UK Property Remains a Good Long-Term Investment


Why Buying UK Property Remains a Good Long-Term Investment

Many potential house buyers and sellers have adopted a wait and see policy on Brexit before they make their move one way or the other.

With fears of a house price crash, buyers are hesitant to buy now while sellers are worried the value of their property may drastically drop.

While no-one can be completely sure what effect Brexit will have in a deal or no deal scenario, there is plenty to suggest that buying a property is still a good investment when looking at the bigger picture.

Brexit or no Brexit, Britain has been struggling with the balance of supply and demand in the property market.

Many new ‘affordable’ homes are being built or are commissioned to be built in the next few years which could help to lower house price growth for a little while before the supply is overwhelmed by the demand once more.

There is still a high demand for low availability so even though house price growth is slowing, it is still growing meaning the longer you wait, the more you will have to pay. It is possible the demand may lower with new taxations laws on Buy-to-let and higher stamp duty making the property market less attractive for landlords. If fewer landlords buy properties then there will be more properties listed for sale rather than for rent.

Despite the low availability, the Halifax House Price Index shows that mortgage approvals are growing by roughly 2% month-on-month and is at a higher monthly average than the average over the past five years due to increased levels of employment and the fact that wages are rising at a faster pace than inflation.

The data suggest that the long-term issue for home-owners to consider is their household finances rather than house prices.

If you wait to see the full impact of a post-Brexit Britain on the property market, you could miss out on a chance of using Help-to-Buy schemes. From 2021, Help-to-Buy will only be available to first-time buyers and for homes with a market value up to the price cap for new regional properties before the scheme ends in 2023. Read more.

It is not yet known what kind of Brexit we are going to have but one outcome with a transition period may mean that the process won’t be finished by 2021 which could mean you miss out on Help-to-Buy if you don’ t act soon.

The big worry coming from reports on Brexit is that there will be a dramatic crash in house prices. While you may look to that for a chance to get onto the property market with cheaper prices, it is likely the interest rates could rise to as high as 5.5% striking out any advantage you may think you have to wait for a crash.

It should be said that interest rates look likely to rise anyway with them being so low at the moment but a housing price crash would dramatically increase it.

For all the doom and gloom surrounding Brexit, Savills Estate Agents predict that house prices could rise by 15% over the next five years regardless of what kind of Brexit we face. There is a feeling among those in the industry that the whole process is cyclical, that house prices go up and down over time regardless of specific circumstances. It is likely in the immediate aftermath of Brexit that house prices will fall but this will be a short-term problem as the fall of the value of the sterling often is.

This potential fall might help to bring a balance to the rising house prices over the last decade but growth is predicted in the UK after Brexit, even if Brexit causes it to grow at a slower pace, so house prices will be on the rise again so if you’re ready to start buying a property for the long term, you should accept that now is a good time on the cycle to buy and there will be a good time on the cycle to sell in future if you wish.

Property page updated on 29th April 2021 by James Bougon