November 1, 2017
Confidence among property investors remains strong, with many taking a long-term view of the market. Barclays research shows prices across the UK are expected to rise 6.1 per cent over the next five years. And while the biggest jumps are anticipated in London, the South and East, investors are actively seeking opportunities in Scotland, the Midlands and the North too.
The Barclays UK Property Predictor provides a forecast of where prices and rental income are heading over the next five years. Its view of future trends is based on an in-depth analysis of factors such as rental trends, employment levels and commuter behaviour, as well as house prices. To better understand investor sentiment, we also surveyed more than 500 high net worth individuals.
Over the next five years, high employment rates, growth in the private housing market and an increase in average earnings will all feed into rising property prices. However, our research also revealed another important driver – the rise of the 25 to 35-year-old HNWI (high net worth investor). The millennial investors surveyed had 41 per cent of their portfolios invested in property, compared to 23 per cent of those aged 55 and above, and generated nearly half their income from rent.
Overall, the research found property remained an important part of all HNWIs investment portfolio. Investors typically owned three properties, while more than a quarter were planning to buy property because they believed it offered long-term investment security.
Analysis of the findings shows London leads the way. Prices across the whole capital are expected to rise by almost 12 per cent by 2021, with Richmond-Upon-Thames the fast-growing area, with house values there likely to rise by 39 per cent over the five years.
But property hotspots are emerging elsewhere. Predicted prices in St Albans almost match Richmond. Cotswold in the South West will enjoy a 32 per cent rise, according to the Predictor, boosted by one of the highest employment rates in the region: the South East district of Mole Valley, South Northamptonshire, and Warwick, in the East and West Midlands respectively, are all expected to see prices rise between 29 and 30 per cent, fuelled by strong household incomes and, in the case of Warwick, a high business start-up rate.
Growth is forecast to be slower in the North. Prices in the North East, North West and Yorkshire and the Humber are expected to rise between 3.6 per cent and 4.5 per cent. The fastest-growing area is Trafford, up by 17 per cent in 2021.
There is still a strong appetite among investors to put money into property outside London, the East and the South, however. More than a third of investors believe prices will rise in Midlands and the North, with just under a third citing strong rental income as a reason for investment.
A personal choice
There are a number of reasons why investors consider property. It will always be an important part of any diversified portfolio and can provide a stable source of alternative income. Even if you’re only looking to buy a second home, or move house, it can still be worth looking again at your mortgages. Rates are low, thanks to a combination of a very low Bank of England base rate and a highly competitive market