What Property Should I Invest in 2019?

The UK is moving ever closer to the deadline set for its withdrawal from the European Union, and whether the country leaves with an agreed deal in place or not, there will no doubt be significant changes on the horizon for all industries.

This rings particularly true when it comes to the property market. Below, Jerald Solis, Business Development and Acquisitions Director at Experience Invest, explains.

Naturally, those looking to purchase a home (or several) in the coming months are speculating what Brexit will mean for real estate as an asset class. And whether you’re a first-time buyer or seasoned investor, keeping a watchful eye on the property trends that are currently shaping the industry will offer a good indication of future prospects.

Importantly, despite doom and gloom predictions from some quarters of the property sector, there is still plenty of evidence to suggest that appetite for bricks and mortar investment remains strong. In December of last year, the average cost of a home rose by 2.2% – the highest monthly growth in prices in 2018. Meanwhile, the total value of the UK’s housing stock reached a record £7.29 trillion in 2018.

So, for those keen to jump on, or move up, the property ladder in 2019, here are a number of the key factors to keep in mind.

Types of real estate investment

There exist a variety of avenues for property investment, and it goes without saying that some will be more suited to a buyer’s circumstances than others.

There exist a variety of avenues for property investment, and it goes without saying that some will be more suited to a buyer’s circumstances than others.

Buy-to-let is a popular option for many, offering the advantage of a monthly rental income alongside prospective growth in the capital value of the property over time. And in line with growing demand for housing across the country, there is an increasing number of specialist Build to Rent (BTR) developments emerging across the country, offering investors a clear path into the lettings market.

In fact, an analysis by Savills released in January revealed that there are now 139,508 BTR homes complete, under construction or in planning across the UK – that’s an increase of 22% over the last year.

Whether a BTR property or simply a house or flat that the buyer intends to rent out, one of the advantages of a buy-to-let investment is the flexibility it offers investors when it comes to leasing options. Of these, the two most prominent are professional single lets and student lets.

Professional single lets can be thought of as the traditional buy-to-let path; it involves renting out a property as a single unit to a working individual or family. The benefits here include consistent and predictable returns (as long as there are adequate allowances in place for costs). What’s more, the process of acquiring a mortgage for the purpose of professional single lets investment is also typically simpler when compared to other types of buy-to-let.

The other popular route is student lets. The student market can be a great way of getting regular income from a property, particularly due to a predictable student cycle that falls in line with the academic calendar. Students generally sign up for a specified length of time, so your returns will generally be predictable.

Where to invest?

Regardless of whether you’re investing in a property for the sole purpose of owning your own home, or using it as part of an investment strategy, it’s vital that buyers are aware of regions that offer the best prospects for capital growth.

For those pursuing the buy-to-let option, the importance here is choosing an area that will attract strong, year-round interest from people looking for accommodation. Key areas to be mindful of are thus popular student cities like Newcastle and Liverpool, as well as hubs that attract young professionals looking for promising job prospects.

For instance, in January of this year data from Your Move revealed that investors in the North are enjoying some of the UK’s highest percentage returns for their investments – with the West Midlands witnessing the largest monthly rent rise at 0.4%.

More generally, property buyers will always want to see their asset appreciate in value as the months and years go by. And while the UK market as a whole has delivered very strong returns in this regard for many decades – average house prices rose by more than £60,000 between 2008 and 2018 – it is worth noting that some markets are growing at a far quicker rate than other.

Identifying up-and-coming markets will help improve the investor’s chances of higher capital growth.

Identifying up-and-coming markets will help improve the investor’s chances of higher capital growth.

How to plan and action investment

It’s good to be aware of certain factors that might potentially preclude a buyer from obtaining the finance he or she needs to secure a property quickly, and without unnecessary hassle.

Property investors should, for instance, be aware of the tightening restrictions on mortgage lending from traditional banks – particularly in light of Brexit uncertainty.

To provide some relief for homebuyers, certain agencies are able to manage the entire buy-to-let investment process from start to finish. These agencies can offer suggestions of where best to invest, while actioning everything on your behalf and managing the investment in the long-term.

And especially when it comes to buying a new-build property, leaving the financing and management in the hands of an experienced agency can be much more convenient than looking after it yourself.

Especially when it comes to buying a new-build property, leaving the financing and management in the hands of an experienced agency can be much more convenient than looking after it yourself.

Looking ahead

Naturally, there are challenges on the horizon as the UK prepares for Brexit. However, bricks and mortar investment options are certainly growing, particularly with councils and developers stepping up housebuilding efforts to cater to rising demand for property.

Being aware of the nuances and advantages of each type of property investment – as well as identifying regions set to undergo strong growth in the coming months and years – will ensure that prospective homebuyers are well-prepared to seize upcoming opportunities in 2019 and beyond.

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