Investing in times of crisis: why the property market remains a strong investment

The Seventy Ninth Group’s Investment Director, Curtis Webster, provides his expert insight on the UK property market and why investing in property during a crisis remains a ‘safe’ option.

Recent reports from HMRC
state there is no sign of a slowdown for the UK property market, and that owning property remains a ‘safe’ option despite current economic challenges. HMRC’s official transaction data for May 2022 highlights the ongoing strength of the UK property market, with a 1.6% increase in completed sales since April 2022’s figures.

With increasing demand for both residential and commercial properties throughout the UK, despite ongoing crises like the rising cost of living, increasing interest rates and worldwide political and economic concerns, investing in property is still a safe and solid investment.

Historically, owning property in the UK has always been a popular investment and a way to keep assets safe. This only intensified during the recent COVID-19 pandemic. This is because property feels like safe investment as it tends to hold its value well through times of uncertainty and risk. As Investment Director at The Seventy Ninth Group, I’ve seen first-hand the benefits of investing in property and how lucrative investing in times of crisis can be.

My dad, Dave Webster, was once one of the largest private landlords in the UK with over 27 years’ experience in the property sector as both a developer and a landlord. He himself started his journey with just a single property, eventually acquiring over 800 properties, and building up a portfolio consisting of developments in excess of £500 million of both residential and commercial property. So, at The Seventy Ninth Group, we know a thing or two about property investments!

In this article, I’m going to explain why there has never been a better time to invest in property and why anyone already doing so should remain invested.

During times of crisis, people often panic, and many investors take a step back and become more cautious. But history has shown this can be a huge mistake. Now, when those investors who would usually be buying and selling are acting more cautiously, the most successful investors can act fast and take advantage of the increased opportunity to build their wealth.

Property market boom

House prices in Great Britain hit a record high in June, rising for the fifth month in a row. This is despite the various political and economic concerns, including the rising cost of living and increasing interest rates. Reports state that the UK housing market remains strong with prices rising last month faster than they did in April. Data from Nationwide Building Society show prices rose 0.9 per cent last month, compared with 0.4 per cent in April. And house prices continue to show month on month growth.

Despite some reports stating that the market is set to slow, market demand is still high compared to what was once considered ‘normal’. The Office of National Statistics also reported a 12.4% rise in property prices over the last year to April 2022. Although in recent months, UK residential transactions have stabilised they remain elevated compared to the level before the coronavirus pandemic.

The UK has a shortage of housing caused by several social and demographic factors. Our population is expanding significantly and is set to reach 74 million in the next 20 years. As the population increases, so does the demand for housing, driving up the price of property.

A recent Financial Times piece reported that demand for new homes continues to outweigh supply despite the mounting fears about the economy. In the article, Crest Nicholson and Bellway, two of the country’s largest housebuilders, express their belief that the housing market will cool off and moderate slightly, but not crash, based on their recent forecasts.

Appetite for property remains strong, and this demand is only going to increase as the population rises, making property a worthwhile investment with the potential to maximise returns in the long-term.

Many smart investors have already started to capitalise on this increasing demand for properties, particularly so for rentals, as they look to purchase properties in the highest yielding areas of the country to maximise returns and hedge against inflation. Recent reports state that one in every 10 houses sold in the UK are being snapped up by buy-to-let investors. These buy-to-let investors bought around 42,980 homes across the country in the first three months of 2022, which works out at around £8.5bn worth of property – almost twice the figure recorded pre-COVID.

Rental demand hits record highs

Factors such as rising house prices and the rising cost of living have combined to result in a huge increase in rental demand, with more people than ever before in the UK renting properties. The ongoing supply and demand imbalance in the UK rental market has driven rental prices to a record high in recent months. And recent data from Rightmove reveals there is no let-up in the UK rental market. With an ever-increasing demand for rental properties throughout the UK, it’s becoming a highly competitive market for tenants, presenting a great opportunity for buy-to-let property investors.

New data from Rightmove’s quarterly Rental Trends Tracker has revealed the average rental prices for properties outside of London has hit a new record high, with asking rents rising to £1,088 PCM, up from £982. This 10.8% rise in asking rents marks the first-time annual growth topped 10% outside of the capital. Rents in London also hit new record highs, increasing 14.3% in a year – the largest annual jump Rightmove has recorded of any region. This means average rents are now 15% higher than the same period two years ago, just as the pandemic started.

