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UK Property Market Update 2022|Will the housing market crash?

January 31st, 2020 – COVID 19 was detected in the UK. November 27th, 2021 – Omicron is found in the UK. How has the UK property market responded and how are things looking in 2022? If you’re looking to invest or move to the UK, the answer will be important to you.

2020 – A Year of Resilience

Annual house price rates of change, UK: January 2006 to December 2020

Despite the excruciating circumstances, the property market performed extraordinarily well. Why? There are two reasons for this.

  1. The UNLOCKED DEMAND for property after the UK’s first lockdown in March, 2020 came to an end.
  2. The STAMP DUTY HOLIDAY that began in July, 2020 and lasted for a whole year.

2021 – Average UK House Price

Average UK house price, UK: 2005 to 2021

Despite starting off with a lockdown, 2021 carried the housing boom torch even farther, coasting on the stamp duty cuts from the previous year and the historically low interest rates. It has been the busiest year in UK property since 2008’s financial crisis.

Here are the details:

  1. UK Property prices in 2021 rose by 10.2%
  2. 1.5 million house purchases have taken place since January, 47% more than 2020
  3. Homebuyers borrowed around £316billion worth of mortgages, 30% up from 2020

2022 – Things to Consider when buying a new house

At the moment, uncertainty is high due to Omicron and unprecedented UK house price levels, but whether you are looking for a new home or considering a new investment in the UK, think of the following to guide your purchases in 2022:

  1. The UK Low Housing Supply – It’s important to remember that while demand has been surging, property supply has not kept up, which partially accounts for these inflated the UK housing prices.
  2. Change in Interest Rates – A possible interest rate hike might be on the cards for 2022, which would only make it more expensive to borrow money.
  3. Rising Mortgage Unaffordability – Rising petrol and electricity bills have tightened many budgets.
2020 – UK Property Marketing Forecast

In face of high uncertainty, most experts across the industry expect:


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Why you should invest in Salford

When you ask the people where to invest in the UK, the general opinion is always London. However, we recommended you take a look at Salford, which is located in Manchester in Northern England. In recent years, Salford has continued to develop, creating a large number of job opportunities, the overall labor power and housing demand is increasing, with convenient transportation, it is definitely the best choice for investment.

Convenient

Geographically speaking, Salford is very close to big cities like Manchester. This strong link to a major city implies its prowess in reach. Transportation is made easy because of this linkage. Starting from Salford Central Railway Station, one stop to Victoria Station (Manchester’s transport hubs), and then transfer to Light Rail. Then you could easily reach Manchester’s Chinatown, Soho’s Northern Quarter, Spinningfields and shopping districts. Convenience means that you are allowed to live in further areas, while still being able to come in contact with modern society. This is something that the general public desires, and in other words, something that would be worth investing in.

Job Opportunities and strong signs of development

Up and coming businesses are always tight on money, as such, saving whenever they can is something that companies want to do when starting out. Thus why London is out of the picture. Unless you have a large stream of revenue to begin with, London just isn’t worth it anymore. As such, places such as Salford are slowly creeping into the eyes of startups. With good connections to the city while being far enough for lower standards of living is more than desirable. As more and more companies move into Salford, it would evolve into a central business district of its own. Even now, Salford is home to over 8700 businesses and employs more than 127000 people, with big name companies such as Talktalk and Vodafone. Being this top business hotspot, Salford is soon to see more growth as it becomes more and more business centric. 

Rise in reward

By the end of the day, what matters more is numbers. As smart investors, we are used to hearing promising investment opportunities that somehow lay flat. Which is why we need numbers, concrete data to back our investments up. According to data from the British Government’ HM Land Registry, starting from March 1, 2020, the overall average residential property price in Salford will be approximately 170,000 pounds (1.62 million Hong Kong dollars), an increase of 1.53% month-on-month and year-on-year. It recorded an increase of 2.92%.  In terms of long-term appreciation, London property prices have not risen as much as Salford, Manchester or even Greater Manchester.

Conclusion

We believe that there are a lot of hidden hotspots in the UK, for example Salford and Liverpool. Sometimes, it’s easier to look for what everyone trusts. However, going against the norm is what we as Denzity also believe in. Just because most people believe in something doesn’t mean the savvy investor has to follow.

Whatever your preference is, Denzity is here to help you make a better decision. Our Portal lists many overseas properties managed by trusted real estate companies all over the world. If there is a place to find your dream home this would be it!


