Investing in the UK Housing Market in 2023
Posted by The Landsite on 6th January 2023 -
Is property investment the best way to beat inflation?
As we have all witnessed, 2022 turned out to be a turbulent year overall for house prices. The UK average house price increased by 7.8% to June 2022. However, according to recent analysis from the Oxford Economics consultancy, UK house prices are approximately 30% overpriced. Despite a 1.4% decline in November 2022, average UK house prices are still significantly higher than they were a year ago. Most recent reports are that property prices could fall sharply in 2023. Estimated drops are anywhere between 8% and up to 20% resulting in ‘paper’ gains over the last two and a half years being lost.
The popular adage “it's not about timing the market, but about time in the market” has proven correct over the years. In other words, those who take a longer-term investment approach generally fair better in the property market. When it comes to buying a home to live in, the likelihood is that you will keep hold of your property for ten to twenty years or even longer. So long as the government continues to miss their target goals of new home developments, the likelihood is that both residential and commercial property will remain a solid investment.
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City centre regeneration projects
Despite the last two bumpy years, compounded by the pandemic and the economic crisis, the past ten years have seen several major cities receive a huge injections of monetary investment for regeneration and development projects within their city centres and surrounding areas. Such projects will drive growth and property demand in the years to come.
Getting creative with property investment
As the downturn in the economy is set to continue and we enter a recession, many property investors have had to get creative with property investment opportunities. The conversion of single properties into multiple units, such as HMOs, commercial conversions or two self-contained flats within one terraced house is a trend which is proving popular. This is because the property has a higher rental return with multiple units in there, which also makes it a safer investment. Should one tenant be unable to pay rent, or one unit is left vacant, you have other tenants paying rent, so it can be less of a risk.
In addition, this type of property investment would add greater value to the overall price of the property as an income generating asset, increasing the ability to refinance during a downturn.
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