Will ‘Brexit’ really affect the UK’s property market

Written by: Cathal Leonard
June 30, 2016

The UK buy-to-let market has seen a lot of changes of late, specifically regarding the revolutionary stamp duty tax levy applied to all second homes or investment properties and now the decision for the UK to leave the European Union. Many thought both of these signalled a death knell for the thriving buy-to-let market, but in the face of uncertainty the property market is one that has, and will remain buoyant.

This is because property is still one of the best investment options on the market. Since the financial crash of 2008, the investment landscape has gone through a raft of changes—with mortgage lending getting tougher and exchange rates are getting weaker—but one thing remains a constant: property as a tangible and secure investment. Bricks and mortar offer security that other assets simply cannot, which has fuelled long-term investor demand, proving the buoyancy of such a strong and steady market.

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Here are 5 reasons why property is still on top:

         1. The best of the best

The reason property has consistently been the best asset class out there? Rental property  provides something that most other asset classes couldn’t dream of—the potential for three different returns on investment: rental returns, rental growth and capital appreciation.

         2. Three-fold investment returns

The reason property has consistently been the best asset class out there? Rental property provides something that most other asset classes couldn’t dream of—the potential for three different returns on investment: rental returns, rental growth and capital appreciation.

         3. Bricks and mortar offer security

Against incredibly volatile markets like stocks and shares, property remains the perfect investment. Of course, the UK property market does go through periods of stagnation and fluctuation, but the peaks far outweigh the infrequent and minor troughs the market goes through.

This is because houses represent security—no matter what is happening in the market, people still need housing, meaning people will still want to invest in property.

         4. Exponential house price growth 

House prices have risen faster and by a bigger margin than any other mainstream investment for years. Historical research shows that property has soared by a massive 47,000% in 90 years; the fact that property has shown consistent growth for nearly a century proves its buoyancy and attractiveness to investors in the long-term as well as the short, something other asset classes cannot contest.

Furthermore, despite any external economic circumstances, property will still be in demand, so the upwards trajectory is likely to continue for years to come.

         5. Rise of the PRS

However there is one demographic that suffer from the ever-growing house prices—first-time buyers. People poised to put their foot on the housing ladder for the first time are constantly coming up against massive monetary barriers from house price growth, meaning that they can’t buy and thus have no choice but to rent privately.

This of course is a massive benefit to landlords—demand for rental stock is at an all-time high, and rents are following the same upwards trajectory as house prices, buoyed by the consistent surge in demand. Rents have also seen a huge historic growth, with average apartment prices rising £1,000 since 2008. This means that not only do landlords benefit from exponential house price rises, they also stand to gain significantly from rental increases too.

 

This shows that whatever is happening in the external markets, property will always remain a constant. People will always need houses, whether owner-occupied or rental, especially in an era where population is growing at a massive rate all across the country—as long as there are people there is a need for housing.

No matter the external circumstances property will always be a safe and sustainable investment due to the fact that the market is more stable and secure than other more volatile markets like stocks and shares, the returns of property will always be available (from bothhouse price growth, rental income and future rental growth), and of course consistent demand that shows no signs of slowing down.

With interest rates at a historic low and the volatility of other investment markets leaving people vulnerable, there really is no better time to invest in property.