While many experts are talking down the UK property market it seems that Barclays Bank thinks very different. The leading light in the UK banking sector has reviewed the UK property market and come to the conclusion that average prices will increase by 6.1% by 2021. This may not seem like a massive increase in property prices but set against the doom and gloom forecasts for the short to medium term it is positive rather than negative.
Buy to let investors
Despite the fact that some financial institutions have reported a drop in buy to let investment, it seems as though Barclays Bank is still experiencing strong demand for financial assistance. Interestingly the bank also expects property hotspots to emerge in the North of England where employment opportunities will improve and business start-up rates should help to attract more entrepreneurs. This will in the longer term cut the gap between the North/South East of England but it will take many years the clawback the price difference in property prices.
An interesting 38% of high net worth investors looking to acquire property in the North of England believe prices will rise, while 27% are banking on strong rental income in the region as their reason for investing. It does seem that finally the price differential between the North of England and London/South East of England is being noted.
There is also much focus on millennial investors who it would seem are still extremely keen to climb aboard the UK property ladder. Future changes in the structure of the UK employment market, with higher employment rates, should in due course increase average earnings which will help when applying for mortgages. It is also worth noting that many millennial investors may be in line for financial assistance from their parents many of whom will have seen a significant rise in the value of their property over the years.
Already millennial investors have a good foothold in the UK property market with 41% confirming their investment portfolio is tied up in property which compares favourably to just 23% for those aged over 55. Millennial investors are also more likely to own more than one property than those over 55 years of age – 48% of current annual income is already generated from rent.
Positive news at last!
Despite the doom and gloom surrounding the UK property market, and indeed the UK economy, it is good to see Barclays Bank coming out with a more positive approach. Even though a 6.1% increase in average property prices may not seem excessive over the next four years, it does compare favourably to some of the downbeat forecasts we have seen of late. It is interesting to see that both millennial and buy to let investors would appear to be central to the future UK property market bearing in mind the way they have been treated by the government.
The next couple of years will be critical for the UK property market and the UK economy with Brexit negotiations expected to prove difficult. Whether things can be quite as bad as the doom and gloom merchants would have you believe is debatable because ultimately nobody knows what will happen. The bottom line is that the UK buys more goods and services from Europe than Europe buys from the UK as a whole. So, in a worst-case scenario, which party needs the other more?