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Why Invest In UK Residential Property?

December 15, 2021

U.K. residential property prices may be experiencing a slow-down in the current climate, but change is inevitable and investing in properties in the U.K. to boost a diversified retirement portfolio is still a long-term recommendation of wealth and fund managers.

While double-digit growth hasn’t been seen for many regions outside of London, there are some strong property investments to be made for those aware of where below market price properties might be found, for instance. Such residential properties move quickly, so having the right investment partners or networks is essential.

Our investors prefer assets they can touch and feel, feeling that pensions and stock markets are complicated, whereas investment in residential property is a commodity is something they can see, relate to and the market is relatively familiar to them.

As many financial journalists find from interviews with people about their preferred investments: You “know where you are with bricks and mortar”. However, in all honesty, many would be investors probably don’t appreciate the various factors impacting on house prices or investing in residential property, for instance: interest rates, population trends, and not least priorities of our political leadership. That last determinant driving housing supply is tricky to evaluate, which is why partnering with experts can make the difference in investing successfully.

Deutsche Bank recently undertook research into various investment asset classes and concluded that house prices have risen on average 3 per cent a year in inflation-adjusted terms since 1939. While their figures, they suggest are not totally precise, this is, however, a trend backed up by analysis by Nationwide Building Society. The graph, below is based on those figures, depicting actual prices paid by buyers since 1975 (with prices adjusted for inflation).

GRAPH 1. Source: https://www.allagents.co.uk/house-prices-adjusted/

 

While there have been plans by recent governments to build 250,000 new homes per year for several years now, those targets have failed to be met, creating constraints on supply, exacerbated by inadequate political commitment. Regardless of current uncertainty for British investors against the Brexit backdrop, the amount of property experts entering the market to secure future returns that exceed traditional financial vehicles continues and overseas investors certainly have confidence in this market, evidenced by London price trends.

Property investment is likely to be the greatest financial risk many profit-seekers can take, regardless of whether planning to resell after refurbishment, or buying to rent. Doing your research will massively reduce not only the emotional risks, such as exuberance, or fear of missing out, but ensure you effectively weigh operating costs against likely profit. However, the financial aspects of investment still pose difficulty for many investors.

A realistic assessment of what you can afford to risk is essential, together with finding out what you can borrow from whom and what the cost of borrowing will mean when weighed against your expected return. If renovations are necessary for your house, this needs factoring in. Operation costs are frequently under-estimated by first time investors. When you estimate a selling price, there will be agents‘ expenses to consider when calculating profit.
Property investment experts can give you access to a range of partners and networks, where exclusive deals are on offer, or bridging loans with independent providers at affordable rates, reliable building contractors and the confidence to proceed, knowing that you are getting advice tailored to your particular situation at every step. With so many variables at play in the U.K.’s current uncertainty, why would you increase your personal financial risk by going it alone?
Contact Roperty’s property investment experts today for sound advice that is appropriate to your particular circumstances. We guarantee to never give advice we would not be willing to take ourselves.

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