Property investment is far more attractive with the low interest rates
With so much uncertainty doing the rounds of late relating to anything remotely connected with finance, whether that be savings, investments, business and even the economy. Ever since the UK voted to exit the EU we have seen the property sector placed firmly under the microscope and an array of predictions from experts across the world.
Almost two months later, how is the property market looking?
The property market has seen levels of demand increase and indeed the general feeling towards the sector is helping it remain in a position of real strength. With or without Brexit, we are still going to have citizens that require housing. Within buy-to-let we are seeing stock levels remaining high and of course tenants who still wish to rent. In fact, HomeLet have said that prices have continued to climb with the average rent sitting at £779 per month.
Before the referendum there were all sorts of doom and gloom predictions. I think the basic principles apply on this one, we have people that require housing with or without having a membership to a market.
Though we must mention that the pound has fallen in dramatic fashion since the result of the referendum was announced.
While many investors will employ the classic “wait and see approach” holding onto cash and placing monies into savings accounts as a method of weathering the storm. We feel that this approach is potentially one that will work against investors.
With rental returns up by nearly 2.5% ever since the referendum, property prices are expected to still increase by around 5% this year. Biding your time will likely work against you as the moment you do decide to buy, you will find the prices higher than today.
It is clear to all that, capital increases are still very much a real possibility. And this is without mentioning the real potential in the commercial property sector, which is very much alive. With returns of up to twelve per cent and a growing demand from both domestic and overseas investors, the commercial property sector is one of the most stable around.
With the Bank of England announcing the new base interest rate being set at 0.25 per cent in order to boost the economy, property presents a real strong alternative to keeping cash in savings accounts.
While the easy approach will be to employ the wait and see method, I think it is clear to most that very little is going to change and in fact price increases are likely to continue.
FJP Investment is a team of investment specialists sourcing a wide range of investment opportunities both in the UK and overseas, including commercial property investments.
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