Why Invest in UK Property in 2022?

Why should you invest in UK property in 2022? As one of the most popular markets in the world, property investment in the UK remains a clear opportunity to build long-term returns.

With property forecasts suggesting the UK could see prices grow by 21.5% by 2025, UK investing remains a reliable channel for maximising returns amidst low interest rates and incredible demand.

Positive UK House Price Growth

UK Houses
 

After the turbulence of the last two years, UK investing remains a clear opportunity as we look towards 2022.

Regional price growth in the Midlands and the North is set to continue outpacing the traditional London market, while individual cities within these regions are expected to over-perform.

According to Savills, over the next five years, UK property is expected to rise in price by 21.5%. This means the average UK property will rise from £322,000 to £370,000.

In terms of regional performance, the revised predictions for the five years to 2025 look something like this:

 

Region 2021 2022 2023 2024 2025 Overall
North West 10.5% 4.5% 4.0% 3.5% 3.0% 28.0%
North East 8.0% 4.0% 3.5% 3.5% 3.0% 24.0%
E. Midlands 9.0% 4.0% 3.5% 3.5% 2.5% 24.0%
W. Midlands 9.0% 4.0% 3.5% 3.5% 2.5% 24.0%
South East 9.0% 3.0% 2.5% 2.0% 1.5% 19.0%
London 7.0% 2.0% 1.5% 1.0% 0.5% 12.0%

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All chosen as prime destinations for property investment with high-growth potential going forward.

  • Locations forecasting price growth between 19% and 24% by 2025
  • Achieving rental yields up to 6%
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Long-Term Rental Increases for UK Investing

UK Rental

 

Driven by a chronic undersupply and rising demand for property in the UK, long-term forecasts for rental prices are extremely positive for those looking to UK investing. 

During 2022, JLL predicts that the average rental prices for a UK investment could rise by 2% over the year, contributing to a 8.5% increase over the next five years.

This is ideal if you’re looking to invest in the UK with Buy-to-Let, as it gives plenty of opportunity for the asset to maximise returns over the long-term.

When we look at specific key areas for UK investing, especially regional cores in the Midlands and the South East, these forecasts are even higher.

The West Midlands especially is outperforming the wider market, with forecasts suggesting it could see rents rise by 12% over the next five years.

Buyer Confidence Drives Activity for UK Investing

UK Regeneration

 

Despite there being plenty of external forces impacting the market, buyer and seller confidence has remained high over the last 6 months – a trend that looks set to continue heading into 2022.

75% of active buyers in the UK were confidence they would purchase a property in the next 3 months, while 81% of sellers were confident they could sell within the next 3 months.

This is largely being driven by a high availability of low-rate mortgages, plus the rush that accompanied the stamp duty holiday deadline.

On top of this demand hasn’t been tempered by the summer holidays (as it can around this time of year), with families and professionals still active in the market.

Those interested in UK investing would do well to consider how this level of demand is impacting supply and what that could mean for prices going forward.

Invest in The Grand Exchange in Berkshire

Discover The Grand Exchange in Berkshire, a clear opportunity for investors to invest in one of the most exciting regions in the UK.

At the heart of the South East, a region forecasting nearly 19.1% growth over the next five years, The Grand Exchange is a development utterly unique to the local market with exclusive resident-only facilities.

  • A development forecasting 7% growth during build
  • Top location for London leavers forecasting yields above 5%
  • Exclusive resident-only facilities brand unique to the market
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TGE Exterior

Property Investment in the UK Driven by Undersupply

UK Undersupply

 

One of the biggest factors for anyone looking to invest in UK property is the disparity between supply and demand.

Many regional areas in the UK – especially those forecasting above-average price growth – remain affordable in the current market and are seeing incredible demand because of low supply.

With Buy-to-Let in the UK worth over £1 trillion, research estimates that UK renters will outnumber homeowners by 2039. For context, this represents nearly 125 million households in a private rented sector set to grow by 24% by 2021.

This only serves to highlight the power of property investment in the UK – where the market is heavily trending towards renting but can’t deliver the supply to meet demand. 

Reduced Stamp Duty Land Tax Until October 2021

UK Stamp Duty

 

In an effort to revitalise the property market, reductions to Stamp Duty Land Tax (SDLT) have been announced on all property purchases made until October 1st 2021.

With the UK market now in ‘Phase 2’ of the holiday – which means 0% SDLT payable on all properties up to £250,000 – there’s still savings to be had for people looking to invest in the UK. 

The extension of this tax break demonstrates an incredible opportunity for landlords that are thinking of pulling the trigger on an investment. This is particularly true for foreign investors, who can currently find value through foreign exchange alongside the tax reduction.

UK Population is Rapidly Increasing

UK Traffic

 

With the UK population expected to reach 74 million people in the next 20 years – we’re seeing why demand is growing within the UK rental market. 

More surprisingly, despite a quarter of the UK expected to be 65 or older by 2050, there is an incredible opportunity for property investment in the UK as a record 1.13 million over-50s turn to renting.

While young professionals continue to be the majority within the rental market – and a clear reason to invest in UK property – we’re almost certainly seeing a renaissance in old people choosing to downsize and rent, especially in these popular regional cities where they can find better value for money.

This has opened up a number of opportunities to invest in the UK and offers investors a much wider range of investment strategies that could be adopted.  

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Discover brand new developments chosen for their high-growth potential.

  • Locations forecasting price growth between 19% and 24% by 2025
  • Achieving rental yields up to 6%
  • Superior build quality in key hotspots
  • Starting from deposits of £41,000
View Our Developments
10754_SEVEN CAPITAL_ONE THAMES VALLEY_BEDROOM [Low Res]

High Levels of Foreign Investment

Birmingham Skyline

 

Foreign Direct Investment (FDI) has steadily increased over the last few years, peaking at £1.5 trillion in 2018. Since then, the UK has consistently achieved a 5% increase in inbound FDI projects, cementing its position as one of the leading countries in the continent.

The root of the UK’s success can largely be attributed to digital tech, which attracted 432 projects in 2019 alone.

As regeneration across key regions continues to build exciting new amenities, this inward investment has translated to a number of global businesses basing their headquarters in UK cities such as Birmingham – which is now home to the likes of PwC, HSBC, Deutsche Bank and Goldman Sachs.

Property Investment in the UK Largely Unaffected by Lockdown

UK Lockdown Train Station

 

While all sectors of the economy have been impacted by multiple lockdowns, the outlook for UK property has been positive, if not more so.

The majority of UK PLCs have described ‘long-term optimism’ in various property market forecasts, with prices and transactions rising to unprecedented levels.

As ‘pent-up demand’ has been released, this has translated to record numbers of enquiries. While the first week of April 2021 saw a record-breaking 30% increase in demand for rental property, transaction levels have since increased exponentially.

While the latest figures suggest that property transactions are 3.9% lower than April 2021, year-on-year, residential transactions have been 138% higher than 2020.

Living Trends Point to Indefinite Renting

Birmingham Young Professionals

 

The concept of ‘Generation Rent’ is well and truly in full swing across the UK, directly appealing to investors that want to build a long-term portfolio and invest in the UK. According to the Resolution Foundation, nearly 4 out of 10 ‘millennials’ are still privately renting at age 30, while nearly a third of the wider generation are expected to be renting well into retirement.

Whether or not you see ‘lifetime renting’ as a bad thing, we’re definitely seeing a shift in culture to a more European way of thinking – only 43% of people in Germany own their home, for example. Going forward, it’s expected that similar ‘continental-style’ rules will be introduced that offer more flexibility and security for both landlord and tenant alike.