Investing in the improving property market can be appealing, however, it could provide an unsuccessful investment, and declines in returns.
When looking to invest, it is always important to consider the timing. The property market has been growing in the last year, since the economy has improved. Now could be a good time to invest in the sector, as long-term strength is possible.
Nationwide recently states that house prices in the second quarter (Q2) of this year have seen greater values than 2007’s heights. Some feared that this would cause another housing bubble, however the market is still stable.
Zoopla have reported lately that 92% of people in the UK think that property prices will rise in the next six months and farther.1 This would create high capital returns in the market. If the economy increases the predicted between 2.5% and 3% by the end of the year, potential profits would only improve.
The rental market reflects this. Buy-to-let landlords are to see the highest returns of any asset class investor. HomeLet says that rental accommodation has grown by 7.5% in the last year, putting landlords in a solid position.1
Recently, landlords have been adding to their portfolios, due to rising rents, dropping arrears, and shorter average void periods. These all cause long-term strength in the private rental market.
The amount of buyers is also dropping around the country, after the Help to Buy success. There are now many potential tenants in the UK, more than there has ever been previously. This keeps demand and returns high.
1 http://www.landlordexpert.co.uk/2014/08/17/why-now-is-the-right-time-to-invest-in-uk-property/