Market Update: why its not all bad

Anyone who has been following the UK news lately might be very sceptical that the UK would still provide good investment opportunities. However, if you look a bit closer, you’ll find that the current market is significantly more resilient than many news sources would have you believe. This article is here to show you that despite the current situation there is still plenty of opportunity, especially in UK real estate.

Interest Rates

Interest rates have been rising lately. However, this is nothing new, interest rates have fluctuated over the past few decades and the current rises are nothing but necessary. The fact that interest rates are rising may make investing appear risky, but it shouldn’t be a deterrent. For instance, investors who bought real estate in 1979, when rates were as high as 17%, have seen excellent price increases and returns on their investments ever since.

Safe Haven

When you look at the worldwide picture the UK’s property market is still a safe and sound investment. The UK’s economy and currency continue to be very stable, making it less risky for investors from overseas because of its lower economic volatility.

The UK housing market has shown consistent growth over the last century, with house values doubling on average once each decade to fifteen years. Therefore, even if housing prices fall like many media are proclaiming, its shouldnt be too dramatic as it is natural to see a correction and nothing to be alarmed about.
With the pound depreciating currently against currencies tied to the dollar, foreign investors can save a lot of money on real estate.

Inflation

Inflation is never framed in a positive light, however, for real estate, it is not as phenomenal as implied. During periods of inflation, real estate prices also rise making it a good hedge against inflation. Rental expenses have gone up across the board, for instance, Birmingham experienced an increase in advertising of 17.6% in the last year. 

Another way inflation can benefit real estate investors is through a mortgage. The value of the repayments decreases with higher inflation. Therefore investors with buy-to-let mortgages essentially end up paying their mortgage company less cash.

Stamp Duty

Chancellor Jeremy Hunt has decided to keep up stamp duty land tax cuts. This means that property investors can save up to £2500 on their investment. Kwarteng increased the threshold for UK buy-to-let investors to pay 3% stamp duty from £125,000 to £250,000. This enables investors to save significant amount of money on a second property and reduce the amount of tax paid in the initial purchase.

Overall with demand exceeding supply, stamp duty land tax cuts and continued price growth, this is as good a time as always to get into the property market.

Please get in touch if you have any questions or want to know how you can get involved in the property market.

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