Is a UK property investment still a sure thing? Surely we know by now that no investment is a sure thing, however, we also know that property values usually travel up over the long term, and that the worsening housing shortage makes this especially true of investment property UK.
According to Nationwide, looking at data over the last 50 years UK property values increase by 10% on average every year. This means that a property will grow in value by 500% over 50 years. But you have to allow for events like the crash at the end of the 80's, and the end of the noughties (2008). However, if you aim to invest over a 50 year period the chances are that you will see 500% growth in value.
But you have to factor into this things like mortgage rates, and inflation. Mortgage rates can be anything up to 6%, and investment advisors are saying we should allow for 4% inflation, so this eats into our 500% substantially. Thank fully we have rental income on top of our capital gains.
But this is not an article on how to calculate investment returns on buy to let properties, that is located elsewhere on the site and you can seek advice from property investment companies UK. This article answers a simple question; property investment UK has long been considered a near-sure thing, even amid all the volatility in the UK, Europe and the world, is this still the case?
In our opinion yes. The UK housing shortage is only going to worsen as we continue to live longer and longer. It's a trade-off; housing recessions reduce housing values, but they also reduce construction, which worsens the housing shortage and thereby stores up even bigger price rises for the next up cycle. We also see an increase in investment property for sale UK at seriously depressed prices.
We say that house prices grow an average of 10% per year, but between 1996 and 2006 the average UK house price more than tripled according to Nationwide data, from £51,367 in Q1 1996 to £160,319 in Q1 2006. Investing in UK property is all about timing and exit strategy. You can either plan to get in and out in 5 or 10 years during an up-cycle, or go in over the long term. Either way if you do your research, find a property with solid rental demand, and buy with a low loan-to-value mortgage, your investment is almost a sure-thing in the UK property market.