Optimistic Outlook for Property Market in Next Five Years

Typical english residential street

According to new research by Barclays Bank, the UK property market is set to thrive over the next five years. They predict house prices will rise by an average of 6.1% during this period, with high value areas experiencing the largest growth.

The study factored in numerous components that can influence the market. This includes rental trends, employment levels, commuter accessibility and the expected behaviour of high worth investors.

For prospective investors, this is great news after some post-Brexit uncertainty. Knowing your initial outlay is likely to increase in value means you’ll always have a stable exit strategy to fall back on.

Regional Performance

London property looks set to gain the most over the next five years, where increases of as much as 12% could be made. This is mainly due to extremely wealthy investors who are always drawn to the capital.

Significant gains are also expected in East Anglia (9.38%), the South East (8.74%) and East Midlands (6.67%), as well as the West Midlands and Scotland at 5.88% each.

In the northern regions, house prices are generally lower to begin with. Although this means increases in the North East, North West and Yorkshire of around 4% aren’t as high, it still allows low-entry buyers to enter the market with confidence.

Positive Investment Climate

For buy-to-let investors, any positive forecast makes for great reading. A purchase that’ll increase in value whilst generating rental profits along the way is the ultimate goal.

The chief executive of Barclays wealth and investments division, Dena Brumpton, has echoed these thoughts with his comments on the study:

“There is an increasing confidence among property investors, as many are taking a long-term view when it comes to putting money into property. It’s also interesting to see from our research how investment prospects are emerging outside of the established property heartland of London and the South of England, with economic growth and employment opportunity fueling growth in hotspots across the UK.”

estate agent signs

Image credit: Rachel H via Flickr

Contributing Factors

The main factor behind these anticipated gains is the UK’s chronic undersupply of housing. New building schemes can’t keep up with demand, especially with an ageing population and large net migration figures. An additional 200,000 people are expected each year.

In turn, the UK’s current stock will grow in value as the necessity to find somewhere to live intensifies – by 2021, the average value of a home in the UK will be nearly £300,000.

However, because of this inflated cost, most traditional first-timer buyers are being forced onto the rental market. Around one-fifth of the population are now currently renting, a figure that was just 8% back in 2001.

There are no signs of this trend slowing down, especially as house prices look set to rise again according to the Barclays survey. This means now is the time to invest, not only to make long-term gains but to also take advantage of the rental mindset of modern Britons.

 

For more information on the rental market, you might find Rents Increased Year-on-Year Official Statistics Show interesting.

If you’re ready to become a property investor, get in touch for a chat today.