US investors UK property

Positive economic signs boost confidence in UK property

There has been some positive news surrounding the economy, which is boosting confidence in the UK property market among overseas investors.

UK inflation dropped from 6.8% in the year to July to 6.7% in August. There were three consecutive falls to the inflation rate until it held steady in September.

Now the outlook on inflation is looking more positive for the coming months. Lloyds Bank has said the UK economy is improving slightly and that the nation is on track to avoid a recession. One of Britain’s biggest high street banks will grow by 0.4% this year and 0.5% next year, which is up from previous predictions of 0.2% and 0.3%

On 21 September, the Bank of England maintained the base interest rate at 5.25%. This brought an end to the longest successive rate of interest rate rises in recent times with 14 in total. Many in the industry are predicting the Bank to maintain the rate at this level again at its next meeting on 2 November. And some are also predicting that interest rates have peaked.

Because of these factors, there is reason for cautious optimism in the economy and UK property market, which could give overseas buyers more confidence.

Weaker pound providing favourable exchange rate

At the same time, the value of the pound has dropped in the past few weeks, particularly when compared to the US dollar. Eagle-eyed property investors in the US and in countries who are pegged to the dollar will see this as a further positive trend, especially as the dollar remains strong.

This makes investing in UK property from overseas cheaper than when the pound is performing more strongly and can allow investors to maximise their budgets. Overseas buyers are likely looking to benefit from the exchange rate and could secure hefty discounts on their purchases.

This will be seen as a positive position for buyers from abroad, including the US, to secure property. US investors have been one of the most prominent overseas buyers in the UK across recent years, and this trend could continue if the dollar-to-pound exchange rate remains favourable.

Buy-to-let prospects in UK property

For those who opt to rent out their property investments in the UK, the private rented sector is home to approximately a fifth of the country’s population. This helps ensure high demand and strong yields, especially in certain hotspots across the nation.

Buy-to-let prospects have recently strengthened as well, according to the latest reports. Fleet Mortgages revealed that yields have increased for three consecutive quarters as the average landlord is now securing a 6.9% yield in England and Wales.

This is a 1% rise compared to the third quarter of 2022, in addition to 0.6% growth on Q2 2023’s figures. And it’s important to note that every single region in the UK recorded a yield increase on an annual basis in the third quarter of this year.

Because of the strength of the rental market in the UK, investors are still keen on snapping up UK property thanks to its strong long-term prospects. And this could continue to entice more overseas investors.

While property price trends can have an impact on investor sentiment, many landlords are focused on their yields, as investments are normally the most lucrative when holding onto the property for a number of years. And currently, rental yields for buy-to-lets are on the rise.

To find the ideal UK property for your preferences and circumstances, many US investors and other overseas buyers opt to work with an agent or property investments specialist. This is similar to the way US property is sourced by buyers – through a realtor. They will have beneficial local knowledge to help the investor find the best option for them.

With many years of experience in working with overseas buyers, BuyAssociation is a property investment consultancy specialising in helping investors access the UK property market. Get in touch with our team to learn about our current investment opportunities and how we can help you invest.

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