In early 2018, the Guardian indicated six features that could influence the UK property market, albeit not all positive. The ultimate expectation was towards a more favourable year for first-time buyers. With the reduction in stamp duty and low-interest rates, along with an increase in help-to-buy mortgages, it should be a brilliant time to invest in UK property.
With interest rates at a record low, bricks and mortar is one of the most lucrative investments available at present. The number of landlords is consistently growing due to the buy-to-let yields available in certain areas. There is no doubt that this would rise far greater should there be more properties available to buy.
The projected 2019 market
Since the vote on 23rd June 2016, Brexit has left a shadow of uncertainty over the property market in the UK. In times of uncertainty, people prefer to hold on to their homes, reducing activity levels and stock across the market. It has recently become clear that the current political climate is an opportunity to market, due to low competition levels and less need for urgency.
The start of 2019 has brought a strong revival in the number of listings available for new properties on the market, according to an index compiled by HouseSimple. The data reveals that the number of new listings in the UK was up by 64% in January compared with December 2018, and up 70.6% compared with December in the London market alone.
The CEO of HouseSimple, Sam Mitchell, said: “We would normally expect to see activity pick up in the New Year, but no one was quite sure how sellers and buyers would react to the amplified Brexit uncertainty in January. In the end, it proved to be a busy month for sellers in particular, and even with the distraction of the Commons vote mid-month, homeowners were keen to make up for lost time.”
Brexit - is now the time to buy?
First-time buyers have received a stamp-duty break from the government on the first £300,000 of a purchase and mortgage rates also remain low. The property market is now set to be the most lucrative investment at this accessible level.
The mainstream property market is still fragile. Middle-of-the-market vendors are in a position allowing them to wait and see what hand the UK is dealt. More middle-range homeowners are looking at renovating and extending their existing homes than looking elsewhere. For this reason, the property market is likely to continue on the same path for the first half of this year.
Brexit produced a 13% decline in the value of sterling compared to the dollar, and wealthy internationals are now acquiring three times as many £10m+ properties as they did before the referendum by entering our marketplace. A Grade I listed mansion on Belgrave Square recently sold for £60m. The five-storey property was once the London home of William Cavendish, the seventh Duke of Devonshire. The property had been on the market for almost a decade and was first listed for £100m. Believed to be the most expensive sale in London this year, it still had a 40% price drop from the original price tag. This is the latest in a sweep of deals in the capital’s ultra-prime market, following the £39 million sale of a six-bedroom house in Stanhope Gate in Mayfair.
Jonathan Samuels, the chief executive of property lender Octane Capital, said this has turned the UK into “a goldmine for foreign investors seeking a bargain”.
He said: “Brexit had a particular impact on super-prime properties in the capital, so for many high net worth individuals, the fallout from the EU referendum has been an investment opportunity.” If not London, then where?
For 2019, investors looking to make the most of real estate investment opportunities presented by UK property will do well to start planning now. Traditionally, investors love London property. London has recently been highlighted as a stagnant market, due to hitting an affordability ceiling price. With the London investment market now coming under scrutiny, other regional markets are emerging with potential for capital growth and strong rental yields.
2018 was an eventful year for the UK’s property market. We have had changes to stamp duty and proposed changes for overseas investors, along with the impending exit from the EU. There is no doubt that the UK market has proved resilient by growing and maintaining its reputation as one of the most stable property markets in the world. But if not London, then where will the next UK investment hotspot be?