How to take advantage of property investment in 2019

How To | Mergers & Acquisitions | Property & Construction

Written by Paresh Raja, CEO, Market Financial Solutions

There is plenty of speculation about how the UK’s departure from the EU at the end of March will impact the property market. Predictions vary from doom and gloom to strong and upbeat, but it is undeniable that there will be a period of readjustment as the country comes to terms with the new political and economic conditions brought on by Brexit.

It makes sense to start by looking at how the property market has performed since the EU referenced in June 2016.

In fact, real estate as an asset class has proven resilient in the face of political turbulence. The latest data from Halifax revealed that UK house prices rose at the fastest monthly rate in almost two years in December 2018, with the average cost of a home rising by 2.2%. This comes despite the political deadlock surrounding a Brexit withdrawal agreement.

As we have seen as a broader trend since the onset of the global financial crisis a decade ago, people clearly still look to property as a long-term investment, drawn to its historical performance in delivering significant capital gains.

Whatever form Brexit may take, many of the current projections for house price growth are optimistic. For example, Savills anticipates house prices to rise by almost 15% over the next five years, adding £32,000 to the price of the average home by 2023. This competitive climate means that those looking to invest in property in 2019 must be aware of the key trends shaping the market and ensure they can access the capital needed to fund these investments.

The rise of property hotspots

From first-time buyers to seasoned property investors, real estate remains a popular destination for investment. This is particularly true in emerging high-growth regional markets across the UK – and for good reason.

Growth is powering ahead in property markets in the Midlands and the North West of England, with regional hotspots like Manchester and Birmingham taking the reigns and driving average property values up.

House prices in Birmingham, for instance, are growing twice as fast as the national average at an impressive 5.6% per year. As a popular student city offering promising job prospects, the city has been attracting strong interest from students and young professionals.

What’s more it has seen strong investment into the development of its transport links and infrastructure to meet the needs of those relocating out of traditional hotspot like London. Combined these factors have led to Birmingham – and the Midlands more generally – establishing itself as a popular destination for buy-to-let investors.

Prime property in the capital

Of course, not all areas of the UK can match the rapid growth seen in the likes of Birmingham, and house prices in the capital have stagnated as people wait for Brexit to unfold. Demand for property, however, remains consistently strong – particularly when it comes to London’s prime property market.

High net-worth individuals have in fact been taking advantage of property opportunities on offer as a result of Brexit uncertainty, with new figures revealing that there has been a 50% spike in the number of homes sold for over £10 million since the EU referendum vote.

The private rental market has also remained resilient. Most regions in the UK experienced steady growth in 2018, led by a rise of almost 5% in London. It’s clear that there’s a sustained demand for property in the UK, particularly with young professionals driving demand for rental homes in the capital and bustling property hotspots.

Taking advantage of property investment in 2019

For those looking to invest in bricks and mortar over the coming 12 months, there are other trends to be aware of.

Firstly, the number of house sales falling through increased sharply in the last quarter of 2018, with some 49.9% of all house sales in England and Wales failing to reach completion.

As prospective homebuyers consider property investment for 2019, they must ensure that they have fast access to finance to be able to successfully complete on a purchase and avoid getting stuck in a property chain.

Moreover, access to capital is becoming increasingly difficult as traditional banks become hesitant to lend amidst Brexit uncertainty. According to figures from the Bank of England, mortgage approvals dipped to a seven-month low in November last year; meanwhile, overall lending from high street banks to UK businesses also remained subdued with a 1.7% contraction over the past 12 months.

For those who have encountered difficulties with traditional lenders, or who require a specialist financial product, there are a growing number of alternative finance providers are on hand to provide support to those in need of quick finance, or those struggling to obtain a traditional mortgage.

Lenders like Market Financial Solutions, for instance, examine applications on a case-by-case and can provide bridging finance that is tailored to a client’s individual needs – giving them the flexibility they need to secure a property purchase in a timely manner.

Looking ahead

Those who’ve kept a keen eye on how the property market reacts to political and economic shifts will have seen the resilience of the asset class over the past decade. This is particularly important as we gear towards Brexit – whatever form it may take.

After all, real estate’s unrivalled ability to adjust to changes has ensured that it remains a strong commodity, particularly for investors looking to the long-terms gains on offer. And as the UK prepares for the transition of leaving the EU, having fast access to finance and a good understanding of property trends will ensure that property investors can seize the opportunities that become available.

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