In our latest investment property market report we highlight what is going on in the UK property market at the end of Q3 2022.
Over the past few months, the UK has experienced seismic changes, many not seen for a generation.
Whilst it has been a turbulent period for the United Kingdom with changes in leadership and volatility in the markets; the fundamentals remain, the UK property market is woefully undersupplied, with demand continuing to significantly outstrip the number of properties available.
Making well-informed buying decisions at any time, no matter the economic or political landscape can prove incredibly fruitful for the savvy investor.
Tax cuts
There have been shifts in key leadership roles in the UK throughout 2022 and particularly over recent months with several changes in government.
During his brief time as Chancellor of the Exchequer, Kwasi Kwarteng announced a mini-budget in September in a bid to stimulate the economy however many of the unsubstantiated changes were swiftly scrapped when they had a negative impact on the financial markets and strength of the pound.
One of the measures that will remain was to immediately and permanently reduce Stamp Duty Land Tax to 0% on all purchases of property under the value of £250,000 – for investors, the 3% surcharge will remain, but this change does represent a welcome reduction in applicable tax when buying a property in the UK.
Northern Powerhouse
The North of England is clearly one of the top locations in the United Kingdom for investors for a great number of reasons.
House prices in Manchester have gone up more than any other UK city in the last 20 years, with Salford following as the city with the second largest house price growth since 2002 and Leicester closely following in third place. (Source: Plumbnation research)
Not only have northern cities and towns experienced exceptional property price growth but there has also been phenomenal economic growth across the region, adding fuel to the North’s merits as an investment prospect.
Learn more about the specifics of Northern investment locations in our dedicated area guides.
The changing face of property investment
Traditional buy-to-let property investment continues to be an excellent long-term strategy and should feature in any portfolio of mixed asset classes, but it is not the only type of property investment we would recommend investors consider.
The rise in the cost of living in the UK has bought affordability into sharp focus, and co-living has seen an increase in popularity. When constructed to high standards and in a suitable location, not only does this type of property receive overwhelming demand from tenants but achieves considerable rental returns.
Those who follow us closely will have also noticed our championing of short-term let options throughout 2022. This, often more tax efficient, type of property investment can return staggering yields and those buying in the right location that caters to not just holiday-goers but business travellers too will experience almost no void periods.
Market outlook
Demand for rental property has soared in the past 12 months and rental values have hit record highs, with some areas experiencing a 20% rise while the total number of properties available to let has fallen by 9%. Though changes have been made to help individuals obtain mortgage lending to buy a property, for many buying is not an option, adding yet more demand for a rental property in the UK.
Such is the confidence in the market that developers are now once again happy to offer rental assurances on developments. At the time of writing, Thirlmere Deacon has two properties at which it is possible to buy with an 8% assured yield for the next 10 years.
As for the outlook for the remainder of 2022; the UK’s property market will continue to present opportunities to the savvy and well-informed investor.
Key stats about the UK property market Q3 2022
- Discounts for overseas investors: British pound fell to its lowest level against the US dollar since 1985 in September 2022
- UK property prices continue to rise: Average house prices soared by 15.5% over the year to July 2022 (Office for National Statistics)
- Rising rental values: In August 2022 average UK rents grew by 8.5% compared to 12 months earlier (HomeLet)
- Tenant demand was up by 20% compared with last year, while the total number of available properties to rent was down by 9%. (Rightmove)
- Northern powerhouse: House prices in Manchester have gone up more than any other UK city in the last 20 years (Plumbnation)
- Tax Cuts: Stamp Duty Land Tax to 0% on all purchases of property under the value of £250,000 – *investors will still be required to pay the 3% surcharge
