The UK Property Market: Still a Good Investment
There have been reports suggesting that the UK property market is heading for a downturn, with claims that it will regain its healthy shape in a couple of years. Property expert Jones LaSalle states that the decline in residential and commercial prices over the past nine months has created a "yield gap between prime and secondary assets back into the market." This situation, according to the expert, offers an advantage for cash-rich investors.
While the persistent tight supply of credit is seen as having a significant impact on the UK property market overall, the firm insists there is still demand for quality assets. This report comes amidst the general consensus that the housing boom is over. Recently, media reports have indicated that most areas in England are experiencing price declines, with homes in Greater London seeing the sharpest drop. These reports may lead some people in the UK to question whether now is still a good time to invest in property.
Stories about a property crash in the UK have consistently appeared in the news for quite some time. However, many experts believe that the property market will remain strong. The reason is that the supply of property is insufficient to meet demand, not to mention that property is still relatively affordable. When prices soften or asking prices decrease, there is always a group of ready buyers willing to pick up bargains. These include first-time buyers, family movers, or property investors looking for deals.
The reason for the steady supply of buyers is the fundamental undersupply of property, as the current number of completed developments falls below demand. The increasing demand for a limited supply of property will keep prices firm. Even though unsold properties have reportedly increased, the level of unsold stock is expected to remain below the long-term trend. One reason for this is population growth. Inward migration has significantly risen due to the UK's appeal as an excellent place to work and live.
Additionally, there are two key factors that make investing in property a sound decision. Regardless of how the UK economy shifts, property is still expected to perform well, especially over the long term. First, when global economies enter another recession or depreciation phase, interest rates could fall, further reducing property investors' expenses while maintaining rental income. Second, if the capital value of property decreases, people may stop buying properties and choose to rent instead. The increase in rental demand would then boost property income.
All these factors indicate that property remains one of the best long-term investments you can make. The only thing investors need to seriously consider is location and choosing the right property at the right time. Once they master these aspects, they can expect to participate in the substantial growth of the property investment market, which has performed consistently well over the last decade.
Copyright (c) 2008 Parmdeep Vadesha