According to recent reports, rental demand is up by 6%, while the number of available rental properties is down 50% compared to this time last year. Demand is growing in areas outside of price hotspots with lower rents. This includes Manchester and Liverpool, which are two of the last quarter’s top five rental price hotspots with asking rents increasing by 19.3% and 17.1% respectively compared to this time last year. The north-west overall continues to see strong demand for rental properties, with seven out of the top ten rental demand hotspots in cities across the north-west.

In recent years we have seen a shift to more people choosing to rent properties long-term and a big increase in ‘lifetime renting’ over home ownership. Our generation has been dubbed ‘generation rent’ with nearly 4 out of 10 millennials privately renting at age 30, and nearly a third of the wider generation expected to rent well into their retirement. The current ongoing cost of living crisis will likely only serve to further exacerbate this as people struggle to save to put deposits down on properties due to high prices. This highlights the importance of the private rented sector and the need for more rental properties to be added to the UK market.

Research by property lending experts Octane Capital states that the UK buy-to-let sector is now worth around £1.7trn – an increase of £239bn over the past five years. And according to a report from global real estate company JLL, during 2022 rental prices for a UK investment could rise by 2%, contributing to an overall 8.5% increase over the next five years. This is good news for anyone looking to invest into buy-to-let properties, as it gives you the opportunity maximise returns from your investment over the long-term. 

As the demand for rental properties is only set to increase, and research suggesting UK renters will outnumber homeowners by 2039, buy-to-let properties are a solid investment that can be incredibly lucrative in the long-term, and now is the time to invest.

Our luxury property arm Seventy Ninth Luxury Living is highly experienced in acquiring and developing assets that deliver optimum financial performance in distressed markets. We identify and invest in areas of high capital growth and increasing rental demand through the UK and have seen first-hand the benefits of this type of investment.

Demand for commercial properties increase as people return to the office

Rightmove reported earlier this year that the demand for office space exceeded pre-pandemic levels in January as enquiries were up 54% compared to January 2021 and 15% higher than in pre-pandemic January 2020. Office enquiries has the strongest growth of any sector, as more businesses move towards a new ‘normal’ and return to in office working.

The office sector took a big knock during the pandemic, with numerous lockdowns and work from home orders in place. Ongoing uncertainty throughout 2021 saw many businesses delay action, but new insight has shown that there is to be an ever-increasing demand for office space throughout 2022. No doubt those that invested in office space and remained invested throughout the pandemic despite the uncertainty are reaping the rewards now.

As many businesses are looking to move to either hybrid or full-time office working, they are looking to upgrade the quality of their office in order to create a positive and welcoming place for employees to work after the difficulties of the past few years. As a result, commercial property investment is fast becoming a strong investment option.

This is something we here at The Seventy Ninth Group have recognised which is why we launched our property division, Seventy Ninth Commercial, in 2021. Following two years of turmoil in the commercial property market caused by the ongoing COVID-19 pandemic, Seventy Ninth Commercial’s strategy is to predominantly meet the demand of SME (Small Medium Enterprise), by designing and implementing a flexible office model across all of our commercial assets, which provides SMEs with an affordable, flexible and safe environment to work.

Property investment remains a safe investment option with long-term benefits

Property investment remains one of the most popular markets in the world, and it’s not hard to see why. Investing in property is a clear opportunity to benefit from long-term returns. Although it’s easy to panic in times of crisis and end up making a knee-jerk reaction such as selling investments, acting more cautiously, or holding off on investing, this could be a huge mistake. Selling too quickly could end in you making some serious losses, and potentially miss out on any recovery. Sometimes the best thing to do is stay strong, remain invested and wait until the market stabilises. And holding off all together means you may miss out on the potential to maximise returns in the long run.

At The Seventy Ninth Group, we specialise in the acquisition, management, and development of lucrative assets during times of economic turmoil and uncertainty. As one of the most experienced names in the UK property market, we are trusted by investors globally. If you’re looking to find out more about property investment opportunities, get in touch with us today.

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