Is property in the UK still a good investment?

by Jodi Rutherford

Regardless of the Brexit outcome, UK property prices are still expected to rise into the future. This is why the UK property market still remains one of the most reliable methods to generate long-term wealth. As the fundamentals of this sector are sound, investors can enjoy a sense of stability that might not otherwise be possible.

There is no doubt that we have witnessed some turbulent times within the United Kingdom. The majority of this volatility stems from the fact that the chances of a so-called “hard” Brexit have exponentially increased over the past few months. With even leaders such as the new Prime Minister Boris Johnson admitting that a no-deal scenario is now more of a likelihood than ever before, many investors are left scratching their heads. This is particularly the case for the real estate market, as this sector is traditionally considered to represent a safe haven when compared to other areas. Is this still a sound investment? What other factors need to be taken into account? How can you take advantage of such a changing climate without risking fiscal losses? Let’s take an in-depth look at these understandably important questions.

Putting the Brexit Situation Into Perspective

Those who spoke of a no-deal Brexit immediately following the 2016 referendum were viewed as political and economic pariahs; harbingers of doom and employing nothing more than scaremongering tactics. It now seems as if these individuals were more in tune with the outcome than originally imagined. With major nations such as Germany stating that there is a “high probability” of such a scenario occurring, the markets are logically concerned. This is one of the reasons why the FTSE and other benchmark indicators could be entering into more bearish territory in the coming weeks and months. Indeed, the falling values of the pound seems to indicate that investors are hedging their bets while preparing for the worst. The fact that the so-called “Eurocrats” feel that Boris Johnson is a relatively easy PM to read in terms of policy seems to solidify their perspective that a hard Brexit could very well come to pass.

The Translation Into the Housing Market

Putting all potential doom and gloom aside for the moment, we need to take a look at some stark statistics in order to appreciate what has occurred within the UK housing markets. Values have fallen by 16.5 per cent during the last 12-month period. The fact that the government may be cut its base rates before December places even more uncertainty within this sector.

This is not the only concern for property investors. Another key observation emerged from the Office for Budget Responsibility. Officials claimed that a no-deal Brexit would see prices fall by an additional 10 per cent through to 2021. A handful of other figures seem to reinforce the observations highlighted above:

  • Aggregate house prices have fallen since the initial referendum.
  • Prices within England are particularly weak; showing a per annum growth of just 0.97 per cent.
  • Northern Ireland has fared slightly better with an annual growth rate of 3.47 per cent.

All of these observations seem to paint a rather bleak picture in regards to the outlook of the property market sector and yet, we need to take another variable into account.

The Future of the UK Housing Market: Putting it All Together

This article has intended to highlight some of the main points to take into account in regards to the current state of the UK property market. To be absolutely clear, not even the most seasoned analysts possess the proverbial crystal ball. A no-deal Brexit is indeed likely to cause strain upon the economy of the United Kingdom. However, the crucial takeaway point is that property fundamentals still remain quite strong even if the surface appears muddled at the present.

Whether referring to first-time home buyers or individuals who may be looking to provide their existing portfolios with an extra degree of financial stability, UK real estate still represents an extremely lucrative venture. The key is to remain focused upon the horizon as opposed to any stumbling blocks that might appear along the road. Those who are able to embrace such a circumspect viewpoint should be able to capitalise upon the many opportunities which await.

Remember, you can do a quick online valuation of your home using our online valuation tool 

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