Saturday, September 25, 2021

UK Property Market Advice

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In the first quarter of 2014, the property market of UK was regularly hitting the headlines for all the right and a few wrong reasons. And, this trend is showing no signs of slowing down. Property sales have hit its peak in the first three months of the year, according to the Royal Institution of Chartered Surveyors. The last such boom was seen early in 2008. This definitely is a positive piece of news, for it denotes a recovery of the real estate market from the recent financial debacle. It is also a welcome piece of information for property owners who have invested heavily in real estates in past and are hoping to reap the benefits in near future.

The Surge in Real Estate Market

The Office for National Statistics also reported that the average house price is now at GBP 254,000 which is an increase from GBP 194,000 as registered five years ago. In London itself, the average prices of a house have soared by more than GBP 150,000 to be at GBP 458,000. The same is expected to rise at least by 25% in next five years. Experts also think that the ‘boom,’ that has started keeping the real estate market of London at its centre, will spread down south as investors and prospective owners will look forward to greener pastures. The increment in prices is also fuelled by the fact that the supply is abysmally low against the demand. As a solution to that the current government offered new construction of 200,000 houses a year. But according to the experts it is hardly going to be enough. For an investor it means, the prices are expected to see a steady rise for some time.

A resurgent real estate market resulted in a growing demand of increment of the property related taxes like inheritance tax, stamp duty etc. It is highly advisable that you should keep a tab on this in case you are intending to capitalise on your newly acquired property by renting it out. The increment in taxes will have significant bearing on your revenue. If you are considering buying a residence for yourself and having a certain budget in your mind you may prefer exploring the northern regions of the country which are yet to feel the heat of the market. In comparison to London and the adjacent regions these areas have only observed about 5% growth in the prices of real estate. But the same statistics will also tell you, that it is perhaps not wise to invest in a house there in case you are not sure that you are going spend the next decade or so at the same location. The resale value of the houses bought there may not be up to your expectation.

There are around 25 million houses in United Kingdom the cumulative worth of which is about GBP 5.2 trillion. Seven out of ten of these houses are occupied by the owners themselves. This only showcases our yearning of buying a shelter for ourselves that we call our ‘dream home’. – Said Steve from Innovo Property UK

While buying a private corner for yourself don’t make a mistake of thinking, that like mansions in Knightsbridge or Belgravia the prices will always increase at such an astronomical rate – this is unless you actually own a home there. On one hand where there are phenomenal rises seen in house prices sold in London Boroughs, Hackney etc, on the other hand, house prices also dipped in places like Sunderland and Doncaster since 2013. So you will have to be patient if you wish to reap the rewards of your investment.

Even if there is much jubilant mood associated with the rise of real estate market the inflation adjusted growth is nowhere near what it was the in 2008. Experts believe that it will reach its peak in 2018. According to a conservative estimation of the real estate agents like Knight Frank and Savills, we are to see a rise by 24 – 25% from what we are currently experiencing. The factors that may significantly affect this rise are inflation, general election to be held in 2015 and policy changes before and / or after that.

Prospective investors may prefer putting their money in the great real estate market of London which is hardly expected to fail you. Beachfront properties in Dorset, Devon and Wales are gaining in popularity by the day. And if you wish, you may also consider investments in overseas locations. Places like Hong Kong, Shanghai, Manilla or Sydney, Perth in Australia have time and again proven themselves to be fertile grounds for investments. Never rule out investing in the business hubs of UAE and Qatar. There are plenty of charming locations on both sides of the Atlantic that are waiting to welcome you, both as a resident and an investor.

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Steven Morgan
Investor Academy Writer Steven Morgan is a financial journalist who has written regularly for national newspapers, magazines and websites.

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