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Half of UK property investors will expand portfolios in 2023

The majority of property investors plan to continue to use their portfolios to generate an income, while more than 50% intend to buy more properties in the year ahead.

Optimism continues to prevail in the property investment landscape, despite the ongoing economic hurdles being faced by many. Bricks and mortar remains one of the safest perceived areas in which to invest through turbulence, particularly in the stronger performing areas of the UK.

Now some new research from bridging finance broker Finbri has revealed that 50.45% of existing property investors are planning to invest more into housing in 2023.

Among the most seasoned property investors, even more activity is on the cards, with 68% of those with more than five property assets in their portfolios planning to capitalise on “increased opportunities in 2023”.

More opportunities coming to market

The research also found that a third of investors (33%) are not planning to invest more next year, while 16% are unsure. This is unsurprising given the current uncertainty, although it is hoped the new year will bring more stability at least in the mortgage market.

Finbri co-founder Stephen Clark said: “These findings demonstrate that those with a vast property portfolio are more likely to capitalise on the increasing availability of property as less experienced investors look to sell.”

He also believes that 2023 will bring with it an increase in property investment opportunities for those in a position to take it, due to the fact that 23% of investors with less than five properties in their portfolios said they may sell due to rising interest rates.

Property investors eyeing the benefits

Clark points out that the outlook for both capital appreciation and growth in income in the rental market are benefits that property investors should be particularly aware of at the moment.

In terms of capital appreciation, prices are expected to see a relatively small decrease on average across 2023, of between 5% and 10% according to Finbri (although the forecast varies across research centres). There may be more properties on the market available for investment, and this will be followed by a return to growth of “2% in 2024 and 4% in 2026”.

On the rental market side, tenant demand continues to spiral, meaning property investors in the buy-to-let space are seeing fewer void periods and strong rental returns. This is particularly prominent among “good quality properties in desirable locations”.

Clark adds: “Experienced investors will be able to take advantage, hoping to achieve high yields. The average rental yield in the UK is 4.71%, but this varies from location to location and researching where the highest yields are will provide investors with a strong indication of where they should be looking to expand their portfolio.”

Choose the right location

As with any asset, there are risks involved, but these can be minimised by property investors opting for optimum locations and property types, as well as by adopting a long-term view of the market.

Rising interest rates are a concern at the moment, Clark points out. However, after a short, sharp spike in rates alongside lenders pulling products from the shelves in the wake of the mini-budget in September, things have already begun to recover – and rates are still at relatively historic lows.

As part of Finbri’s research, it highlighted what it believed could be potential ‘hotspots’ for property investors over the coming months. These include Liverpool, Reading, Bolton, Slough, Aberdeen and Burton.

Clark concluded: “Property investment can be a great way to diversify your portfolio and generate additional income, but it’s important to do your research to discover which locations are better for investment.

“Keep an eye on interest rates, as they are expected to rise over the next few years and be aware of developments in the market that could make it more competitive.”

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