Current UK Property Market Climate, Where Do We Go from Here?

The UK property market could be heading for a downturn, but there are still positives to investing in property. Find out whether now is the right time to buy.

The current UK property market might not look like the safest prospect for investment to some people. However, although a number of factors have caused multiple issues, it doesn't mean that all is lost. Investing in the UK property market may still be a solid choice for many, especially when compared to other investment options. Investors who are curious about putting their money into property, whether as first-timers or to expand existing portfolios, should start by ensuring they have a good understanding of current conditions. When you understand the climate in the market, you can make the right decisions when it comes to investing in property.

The State of the UK Property Market Today

If you have been keeping an eye on the news and the current state of the property market, it may look a little doom and gloom. There are various issues that are having an impact on the property market and could make some investors nervous about putting their money into property. However, it's important to understand exactly what's happening and what it means before making any decisions.

Many things have shaken up the property market in the last couple of years. While some investors are choosing to withdraw from property, the market is still being described as "surprisingly resilient" and, in September, home sellers are raising their asking prices at the strongest pace since March. Nevertheless, although the property market has been resilient so far, the Bank of England is preparing for house prices to fall by as much as almost a third, including this scenario in their latest stress test.

Factors Affecting the Market

There are many different factors that have, are, and will have an impact on the property market in the UK. Understanding what is influencing the direction the market is going in can help you to assess the prospect of property investment and how to make it work for you.

COVID-19 pandemic

Although the rate of COVID-19 spread may soon no longer be at pandemic levels, the housing market was still impacted by the event. Initially, house prices dropped when people put their sales and purchases on hold. However, the market soon began to recover, especially thanks to initiatives such as the stamp duty holiday. By 2021, the housing market was much healthier, but it has now slowed down. There is a possibility that this could change thanks to further changes in the stamp duty rules.

Cost of living rise

A rise in the cost of living is affecting the decisions that people are taking in regard to property. They may be less likely to sell or buy when facing increasing energy costs, as well as increases in other essentials, such as rent and mortgage payments, food, and more. With inflation at a high, many people are having to tighten their belts and reduce their spending. This is in part due to the Russia-Ukraine war, which has led to higher energy costs in many countries that rely on Russian oil production. The poor performance of the pound may affect the cost of living further.

Higher mortgage rates

Rising mortgage rates are also affecting the property market and causing it to slow down. First-time buyers and existing property owners may be more likely to put their plans of buying on hold when faced with higher mortgage payments. In addition, some mortgage lenders have announced changes to their mortgage products. Halifax has withdrawn mortgages with fees, as of the end of September, while Virgin Money has temporarily withdrawn new mortgage products, and Skipton Building Society has taken its business product range off the market.

Why UK Property Is Still a Good Investment

Looking at today's property market, it might seem like it's not a good time to invest. However, the truth is that investing in property is almost always a sound decision should we revisit history. With inflation at 9% and possibly rising to 10%, you could be effectively losing money if not investing. When you choose to rent out your properties, you can ensure the mortgage payments are covered. By sourcing rental properties with high returns, you can mitigate high inflation rates and create a healthy monthly cash flow.

The recent change to stamp duty could also help to buoy the property market. The new rates, which came into effect immediately, doubled the rate at which stamp duty is paid. The threshold is now £250,000, or £425,000 for first-time buyers. Discounted stamp duty for first-time buyers now also applies up to £625,000. According to Rightmove, the stamp duty cuts could drive further demand after average prices have already risen recently.

Now is still a great time to explore investing in the UK property market more so now than ever before given the current economic concerns, “as safe as houses”. Get in touch to find out more about how to source the best investment properties around the UK.