospect.

At RWinvest, we are experts in property investment and have over 21 years of UK housing market expertise.

Having been operating for more than two decades, we are one of the nation’s top property investment companies, helping both newcomers and experienced investors find the best buy-to-let properties on the market.

With specialists able to help you every step of the way along your property investment journey, we have some of the best investment opportunities available in hotspots like Liverpool and Manchester.

Our dedicated teams have a vast array of knowledge about the property market and how it has changed over time. Try giving us a call today to find out more.