After a difficult period since the UK referendum on EU membership there are signs that property investors are looking to take advantage of short-term price fluctuations. Despite the apparent doom and gloom among some experts there are signs investors are looking to take advantage of short-term pricing pressure to maximise their long-term returns. If you take a step back and look at the situation from a distance, there are many reasons to be positive in the longer term.
Immigration
Immigration was a bugbear for many voters in the recent referendum but the reality is that relatively high immigration will continue in the UK for many years to come although it may be controlled to a greater extent. Many people also ignore the fact that we already have significant non-European immigration in the UK which has also increased demand for property right across the country. Those who voted for the UK to leave the European Union will be sadly mistaken if they expect immigration to disappear overnight.
New build shortages
It is ironic that housebuilding shares took a hit over the last week amid concern of reduced demand in the UK property market. Many seem to be forgetting that the UK has been running a new build housing shortfall for decades and even if current demand for UK property market slowed there is more than enough pent-up demand. One of the issues which have apparently stopped the housebuilders from increasing their output is a lack of skilled labour in certain areas of the industry. Could a new immigration policy focusing upon skilled labour help?
Skilled labour shortages
As we touched on above many of the major housebuilders across the UK have highlighted a shortage of skilled labour in a variety of areas of their business. A move towards more controlled immigration for those offering specific skills sets to the UK could assist UK housebuilders in expanding the number of qualified staff in the medium to longer term. This in turn will allow them to increase their new build output and help to satisfy the historic and current appetite for UK property.
Rental yields
Any reduction in UK property prices in the short to medium term will increase rental yields and likely attract more investors to the buy to let market. This is a market which has been extremely strong in the UK for some time now although in some parts of the country rental yields have reduced significantly as house prices have increased. It will be interesting to what level of rental yield will tempt in those investors currently sitting on the sidelines looking to create long term income streams.
Conclusion
While there has been some confusion and concern since the result of the UK EU referendum was announced many investors will see the reduction in property transaction numbers and property prices as a good long-term buying opportunity. Let’s not forget that as property prices slip back there will be an increase in the rental yield as demand for the UK rental market still remains extremely high. If you are able to look beyond the short-term uncertainty there could well be a number of very attractive opportunities on the horizon.