Is U.K. Property Still a Good Investment For Expats?
With all the political disruption and mayhem that has gone in the U.K. over the last 3 years. As of writing (April 2020) property as a whole, throughout the U.K. has continued to grow, despite its slow growth of the U.K.
The average U.K. property growth in 2019 grow by 0.3% averaging 216,805 GBP.
Although, the country is divided, with stagnant, declining, and growing areas. Declining prices are prominent in London. Growth areas higher than inflation at 2% CPI are more likely found in the north and Northern Ireland.
From a continental point, the U.K. still stands the most expensive place to buy property in Europe. Double the average per square meter of France.
Is It Still Worth Buying As An Expat?
Actually, U.K. property is and would have been a value if buying from a foreign currency since the ever falling GBP 3 years ago. Personally, believing in reviewing economic data in the long term value of GBP.
Looking at the E.U. presently going though economic challenges without the U.K. financial contribution. Germany predicted to go into recession. While the other major E.U. contributors facing their own political and economic problems, Spain, Italy & France questioning E.U. stability.
Investing in its currency of a developed country presently undervalued is a rare opportunity. Additionally, the U.K has a shortage of houses, and the construction of new builds will see prices stable, even with slow growth.
With an uncertain growth for the U.K. for 2020 (with the present situation of the pandemic), could it have an effect on U.K property?
In short term yes but if you are a long term U.K. property investor, which let’s face it, most would be with the high tax costs on selling straight away then we should see markets go back as they were. The U.K. has a strong rental sector due to the shortage of houses, however, you need to look at your investment area and what the demand is, there is no point buying a family Buy To Let, in a student part of the city. Many won’t want to live there and you will likely end up with complaints.
The U.K, like most other developed countries, goes on what is an 18 year (or near) cycle. At the end of each cycle the prices going higher.
This in simple terms, states that property crashes and then booms getting higher, I would highly recommend reading Fred Harrisons Boom Bust. Additionally, will do an article as it’s a very important topic. For anyone that is skeptical, please read the book and the history of the housing market. After 2008/2009 they have tightened up the regulations and legislations of mortgages, lending and being able to buy a house, this can often deter people, however, if you have everything as it should, then there shouldn’t be any problems.
U.K property presently has the advantage of leverage, with average mortgage rates on most values being eroded by the inflation rate. Thus are essentially borrowing money for free. For me, this is why we should have it in a portfolio.
Conclusion
With rental income averaging 5% and growth in the U.K property markets and the ability to leverage eroded by inflation. U.K. property is still as a whole, a good investment for the long term for the reasons stated.
I will go further into what areas are presently valuable and the tax of the U.K. properties in the later part 2.
