If you are looking to make investments, particularly for the long term, then it is important to know what is going to give you the best return. We look at the residential property market and help you to decide whether an investment in residential property is something you are considering.
Current State of the Market
The UK market has always been volatile when it comes to house prices. This tends to go in cycles with the market being buoyant at some stages and then suppressed at others. The introduction of buy-to-let mortgages over the last 20 years or so has meant that a lot of people have taken this route as a method to get into property investment, and yet those people that have invested into have made significant gains. The recent uncertainty over Brexit had caused a lot of buyers and sellers to sit on their hands. This suppression of the market was currently causing a slight stagnation of house prices. This had meant that the market was not growing at all.
Future Prospects
Market experts predict that the current stagnation is now not likely to last. We have officially left the EU and Brexit divorce proceedings have started; the market is expected to grow again. The long-term prospects are looking good. The UK population is growing at a great rate and whilst the building rate is growing too, demand is outpacing the supply of new homes. This will likely cause house prices to rise substantially in the future. Investors who have a portfolio of assets are likely to see a good return on investment in the long term. This is particularly true in the buy-to-let market which is growing substantially. As younger people are finding it harder to get onto the property ladder in the first place, there is a growing rental market for people who want their own space.
Regional Variations
Whilst certain parts of the market are failing to grow, there are regional variations. Scotland and the North East are still showing considerable growth in the property market. There are even more subtle variations when it comes to places like London. Overall in London, the market is showing a decline, but this is largely because of the headline properties with big money in places like Kensington and Chelsea. Your £30M villa might be losing money, but the average family home is still seeing a growth in property value. This means that if you are a prudent investor who is prepared to do the work to find the right areas to buy property in then you can make some valuable investments.
Final Thoughts
The tax incentives for buy-to-let properties are being phased out slowly. Landlords are no longer able to offset their mortgage interest costs against their rental income for tax purposes. This means that landlords that have smaller deposits are seeing their profits being eaten into, meaning that more people are switching to buying property to own outright.
