There’s one question above all that, in the real estate industry, we are constantly asked: ‘Is now a good time to put money into property?’
The consensus is, despite the uncertain environment, residential property in particular is still a fantastic asset – tried, tested, tangible and trusted.
People will always need to live somewhere. There’s a consistent, growing need for property, and yet we have constrained supply:
- There is a housing shortage, with 8.4 million people in England facing a ‘housing crisis’.
- The UK is delivering less than half of its target 340,000 new homes annually.
That said, property is not right for all of us, all of the time. And not all approaches to investing are equal.
The ‘who, why and how’ of property have changed, and are expected to change further.
We’re in a recession. Government stimulus, effective quantitative easing, and long-term low interest rates means capital is cheap, readily available and looking for a safe home.
The good news is that residential property has proved resilient through covid:
- Residential property values have proved stable relative to non-property and other property assets, with annual price growth of 5% in the year to September, versus a value reduction of 6.6% in just six months in the wider real estate sector. Even the Queen has lost substantial sums: the Crown Estate has suffered a £500m down-valuation, largely due to reduced retail rental income.
- Residential rental returns have been resilient, with rental income typically 95%+ through covid versus <50% in other real estate sectors.
There’s more change to come though, including:
