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5 reasons why now is the time to invest in UK property
The first half of 2014 saw an upward curve in UK property prices and with the Office of National Statistic’s reporting that the Government had hit their 2.0% inflation target at the end of Q4 2013 as well as the number of people out of work falling to 7.1%, the stage is set for an economy on the rise.
With this in mind, the UK property market is in good shape with trends in 2014 looking to follow the rises enjoyed in 2013. To put this into perspective, UK Land Registry stated that the average house price in England and Wales rose to £172,069 in April, which represents an annual growth of 6.7%. Property prices have risen at their fastest pace in almost 4 years.
Let’s look at 5 reasons which will explain why now is the perfect time to consider investing in the rising UK property market.
Rental yields are strong and rising
With rents rising steadily and with demand for rental properties at an all-time high as a consequence of tenants renting for longer periods of time, landlords now benefit from strong rental yields from their property investment.
Data released by Move With Us have shown that in May, the average cost of renting a property across the UK increased to £1,006 per month.
Recent figures show that there has been no decline in demand, with Countrywide reporting that there are around 10 potential tenants after each rental property that came to market across the country.
UK commercial property is performing well
The UK’s commercial property market is going from strength to strength, with returns in the first half of 2014 reaching the highs recorded back in 2010.
The IPD UK Monthly Property Index showed that UK commercial property values increased by 0.8% in April. This marked the twelfth consecutive month of growth recorded by IPD, with values now 8% higher than they were one year ago.
It seems that 2014 is fast becoming the year of commercial property investment. Knight Frank expects increased levels of overseas investment in the UK’s commercial property sector partly due to relaxation in rules in Taiwan. An influx of Taiwanese investment may increase investment levels by 15%.
Strong demand also fuelled by overseas investors
According to reports, overseas investors who purchase property in the UK – especially those who buy property in London – are helping to fuel the market.
Think tank Civitas has stated that wealthy investors purchasing homes are driving up prices.
Improvements in mortgage lending and government schemes have also helped push prices up, with more first-time buyers now purchasing properties across the UK.
Despite the rising number of buyers, demand in most cities is unable to keep up, making now a good time to buy if the investment is right for you.
Range of non-traditional UK property buy-to-let assets available
It’s not just traditional property assets that are performing well. Student accommodation, care home rooms and less traditional options like car park spaces and self-storage units are performing well.
As outlined above, the UK property market is witnessing a revival with rising prices and increasing rental returns. Whilst the more traditional investments are experiencing a rise in prices and yields so too are the assets classed as Income Generating Assets.
Most investors know more about the mainstream, every day investments like residential buy-to-let or commercial property such as offices and hotel investments, however not every asset class is as widely known.
Student Property Investment
Named the UK’s number one performing asset class by Knight Frank, student property investment has outperformed all other asset classes since 2011. Rising student numbers coupled with high occupancy rates has created a strong demand, therefore good returns, in some of the country’s top university towns and cities. Knight Frank forecast that returns will continue to rise throughout 2014.
Care Home Investment
Due to the non-discretionary nature of the care homes, investment in the sector has remained strong. A rising ageing UK population coupled with a lack of high-quality rooms has helped propel Care Home Investment into the mainstream, with many investors receiving strong returns due to strong occupancy levels.
Lower entry level commercial property investments such as Self-Storage and Car Park Spaces have proven popular with those looking to diversify their portfolio. Both sectors have a rising demand in the UK and when located in an area of high demand, will provide investors with a regular and passive income. Typically these kinds of investments offer a lower entry level into the UK’s property market, making them an appealing option for those with a smaller budget.
Stable and clear property ownership laws
Known for its transparent nature and flexibility, the property market in England and Wales offers a broad variety of investment options.
It is appealing for overseas purchasers due to attractively priced assets and the current lack of restrictions on foreign nationals or overseas companies buying or renting property (subject only to tax implications).
Clear, established and transparent property ownership laws help to negate uncertainty in the UK’s market, making it appealing to those based overseas. Uniquely the market is known as a trusted and well-established market, making it a good location for property investors.
This article was written by Experience Invest, a property investment company based in central London. Experience Invest provides investors with exclusive access to market leading products. Opportunities are tailored for the current market conditions and promote personal wealth through safe and intelligent portfolio management.