The above charts show the progress of the house price index of USA, UK, Australia and Dubai. All markets dropped in the 2009 global financial crisis albeit in different magnitude. The drops in USA and Dubai were over 30% while UK drop was below 20%. It is also worth to note that both UK and Dubai recovered all the losses since the peak of 2008 in about 6 years while USA house price index is still below its peak before the financial crisis. Dubai residential price index recovery was driven by many reasons like GDP growth, population growth after the Arab springs and the acceleration of foreign investments after the announcement of the 2020 Expo.
The resilience of the UK residential market is driven by strong fundamentals which appeal to both domestic and global investors. I would like to list some of the reasons that encouraged me to invest in the UK residential properties.
1- Chronic supply shortage: Over the last two decades, a trend for urban living has led to rapid population growth in UK cities, where local authorities have been challenged to meet a rising demand for homes in areas where there typically is little available land. The need for new urban residential development sites has increased significantly, driven by young professionals, students and recent graduates choosing to live close to employment hubs and culture and entertainment quarters. The overall population in the UK has also been steadily increasing by about 400,000 people every year, and is forecast to reach 71 million by 2030. To accommodate this, the government recently raised the national housebuilding target from 240,000 to 300,000 homes per year – yet on average, the UK builds about half that.
2- High yields: The below table, from totallymoney.com, shows the top 10 post codes in the UK with the highest yields for Buy To Let (BTL) properties.
A yield of 10% and above together with consistent capital growth due to the chronic housing supply shortage is the recipe of significant total return.
3- Low interest rate: The current bank of England base rate is at historically low level of 0.5%. UK residents can get BTL mortgage below 2% while global non-residents investors rate for BTL is below 3.5%.
4- Global Investors friendly environment: In comparison to other European markets, global investors can easily obtain a mortgage in the UK, find property managers, properties sourcing companies and online tax return accountants. All these factors are essentials for global investors.
Through Wealth Heights coaching program, we helped many clients to purchase extremely profitable properties in Manchester , Leeds , Liverpool and Birmingham via our trusted UK based contacts. If you are seriously considering investing in UK properties, don’t hesitate to email us (firstname.lastname@example.org) or join our coaching program.