In spite of the recent challenges faced by the UK housing market, demand remains robust across certain property sectors, with investors still honing in on off-plan opportunities.
After a couple of years of massive acceleration in UK house prices in the aftermath of Covid, with both buyers and sellers showing record-breaking levels of appetite to move transactions on, the market has inevitably slowed to a more sustainable pace.
While this only led to an arguably insignificant fall in house prices over the past year – or a small increase according to the Halifax report – transaction levels in the mainstream market have slowed. Partly, this is as a result of higher mortgage rates affecting confidence and affordability, although this has already begun to be reversed.
The off-plan property sector, though, often treads its own path despite wider market grumbles. It remains a popular way for investors to maximise their output, due to the fact that the value of the property once built can be higher than the off-plan price originally paid, and it entices buyers who are looking at long-term investment.
Investors are also more likely to invest in off-plan property with cash, meaning that the rise or fall of borrowing rates has less of an impact on this segment of the market. What’s more, with energy efficiency remaining a top priority, off-plan new-builds are an even more future-proof option.
Off-plan property in regional markets
Away from London, some of the UK’s regional housing markets have seen much stronger performance over the past couple of years. Overseas buyers looking for a place to invest with the best prospects for return on investment are therefore increasingly attracted to these parts of the country over the capital.
According to comments from Mark Evans, partner at Knight Frank and head of regional residential development, demand for new homes among overseas buyers remains robust, particularly in stronger locations. There has also been a “flight to quality” impacting the types of properties overseas buyers want to invest in.
The company states: “Properties falling within the pricing spectrum of £500k to £1m have experienced substantial demand, particularly in stronger locations. This trend has contributed to heightened activity throughout the year from both land acquisition and sales perspectives.”
Evans also points out that the autumn sales market, including in the off-plan space, saw a “remarkable” lift in buyer confidence with greater appetite, and he believes this will carry on into 2024 – particularly if the General Election doesn’t happen until later in the year.
“Overseas investment markets are increasingly exploring regional opportunities, especially in cities with renowned educational institutions,” says Evans. “Second home owners are gravitating towards areas housing these educational hubs, presenting an investment opportunity.”
Incentives go a long way
Knight Frank advises that pricing and presentation are the key aspects to focus on for the year ahead, including in the off-plan, new-build property market.
“Buyers today exhibit a preference for turnkey solutions, seeking to move seamlessly into their new homes. Incentives hold considerable allure, especially given the current cost of living and mortgage expenses. Energy-efficient properties, which positively impact monthly outgoings, are increasingly attractive in this sector.”
Some of the key UK regional locations that BuyAssociation has seen particular interest in from overseas buyers include Manchester, Liverpool and Stockport in the north west, and Birmingham in the West Midlands, both in the centre and in outer areas such as Solihull.
Manchester and Birmingham in particular are known for being cosmopolitan cities with world-class educational institutions, which is a particular draw for many overseas investors. Both of these cities have numerous off-plan investment opportunities available – get in touch for more information.
