Insights » Is Now a Good Time to Invest in Property in the UK?

Is Now a Good Time to Invest in Property in the UK?

By Cara Dutfield

The UK property market has historically demonstrated exceptional resilience and steady growth.

In the wake of a tumultuous year, many are questioning whether now is a good time to invest in property in the UK.

According to Zoopla’s December House Price Index, the average house price settled at £264,400, experiencing a -0.8% decrease compared to the previous year. However, in early 2024, those drops began to stabilise, hinting at a positive swing in the market after a somewhat disappointing end to 2023.

In this article, we’ll answer the question: ‘Is now a good time to invest in property in the UK?’ Using exclusive industry insights, we’ll provide a thorough analysis of the current market, helping you navigate this important decision.

High Rental Demand

The inventory of available rental homes is nearly one-third lower than the five-year average. This, coupled with rental demand soaring 51% above the five-year average as of September 2023, has resulted in a significant housing challenge for renters.

This surge in demand is most notable in the West Midlands, where 76% of landlords have reported an increase in tenant demand. Funding these areas presents an opportunity for investors to tap into lower property prices and higher rental yields.

For investors seeking a reliable income stream, rising rental yields offer a promising prospect. In addition, with rental inflation projected to reach +5% in 2024, these yields are poised to see further growth in the foreseeable future.

uk property inestment

Favourable Interest Rates

With interest rates on a downward trajectory in 2024, many individuals believe they should wait for rates to drop further before investing in property. However, this could jeopardise your chance to take advantage of skyrocketing rents and create long-term wealth.

The positive outlook on interest rates in 2024 compared to the 15-year peak we witnessed in July 2023, makes now a great time to gain a competitive advantage on your buy-to-let purchase.

Decreased mortgage rates fuel a heightened demand for properties, potentially boosting both property values and rental incomes. For investors, this translates to an advantageous landscape for acquiring new properties and leveraging existing ones.

Infrastructure Investments

Between 2023/24 and 2024/25 the government has committed to investing £164bn in major infrastructure and construction projects.

A key example of this is HS2, the UK’s brand-new High Speed Rail Network, meticulously designed to create an innovative travel network between London, Birmingham, Manchester and Leeds.

HS2 represents an opportunity for professionals to live and work in two different cities. This makes it possible for someone to live in Manchester and commute daily to and from London. Consequently, this initiative is projected to fuel the rental market, rendering northern cities increasingly attractive, affording the luxury of working in the capital with a more economically viable city centre lifestyle.

Should I Invest in UK Property? | More Good News For Landlords in 2024

Buy-to-Let Mortgage Trends
The average buy-to-let fixed rate mortgage stands at 5.5%, lower than the previous year. In response to inflation and the Bank of England’s base rate changes, this reduction is predicted to continue.
Digital Tax Reforms
The transition to the Making Tax Digital (MTD) scheme has been deferred until April 2026 for landlords with income over £50,000 and April 2027 for landlords with income over £30,000.
Energy Reforms Scrapped
In September 2023, Rishi Sunak scrapped the planned changes to energy-efficiency rules for rental properties.

why invest in uk property

Why Invest in UK Property? | Key Benefits For Investors

While market conditions may constantly shift, UK property investment offers a number of timeless benefits to both resident and international investors. These include:

• Lucrative Investment Opportunities

The UK property market has a notable track record of stable growth and unwavering demand, offering investors a pathway to secure their financial future. With a diverse array of property types and locations to choose from, there’s a suitable option to suit a range of needs and preferences.

• Cultural Attraction

The UK’s diverse history makes it appealing to both local and international residents. This allure contributes to the continuous demand for housing, ensuring a consistent pool of potential tenants or buyers.

• Economic Resilience

With a robust and diverse economy, the UK has successfully navigated through numerous global economic challenges. Investing in UK property provides a tangible asset that is sure to withstand fluctuations in financial markets.

• Financing Options

The UK offers an extensive array of financing options for property investors looking to expand their portfolios. Ranging from traditional mortgages to innovative financing schemes, investors can enjoy the flexibility to tailor their approach to suit their unique circumstances.