Over time all property markets develop and change and are often unrecognisable from the animal of say 10 or 20 years ago. Many real estate investors fall into the trap of assuming for example the likes of London will remain the major market in Europe when in reality Brexit has the potential to change this forever. This is a rather severe example of markets adapting but if you think about it, property markets do continually develop and change.
There are many areas of the UK which have been off the radar of property investors some years. Once areas such as London begin to look “overvalued”, very often investors will begin to look elsewhere for their long-term capital appreciation and rental income. While it would be wrong to suggest that property markets in the North East and the North West of England have changed dramatically they are certainly developing. Over the years many investors have ignored the often double-digit rental incomes available but now London is “off-limits” at the moment there seems to be renewed interest in this double-digit rental income.
As a consequence and this is only one example of many, the affordability factor of properties in the North West and the North East of England is changing. Those who now assume that double-digit rental incomes are still easy pickings in the area may well be disappointed and might have missed a good solid long-term investment opportunity.
Local infrastructure investment can make a massive difference to any property market as shown by the likes of the HS2 project which has yet to get off the ground. Predictions about the change in property values on the route of HS2 were dramatic to say the least and would, assuming the project does eventually go ahead, change these local property markets forever. There have been rumours for many years about infrastructure investment, new transport links but many investors want to make money NOW and often put these potential opportunities on the backburner.
While any general improvement in local infrastructure does impact the local property market it can have a massive impact upon the regional employment market. If for example certain employment hotspots have seen property prices pushed to levels which are “unaffordable” then many people will look at the local infrastructure and how easy it is to commute. There can be savings in the hundreds of thousands of pounds for those willing to commute and again this can have a massive impact on a local property market.
Change and adapt
History will show us that markets around the world have changed and adapted over the years due to a variety of economic and social issues. Those who believe that property markets around the globe simply standstill and maintain their status quo going forward will at some point receive a significant shock. In reality it is investors who change and adapt to different environments and different conditions. Where one market is perhaps becoming overvalued they may look further down the transport network to see which properties could attract the commuters of the future.
In many ways you do need to think ahead as a property investor although the further ahead and the more assumptions that you make the greater the potential risk but also the greater the potential rewards. Many investors are quite happy to invest in traditional long-term property opportunities while others perhaps have a greater appetite for risk and the potential rewards which this can bring.