Optimism in the UK property investment space continues to pick up, and new research reveals that wealthy buyers are making plans to snap up more opportunities.
The UK housing market continues to perform strongly as we move towards spring, with most reports showing strong demand, rising house prices and a boost in the number of property transactions and homes being put up for sale.
The outlook for the coming year, while retaining some uncertainty with regards to the impact of the upcoming general election among other external factors, is largely positive. Most economists are expecting the Bank of England to begin lowering interest rates as inflation is curbed, leading to more reductions in mortgage rates.
While timing has always been something to factor into property investment, the statistics show that it is an asset class where the most appreciation can be expected over a period of time. Despite the short-term ups and downs in the market, serious investors continue to find opportunities suited to the current climate.
Confidence in property investment
In a recent survey from Investec, which polled high-net-worth individuals earning more than £501,000, more than three quarters (77%) said that they are looking for their next UK property investment opportunity right now. The average amount respondents were looking to invest in the sector was £380,000.
However, 11% plan to increase their exposure to the property investment space by as much as £500,000 or more, which Investec puts down to a good level of confidence in the housing market alongside a positive stance on the future of house prices and interest rates.
A much smaller proportion of high-net-worth investors – 14% – said they may reduce their exposure this year, with 3% looking to divest entirely and 6% would leave their current portfolio unchanged. There are multiple reasons for these responses, which may be down to personal circumstances as well as market outlook.
The way in which wealthy people use property investment as a way of managing their overall assets was also mentioned by Investec, which noted that around 58% of respondents had borrowed against an investment portfolio, sometimes as a loan that would be reinvested in the portfolio or used to help a family member buy a property.
The latest on the market
Taking a broad view of the UK housing market, various indices are all now showing similar trends: rising house prices, more sellers coming to the market, and growth in mortgage approvals so far this year. Property prices are now very close to their peak in summer 2022, which is why many investors are acting quickly to get the best deals.
It remains to be seen whether the recent spring budget announcement from Chancellor Jeremy Hunt will have any effect on the market, while the next inflation tracker could also have an impact on the Bank of England’s next base rate decision.
However, the results from Investec, along with other recent surveys, show an overall more optimistic outlook than we were seeing six months ago.
Investec private banking team lead Cheryl Quinn points out: “Despite uncertainty around house prices, as a business we are seeing that a large number of high net worth individuals remain optimistic about the sector.
“Many view the current instability as an opportunity for increasing their exposure to UK property at an attractive price point and very much value the ability to leverage income in order to fund investment properties.”
Quinn adds: “However, these individuals can struggle to access lending because of their complex income profiles.
“This is particularly true of City professionals, who often receive a large part of their renumeration as discretionary income, and entrepreneurs, who usually have a large part of their wealth tied up in their businesses.
“This, combined with the current market uncertainty, means that clients need to think carefully and seek independent expert advice before any major decisions.”
If you’re looking for your next UK property investment opportunity, browse some of our current projects here, or get in touch to speak with one of our experienced advisers.
