The market trend has its unique characteristics. Because of the Real Estate in The United Kingdom condition people finding difficulty and became more optimistic. According to the current economy, investors are not getting a proper estimation for buying the property.
Commercial Real Estate Trends in the UK
Real estate trends one part is commercial real estate trends in the UK. Even it is called a United Kingdom commercial property. This year commercial real estate (CRE) has a solid grip compare to last year. Now the question is what will be the future of real estate? There are four trends which play a significant role in this on-going year. Those are following below:
Global Urbanization: Global Urbanization trends are continuing still in the UK. Everyone wants to enhance access to jobs and amenities and from shopping to healthcare. UK urban population got an increase from 2000 to 2010. If trends continue then demand will become high for retail, housing, offices and other property too.
Raise in Interest Rates: Interest rate will increase for this year. The forecast can be varying. There are so many factors which indicated that interest rate being low. All depends on the current economic growth trends.
Increase Capital Flows: UK market is very transparent because of this many investors like to invest here. According to the statistics investment is increasing as expected in the United Kingdom.
Limited Supply Additions: This limited supply addition only continues with a modest supply growth in the various sectors like multifamily housing, student housing, single tenant, etc. Last recession was very protracted. In this time commercial and residential real estate becomes a riskier sector.
Low unemployment: Now low unemployment rate decreased compared to the previous year in developed countries. High employment increases the demand of the market. Major cities got effected much.
Low inflation: Low-interest rate automatically decreases inflation. Most of the investor see the inflation hedge then rent can be raised if price increase.
Population growth: Population increase year by year. The projects are more for providing future supply. New construction cannot meet the expectation of a growing population. The population growth will support more investment in the future.
Improving consumer balance sheets: Strong consumer balance sheet allows consumers to keep the credit of there purchase properties and help to generate demand which can be a reason for price rise.
Increased retirement age: Many countries want to increase human’s retirement age due to social security and budget shortfalls of the government. then the labor force will increase and it will boost the demand for urban properties.
Urbanization: Population is growing in a rapid way at a higher rate all over the country. This growth will continue even in a smaller town too. That time the economic opportunity will increase in the urban hub. The new development also will keep up this growth. Then rent and prices both will increase.
Residential Real Estate Trends and forecast
United Kingdom residential property prices are increasing day by day. If the national property value increases by 3.9 percent, the consumer price will increase by 2.5 percent. This situation directly indicates that the rental rate will increase more than the home value. This is very good news for the buyer to purchase a flat and give for a rental basis.
For the buyer, there are many advantages. Buyer can pay an additional rental premium which he can put for a down payment. Base rent must be less compared to a new mortgage for the same house. Buyer can apply this when he will not have the 20% amount for a down payment.
These are tips which buyer can follow to buy and putting it to rent to his own property. Rent has to be based on current market value. Paying more than market value will not include in the rent premium. If the buyer decides to go for a lease basis, then rent must be increased as per the Consumer Price Index. Annually rent must be increased by 2.5%.
Factors behind increasing house inventory in the UK:
UK house inventory is getting increase day by day. As per United Kingdom Real estate market forecast, there are some factors Which come under consideration. Those are discussed below:
Employment: More people working in the UK compare to other countries. Though the financial crisis started in 2008 still the employment rate is becoming high.
Help to Buy: Buyer need to pay down payment about 5% of the purchase amount. The government also gives loan buyer in 20% of the value and remain 75% if required they ask for a mortgage.
Right to Buy: Right to Buy is a famous scheme which allows tenants to buy their home with a discount. Because of this buyer get affordable home for them and it is a continuous process.
Starter Homes Initiative: the First-time buyer is a buyer who is under 40 years. Only for the 20% of the building price Section 106 affordable housing contributions constructs a quality home at an affordable rate.
Right to Acquire: This is similar like Right to Buy. The buyer gets a discount and their homes come in affordable rate.
Low-interest rates: Low-interest rate can come in three types like ten-year fixed, five-year fixed, three years fixed, etc. The first-time buyer faced more difficulty to deposit 20-25%. In this case, this interest rate helps them.
NPPF: NPPF is also called a National Planning Policy Framework. This policy makes even more affordable which increase the housing supply.
Right to Build: In this scheme self-builders and small house building firm mostly get benefited. This is one type of land release scheme where the builder can challenge the nearby council to release land.
United Kingdom Real estate market was even good for greenbelt relaxation and adaption. This is also one term which helps people to buy home.
United Kingdom Real Estate Trends and Forecast
Currently, the real estate market in United Kingdom is an impressive option for both builders and buyers. One can invest in United Kingdom property.
After inflation, the growth in the price of residential property across the country has increased by just 2.2%. In a real term, it is a price drop after the inflation period. Also, the transaction levels are falling and mortgage approvals also dropped to their lowest level in the last three years.
Nowadays the landlords are less interested in buying estates due to the additional rate on stamp duty on those who are buying the 2nd home. So, as a result, the percentage of a house bought by landlords dropped. Landlords bought only 12.5% resold houses, which is the lowest in the last 9 years whereas the proportion of buying residential property in cash rose dramatically.
The factors that are influencing the Real estate trends in UK: –
As the current economy is weak so there will be no expected hike should be done across the year. So the mortgage will remain cheap but the inflation also outpacing the wage rises. Only 0.25% hike in interest rates is expected this year and this will end up by taking the interest rate to 0.75% for Bank of England.
The rise of building new houses
As per the new United Kingdom Real estate market forecast in 2016-17, it seems that United Kingdom Real estate marketis rising for 20 years over the last year. But during this financial crash, the government has decided to build 300000 houses this year but the 20% rise only ends up making 217000 houses.
Landlords will lose against the first-time buyers
The landlords are squeezed by the new law of tax rates on owning 2ndhouses. Buying new houses are not giving them the desired profit so the number of houses bought by landlords has come down in a huge percentage. This provides an open space for the owner-occupiers, who want to purchase properties themselves.
A slight cut in stamp duty
UK government has abolished the stamp duty for all properties up to £300,000 for the first-time buyers. And this will save at least £5000 for the maximum number of first-time house buyers, depending on the property price, but the new budget will raise the property price by 0.3%. Also, it is decided that United Kingdom residential property of £10bn boost will be provided by 2021 for chasing the price of new builds.
Relief for tenants
Depending on the last few years of constant rent rises it is difficult for the tenants to survive in the UK with the slow growth of daily wages due to inflation. But now the new law provides them some relief as the landlords are unable to higher the rate from their own. In 2017 only 1% rent rises happened in the UK.
Now, during the post-inflation time, the UK government puts its effort in the internal economy for making it stable. Real estate trends in the UK of business is one biggest segment which can provide them stability by less price rise and tax rates also. It will also circulate the internal currency in the market.
As the government abolished the tax rates and giving some relief to new buyers and also they are squeezing the landlords by taking more tax on buying new properties. This helps the government in both ways. Where the landlords must have to pay more tax on purchasing multiple houses and secondly in spite of the low rise in daily wages one can easily afford United Kingdom commercial property due to fewer rises in prices of housing estates.
The government has initiated to build more houses for tenants and buyer sat which will provide stability in internal economic growth and more taxes in the near future. From the builder’s point of view, the current cheap price of land and building is an impressive investment for builders as it will give them extra benefits and profit in long-term as of 2021.