The UK Property Market: Thriving Beyond Brexit.
The United Kingdom’s decision to leave the European Union has been a topic of much discussion particularly around the time leading up to Brexit and for several months after. Many investors were and still are concerned about the impact it will have on the UK property market. While there have been some short-term effects, such as uncertainty and a drop in property prices, the UK property market has shown remarkable resilience and adaptability in the face of change. In this article, we will explore how the UK property market is navigating Brexit and beyond and provide some guidance for investors looking to capitalise on the current market trends.
UK PROPERTY MARKET
Whilst there is no doubt that Brexit has had a considerable effect on the UK and the UK property market, it has also presented new opportunities, and savvy investors are looking to take advantage of these opportunities. As the UK redefines its place in the world, there is potential for the property market to thrive and evolve in exciting new ways. The UK has a long history of stable and resilient property markets, and there is no reason to believe this won’t continue as the country adjusts to its new status outside of the EU.
In the immediate aftermath of the Brexit referendum, there was some uncertainty and volatility in the UK property market. This was largely a short-term effect, and the market has since stabilised with record growth in many areas of the UK. While there was a slight decrease in property prices in some areas, this has been largely offset by increases in other regions of the UK. Overall, the UK property market has shown remarkable resilience in the face of change and has weathered the initial storm very well. In fact this is seemingly a reoccurring trend where any major event or threat to the UK property market that’s expected to have a negative impact, doesn’t materialise, there are a few reasons why this is but we believe the main reason for this is the distinct undersupply of property hitting the UK market each year.
The UK government has set targets for housebuilding in order to address the country’s housing shortage and increase affordable housing options for citizens. The current target is to build 300,000 new homes per year by the mid-2020s.
However, the government has struggled to meet this target in recent years. (Source: Property Reporter) In 2020, only 244,000 new homes were built, which was an improvement from the previous year but still fell short of the target. Additionally, the COVID-19 pandemic and associated restrictions have slowed down construction projects and further impacted the government’s ability to meet their housebuilding goals.
Despite these challenges, the government has continued to prioritise housebuilding and has implemented various initiatives to encourage and support the construction of new homes. These initiatives include measures to incentivise developers to build more affordable housing, streamline planning processes, and provide funding for infrastructure improvements to support new developments, yet the level of new homes is still not sufficient enough to cope with demand.
It’s this widening gap between supply and demand that will always lead to resilient and robust responses to turbulent conditions from the UK property market and Brexit is no exception to this. Whilst prices will drop in the short term, due to the above, the property prices will always rise again not too long after due to the supply vs demand gap.
Looking to the future, there are many reasons for optimism in the UK property market. The country’s departure from the EU could lead to new trade deals and relationships with other countries, which could create new opportunities for investors in the property market. There is also the potential for the UK property market to evolve in exciting new ways, as the country adapts to its changing status in the world.
It’s important to note that the impact of Brexit on the UK property market will vary depending on location. While London may have seen a slight decrease in demand in the short-term, other regions of the UK have seen a rise in demand for properties. For example, the North of England has seen significant investment in recent years, which has led to an increase in demand for properties and a rise in property prices. Investors should consider the regional differences in the UK property market when making investment decisions.
For investors looking to capitalise on the current market trends, there are several strategies to consider. One approach amongst others is to invest in new and innovative property developments, such as student green buildings or co-living spaces, which are becoming increasingly popular with younger generations. Investors should also consider the long-term potential of their investments and focus on properties that are likely to appreciate in value over time.
Below are a few other strategies investors could employ to make the most of the post-Brexit market conditions:
With the rise of platforms such as Airbnb, short-term rentals have become increasingly popular among travellers. This presents an opportunity for investors to purchase properties in popular tourist destinations, such as London or Edinburgh, and rent them out on a short-term basis. By doing so, investors can generate a higher return on investment than they would with a traditional long-term rental.
The UK has a large student population, which presents an opportunity for investors to capitalise on the demand for student housing. Investing in student housing can provide a stable source of income, as students typically rent for the duration of their studies. Void periods are also low as most students will pay for 51 weeks of the year, often in advance at the start of the year. Additionally, investing in student accommodation in university towns or cities can provide a steady stream of tenants. Yields tend to be higher than traditional buy to let with student accommodation also.
In addition to residential property, commercial property can also provide an opportunity for investors to profit from the UK property market. Investing in commercial property, such as office buildings or retail spaces, can provide a reliable source of rental income and appreciation in value over time.
In conclusion, the UK property market is thriving beyond Brexit, with new opportunities and exciting possibilities for investors. While there may be some short-term uncertainty and volatility, the UK property market has historically been stable and resilient, and there is no reason to believe this won’t continue in the future. By focusing on the opportunities presented by Brexit and being strategic in their investments, investors can navigate the changing landscape of the UK property market with confidence. The UK property market is an excellent choice for savvy investors looking to capitalise on the current market trends and build long-term wealth.