The property market continues to defy the doomsayers. For months now, pundits have been predicting that crashes are just around the corner, but the numbers simply keep going up. Average house prices in the UK hit a record high of £294,845 in June, according to Halifax’s latest house price index.
Commercial properties are also pushing forward. Strong performance in the market is being driven by the need for industrial, logistic and retail warehousing space. Demand across the property spectrum has been affected by a range of economic factors – some good, some bad. The question is, how long will this last and is it sustainable?
I think there’s still plenty of room to grow, even with some rocky roads ahead of us.
In the short term, buyers and investors may be spooked by changes coming from the state. We’re in the process of welcoming a new Prime Minister. This raises all sorts of questions about what could be on the horizon. If there’s one thing markets of all shapes and sizes don’t like, it’s uncertainty.
Also, the rhetoric put out by the government and legislators in recent months hasn’t exactly been comforting. Property developers have been accused of cartel-like practices, while planned legislative and tax changes are set to make things tricky for landlords. When you add in skyrocketing inflation, an energy crisis, supply chain issues and even war – many may wonder if they’ll ever be light at the end of the tunnel.
But, over the long-term, we should remember that basic supply and demand trumps most temporary difficulties. And there’s plenty of demand for property.
The UK is desperate for investors to bring more housing supply to the market. It’s believed there are 29 prospective buyers for every residential property sold in the UK. We’re also not building nearly enough homes to replenish stocks. Around 300,000 homes need to be built every year to keep things sustainable. The latest data shows this target has been missed by a whopping 40%. Residential investors may do well where they supply desperate house hunters with attainable, desirable homes.
The commercial market also seems to have brighter days ahead of it. Despite everything thrown at it, the tenacious UK economy grew by 0.5% in May.
With nearly 2 years of lockdowns behind them, businesses are desperate to bounce back from Covid. It’s believed 80% of businesses are planning to increase their workforce and according to Savills, there will be growing demand for prime office space over the coming months. There’s even opportunity outside of the obvious, with around £12bn of capital chasing science-related commercial opportunities in the UK.
No one is denying the property market isn’t facing challenges at the moment. But for investors willing to push through, property is still plenty stable where it counts.
• Commercial properties are also pushing forward. Strong performance in the market is being driven by the need for industrial, logistic and retail warehousing space.
• But, over the long-term, we should remember that basic supply and demand trumps most temporary difficulties. And there’s plenty of demand for property.
• It’s believed 80% of businesses are planning to increase their workforce and according to Savills, there will be growing demand for prime office space over the coming months. There’s even opportunity outside of the obvious, with around £12bn of capital chasing science-related commercial opportunities in the UK.
