The UK Property Market 2018 & 2019: What’s Happened & What to Expect

Brexit, a year on. Four months to go:

On June 23rd 2016, the UK public voted to leave the European Union, an outcome few predicted. However, almost two and a half years on from the Brexit vote, the financial crash that cynics have been predicting is yet to arrive.

A year ago, we wrote about Brexit and what it meant then. Here, we now revisit it and see if anything has changed in the previous 12 months in the lead up to March next year.

In terms of the UK property market, prices have either plateaued or risen at a slowed rate. One of the reasons for this continued growth in property prices, and the level of inward investment, is down to one simple metric: Supply and Demand. The UK has an immense shortage of properties and each year falls well short of the target of 250,000+ new homes. With the elderly generation living longer and a rising young population looking to move out of their family home – either as a first-time buyer or renter, all of these factors put more pressure on the UK property market, which in turn forces prices (and rents) upwards or to remain the same. Unless properties are built, this is likely to continue into 2019.

Probably one of the biggest impacts of Brexit to date is the effect on buyers within the UK property market. Confidence has dropped dramatically according to the official surveyors’ body with the number of sales falling and sales taking a record amount of time to complete. The Royal Institution of Chartered Surveyors (RICS) says the time taken for completion of a property sale has reached a record 19 week, the largest amount of time since RICS started collecting data. The uncertainty of Brexit has stopped people moving.

Also, within the UK property market, areas such as Manchester and Liverpool are still receiving billions of pounds of inwards investment which in turn is creating jobs and more investment opportunities. And they’re not the only areas. Regeneration projects are taking place all over the country, all great in boosting local economy.

Overall opinion is that although there is uncertainty around Brexit, there is enough evidence to suggest there are still, and will be, some excellent property investment opportunities within the UK property market in 2019. And with the main question being asked through all of this is ‘should I buy a house/property investment?’, the simple answer is yes. Property should always be considered a mid to long term investment. The term, ‘safe as houses’ springs to mind.

 

The Buy to Let market:

The Buy to Let market has become much more challenging for investors in the last year for a number of reasons. New legislation introduced has hit landlords’ profits: such things like limited mortgage interest tax relief and recent interest rate rises have seen Buy to Let mortgage costs rise again. This is expected to continue into 2019 for the UK property market.

Since the introduction of new tax reforms for landlords in the Buy to Let market, official figures report that around 3,800 rental properties are being sold each month. With profits taking a hit, landlords have tried to negate this loss by raising rents, but this has not proved successful. In the last 12 months, prices have only increased by approximately 1.18% which is the slowest annual increase in the last five years.

 

Potential new homes available

Since the introduction of abolished stamp duty for first time buyers, according to the Chancellor Phillip Hammond, it has helped 121,500 people and the number of first-time buyers is at an 11-year high.

However, analysis from the BBC suggests that House Building levels are ‘below pre-crash levels’ in the UK property marketing. To try and combat this, Mr Hammond has promised a further £500m for the Housing Infrastructure fund – a pot of money that local councils can apply to for help with building homes. This should in theory provide enough extra money for around 650,000 more homes to be built across England. On top of this, a £675m fund is being created to help councils renovate their main high streets and shopping zones. Whether this is to modernise the retail areas or convert unused commercial buildings and shops into homes. Estimates suggest as many as 300,000 to 400,000 residential properties could be created by utilising empty space above shops.

From an investment perspective in the UK property market, only time will tell. It has been widely reported that the current government is far behind target in terms of house building. However, if the above does happen, it could make for some extremely exciting residential investment opportunities throughout the country.

Read our other blog on upcoming and ongoing regeneration projects across the UK.

 

Life Tenancy Investments

For us, Life Tenancy Investments are going from strength to strength. With investors concerned, whether it be Brexit or they think there is a potential financial crash coming, people are always looking to invest in property. Being able to buy a residential property at an average of 47% below the equivalent RICS valuation, provides a good level of security against any down turn in the property market in 2019. And with Buy to Lets in dire straits, more and more landlords are looking at alternatives to help diversify their portfolio.

Throughout most of 2018 and continuing into 2019, we are working with some large financial institutions to make Life Tenancies even more available to everyone. This is an extremely exciting development for Wakeley and our investments, so watch this space.

But in the meantime, we are continuing to become a staple of any investors portfolio and an exciting alternative residential investment of choice in the UK. With Life Tenancy investments requiring much lower maintenance, we have seen a real influx of first time or ‘novice’ investors approaching us first, before diving into more traditional residential investments.

 

In summary, from the information we all have access to, things are nowhere near as bad as some cynics would like you to think. Property is property and will always be one of the safer investments for your money. Only time will tell what impact Brexit will have, if any. However, with money still being pumped into property development up and down the country, there are still numerous opportunities if you look closely.