The idea of investing the money we have worked hard for can be scary, especially for people who are new to it. With the pandemic reminding us of how easy it is to lose our jobs and income streams, we are even tighter with our purse strings. However, 2020 has also shown us how COVID-19 has impacted the economy, sending the property market into a boom which can really benefit property investors in the long-term.
Investing in property could be the best decision you make this year. Whether you are looking to kickstart your property investment career or expand your portfolio, here are the three key factors which will help you understand how now is the time to enter the UK property market.
COVID-19 has been destructive for many industries and aspects of everyday life, but some light is approaching. With vaccines now being circulated, it is expected that the economy will start the bounce back into place. However, to boost this recovery, interest rates have shot down to a shocking low of 0.1% to encourage consumer borrowing and spending. This also presents an opportunity for investors who can now access more affordable mortgages.
Investors must also consider the impact of Brexit on investment. With the final exit from the EU with a free trade deal in place, certainty and security is assured. It has also minimised the short-term impact of Brexit on the economy. However, perhaps one of the most anticipated changes to come from Brexit is its impact on the pound. Right now, there are no predictions of drastic fluctuations in the pound. Increases in the pound’s value in the long-term are likely to benefit investors and provide a better rate of return on their property investments.
Return on Resilience
A prominent factor for investors is the return on their assets. Their property needs to sell to profit the investor and finance future investments. And, if we have learnt anything from 2020, it is that the UK property market has been resilient in the face of a pandemic. With the property market already enduring the 2008 financial crash, it has adapted to show resilience in the face of future economic uncertainties – including nation lockdowns and extensive restrictions.
The UK property market has not only survived the pressure of COVID-19, but it has thrived in its presence. Towards the end of 2020, the average property price rose to an all-time high of £250k, and demand for property soared as people sought out their perfect home. The ability for property to bring an exceptional rate of return as we traverse through the remainder of the pandemic is high. Many experts predict this boom to continue as 90% mortgages become available to more first time buyers and people search for their perfect ‘lockdown’ home.
Most property experts will tell you that you need diversity in your portfolio to be a successful investor. Having a variety of housing lowers the investment risks as you are utilising multiple markets. Evidence from the most seasoned to the newest property investors has shown that single assets do not match more diverse portfolios’ performance.
Diversity can come from different types of properties as well as similar properties across other regions. By introducing variety to your portfolio, you are not tied to one market. If one market faces a lull, you still have additional properties and potential returns elsewhere.
We can confidently say that the UK property market’s performance in 2020 suggests property will remain a strong industry in 2021. Investors, experienced and new, can look to 2021 without fear of entering the UK property market once again.