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United Kingdom | 3 Reasons why UK property is worth to buy

Owning a property is a dream for every Hong Kong person. However, Hong Kong’s property prices have risen a lot and it’s difficult for Hong Kong citizens to have one. Compared with the sky-high prices in Hong Kong, overseas property is becoming a choice. The UK has been a popular choice as we have BNO which is easy to immigrate to the UK.

A good time to enter the market 

According to Knight Frank data, the number of UK exchanges in July 2021 was 21% below the five-year average. Moreover, the nationwide house index decreased from 8.7% to 7.8%. It is believed the UK real estate market took a hit during the pandemic. However, it is good news to investors since the housing prices are at a more reasonable stage. 

Besides, The American Federal Reserve Bank is starting to taper their repurchase of external debt and Q3 non-agricultural employment data happens to be way lower than expected. It can be foreseen that the tapering would be postponed as it is still not the time to release the inflation to the public. It is a great time to purchase assets now before tapering begins again.

“Help To Buy” Policy

The UK government has now added a “Help To Buy” policy to lower the threshold for the first phase of a new building. It also provides a home equity loan of more than 15% (up to 40% in London) to assist any first home buyer aged 18 or above. With a 5% first installment, you can use the policy to buy a new building. This round of policy will last until March 2023 (2022 in Scotland). If Hong Kong people are successfully hired after arriving in the UK, and have established sufficient credit scores and records, this policy can apply for them as well.

A path towards stability

The stock market has always been a volatile location. With previous disasters such as the depression in the 30s or the stock market crash earlier last year. These are all situations that every savvy investor wants to avoid. It is also no secret that real estate is a surefire way to maintain value and keep your money, but the question is how much?

Even though you can ensure that you would not go bankrupt with having property, the benefit also lies in the possibility of making money, thus the name of “investment”. As the rental yields are so high in the UK, it really is a foolproof plan. There are constantly tenets looking to rent and buy, no matter in what financial climate in the United Kingdom. With that you can always turn a profit on top of keeping your assets intact in dire scenarios.

Risk and Reward 

The most important part of investing is to manage risk and return.  The higher the risk of an action, the higher the reward it will bring to justify the investment in it.  And the current low risk and high return make purchasing a property a good investment.

   Whether you buy and sell real estate business for your own use or long-term investment, the UK market can meet your needs.  Like the slow pace of life in Merseyside or the fast pace of central London, there is always a place in the UK for you.

Conclusion

Whether or not you choose the UK as the next place to look for an overseas property, we hope these points help clarify what aspects of a country you should be clear about before investing in property. There is no one size fits all answer. 

Whatever is your preference, Denzity is here to help you make a better decision. Our Portal lists many overseas properties managed by trusted real estate companies all over the world. If there is a place to find your dream home this would be it! Watch out for upcoming videos that will take a deeper dive into the area. 

Disclaimer

Please note all the above stated is opinion only and does not constitute proper investment advice. Denzity is not liable for any investment decisions that result from following the opinions outlined above.

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It’s 2021: Where Can You Invest in the London Property Market?

  • The mortgage approval rate is up 827% since last year.
  • Stamp duty has been waived – saving buyers up to £ 15,000
  • Retail investment is up £290m in 1 month

The UK offers relative stability and transparency, with London at the core of it’s market as one of the major metro areas of the world.

A hub for overseas property investment, the demand foreign buyers have been responsible for as much as a 20% increase in prices. The city is home to millions of immigrants and is often the primary choice of investors due to its geographically convenient location and growing scope of opportunities.

Stamp duty has been waived for the bulk of 2021, releasing the pent up demand from Covid.

A quick history…

Pre-pandemic, Prime Central London (PCL) prices suffered due to “higher rates of stamp duty and political uncertainty,” cites a 2019 Knight Frank report, pushing the average price for existing homes below their 5-year average.

Property in popular neighbourhoods fell up to £200/sq foot below average: Hyde Park, St John’s Wood, Chelsea, South Kensington, Kensington, Belgravia, Knightsbridge and Mayfair in PCL ranged between £1,000 to less than £2,000/sq foot.

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Covid-19 made an immediate, obvious impact throughout 2020, with an initial crash followed by volatility, spurred by quarantine and mass uncertainty. However, in March of this year – 2021 – property transactions were the highest in a decade in Prime Central London. In other words, the property market was at its most active in the last 5 years.

Price growth began at the beginning of 2021, and demand will continue to grow as travel eases, vaccines take effect, and investors realize the opportunity to break in before supply is snatched up at a premium.

This image has an empty alt attribute; its file name is London-house-prices-map-1-1024x612.png
London remains a strong investment location for capital appreciation assets. 

