British realty is growing in price by 11% annually, according to analysts. Despite the instability of the global economy, the crisis that resulted from COVID-19 and lockdowns, the property market proved to be quite stable.
What are the reasons for the increase in housing prices?
According to property portal Rightmove, the value of a realty reached a new record in July at £369,968, strengthening its position by 0.4 per cent. At the same time, the demand for housing increased by 26% compared to 2019.
Among the reasons for the price increase, analysts state:
⁃ increase in rates on mortgage loans;
⁃ impact of inflation and economic fluctuations;
⁃ high demand for real estate;
⁃ decrease in activity of the construction industry market and increase in costs for the construction of new facilities;
During the pandemic, the property market in Britain has dipped, although it has remained relatively strong compared to other sectors. Over the past year, there has been an accumulation of demand, which provokes new activity. In addition, the shortage of realty space fuels the interest of buyers in the topic of purchasing square meters.
Prospects for the development of the realty market
Savills UK, one of the leading real estate agencies, in its forecast speaks of a gradual decrease in the cost of square meters over the next 5 years. At the same time, 2023 will be the peak year in terms of cost.
Instead, Jones Lang LaSalle, a leading provider of real estate services, says 2022 is just the beginning of a boom in property demand and prices. According to their forecasts, realty values in Manchester alone will increase by 26% by 2026. According to government figures, the annual shortfall is about 100,000 new homes. The supply index has already fallen to 9.5% compared to last year, whilst demand is up by 16%.
Even with rising mortgage rates, investing in real estate remains a good idea because, according to forecasts, if the market goes down, it will not lose more than 1% per year.
Property as a way of passive income
The global economic outlook forces of the British to think more and more often about additional ways of earning and creating financial cushions. Money can work, but how in conditions of crises?
Experienced investors and experts claim that property shouldn’t be underestimated compared to other areas of investment, especially when it comes to Britain. The country is replenished with hundreds of thousands of immigrants every year, and there are no more square meters. Even the rent is growing annually by at least 3%, and in London it is 85% higher than in other regions of the country. And this means that even renting out housing will bring you decent passive income.
Dmitry Leus, a practising real estate investor, claims that buying an inexpensive home worth no more than 400,000 pounds is already a good use of your savings. He advises also to unite with partners for joint financing of the construction of small flat buildings. In this way, you can get up to 25% profit interest.
According to Leus, it is also worth considering the option of investing in commercial real estate, especially warehouses. Since the development of e-commerce constantly increases the demand for such objects.
In general, we are now observing phenomenally positive forecasts for the mood in the real estate market of Great Britain, it seems that this market has reached the pedestal of its growth.