The question of where to invest is perhaps most relevant to property investors. As the famous saying goes: choosing a great property is about three factors: Location, Location, Location!
But where should one invest?
In the UK, property prices achieved peak in 2008, shortly followed by a small dip during the great recession. Prices then recovery and eventually exceeded 2008 levels at the beginning of 2020.
London
London is the gem of the investment properties market, but London prices there are often too expensive for a single investor to buy a property. If one does have the capital to support such a large transaction, there still exists the geopolitical risk of a double-dip recession and its likely knock-on effect on London house prices.
With all these issues aside, the financing of the property could be difficult. Since the credit crunch, gone are the minimum 5% deposits. More than 10% has to be put on the table now for a UK mortgage provider to even take an application seriously. All these factors are beginning to dampen the appetite of UK property investors.
International
Therefore many investors are currently looking into investing in properties overseas as they once did in before the credit crunch and property crash. Value hunters will have their eyes open for opportunities to invest at below market value, a scenario that will lead to attractive returns in a variety of market conditions.
The foreign property market offers several advantages over UK property. Firstly, the property markets are often under-developed, with a faster-growing population than the UK. These factors suggest superior returns over the medium term, as we saw from emerging market equities over the past decade.
Secondly, an overseas property can be used as a holiday home, which can save you thousands in vacation costs during the year, which is effectively a supplementary form of financial return! For this reason, many investors choose locations such as Turkey, Monaco, Spain and other sunny locations.
UK Regions
The UK regions have seen tremendous property price growth during 2020 and 2021, with areas such as Greater Manchester and West Yorkshire showing increases of between 10% – 15% year on year.
These price increases have been driven by
- Pent-up demand from buyers unable to purchase during the pandemic
- A flood of time-sensitive offers from buyers looking to take advantage of the stamp duty waiver scheme
- A desire for more space following time spent couped up in small or crowded accomodation
- Continued low interest rates
- An increase in household savings, due to holidays and entertainment spending cut during lockdown.
The question of where to invest in property has a huge impact on how much you’ll need to save up for a house deposit. Our guide on how to save for a house deposit will include practical advice on how to choose the right financial savings target and includes tips on getting there quickly.
Where are you thinking of investing in property? Leave your comments below! Please also let me know what your favourite property investment books and investing books are.