The demand for properties in the city still grows, and investors are encouraged to view it broken down in the 5 main areas mentioned below:

  • Central London
    • West End, Covent Garden, South Bank, London Bridge, Chinatown, City of London;
  • North London
    • Barnet, Enfield, and Haringey;
  • South London
    • Bromley, Croydon, Kingston upon Thames, Merton, Sutton, and Wandsworth;
  • East London
    • Collondale, Saxilby, Brookville;
  • West London
    • Popular neighbourhoods: South Kensington, Notting Hill, Fulham, Hammersmith, Shepherd’s Bush, Kew, Twickenham;

As far as investment goes, reallymoving.com suggests the following areas in terms of pricing, transportation, environment and other factors that are to be considered pre-purchase:

  1. Barking and Dagenham
  2. Havering
  3. Leyton
  4. Battersea
  5. Bloomsbury

They also have this article on organizing a home move to London.

A large construction project in Battersea, London.

Wile London is on track to recover from its a recent turbulent timeline, smaller metro areas and submarkets are increasingly being viewed by investors for their higher yields, watch our quick video on that here.

For more information on London, there are easily accessible market reports from the London Datastore – a public database – here.

This just the beginning of the conversation

At Denzity, we publish personal finance and investment articles for the young professional. If you have any questions and comments, write them below or reach out to our team here. Stay tuned for more investor focused content, financial advice, and industry updates.

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TOP 4 SOLID REASONS To Buy UK Property

Before purchasing any overseas property, investors must consider the advantages of the UK market. The country boasts the 4th best property market in the world, and is a strong buy.

1. Variety of Options

London Metro Area. The Northwest. East Midlands. Scotland. The UK boasts a wide variety of property that is often overshadowed by exorbitant prices in posh residential neighborhoods.

In fact, the laws of supply and demand give investors options from houses in Durham for under £ 60,000 pounds to an extravagant £ 13 million pound home in Belgravia. In other words, you can break into the market with under $100,000 USD.

This variation among asset classes means different ROIs based on your risk profile and long-term goal. For example, Even in the famously expensive London market, there is a wide variety of prices.

Multi-million pound homes in Knightsbridge and Westminster draw attention away from the surprising affordability of other London districts.

2. Extensive Transport Infrastructure

With over 70 airports, 40 major ports, excellent rail links, and toll-free motorways, the UK offers residents strong transport links. The connection between suburban and rural areas rank high among EU members and are only strengthening. On top of domestic railway lines, Eurostar also links the UK to the rest of Europe.

In May 2021, the Transport Minister has revealed plans to inject £401 million pounds into transport infrastructure. New stations will be built along the northern Transpennine route, especially between Leeds, Manchester, and York, along with upgrades between York and Church Fenton.

Record levels of transport investment will promote new property markets.

The respective locations’ real estate prices will mushroom as the investments in infrastructure are realized over the next few years, and have already seen surges in market energy.

3. Post-Covid Bounceback

Despite a new stamp duty for non-residents, property firm Strutt and Parker is predicting higher transaction volumes than last year. In fact, they have released a five-year forecast which estimates up to 35% growth.

On top of that, Prime Central London’s lettings have seen a YoY decline of -6.7%, compared to a worst-case prediction of -10%. While market indicators do not match pre-Covid peaks, they indicate a slow return that still offers an opportunity for investors to break in.

London is among one of many markets that is expected to bounce back.

The sector can see continued government support through planning system reforms and increasing demand for new-builds between homebuyers and investors.

4. Strong International Community

The UK and its popular metro areas have consistently attracted foreigners. So much so, that King’s College research shows foreign investment is responsible for prices being 3 times higher than they otherwise would be.

The country is home to millions of immigrants and is often the primary choice of investors due to its high level of internationality. In fact, only 20% of investment volume is purchased by UK citizens. In the same 2021 JLL market report, the research breaks down the purchaser nationality into the following percentages:

  1. USA: 36%
  2. UK 20%
  3. Hong Kong: 12%
  4. Czech Republic: 10%
  5. Germany: 10%
  6. China: 4%
  7. Other: 7%

The markets of the “new normal” are on a shaky recovery, though still offer plenty of options for professionals to invest their hard-earned cash. Going forward, policy changes in EU relations or stamp duty is sure to impact property prices, and our future publications will keep you up to date on property trends to be aware of in the UK.

Now that you’re here…

At Denzity, we help international investors find their next property. If you have any questions about your next purchase, reach out to our team, here. Stay tuned for more location-based articles, investor focused content, and listings from our clients.