Property Investment Guide
With so many asset classes being available to investors in 2023, it can be confusing finding the right one for you.
Every investor begins their portfolio for different reasons and has a different range of risks they are willing to accept with their chosen investment strategies.
From returns to cost to risks, there are multiple factors you need to consider before you put your money anywhere.
However, we believe that one asset class is versatile enough to fit a range of needs suitable for any investor: property.
Property investment is thriving in the UK in 2023 thanks to a combination of factors which we’ll discuss in this blog, where we answer the question of is property a good investment in the UK in 2023.
Spoiler alert: the answer is yes.
Let’s get into it.
How Do You Earn Money From Property Investment?
You earn money from property investment in two main ways:
Rental Income – The monthly payments that tenants make to you give you a source of consistent passive income.
Capital Appreciation – The growth in value that your property will see over time, allowing you to make a considerable profit if you choose to sell it.
This makes property investment unique among investment options as you are earning passive income through multiple streams, unlike other asset classes like stocks or shares where you only see returns through one main method.
Why is Property a Good Investment in the UK in 2023?
The UK property market is thriving in 2023, having built off the back of incredible growth and success in 2021 and 2022.
With this in mind, here are several reasons why property is a good investment in the UK for 2023.
Rapidly Growing House Prices
The UK has seen house prices rise rapidly over the past few years, with substantial growth being seen in areas like the North-West.
Over the past two years, the UK as a whole has seen house prices rise on average by a staggering 14.5%!
This means if you had bought a property in 2021 for £200,000, you could sell it and make a profit of nearly £30,000 today.
That’s a stunning profit to make in only two years, and given how many investors choose to own their investment properties for a long time, the potential for returns is much higher.
Some major cities in the UK have seen even higher levels of growth.
Take Liverpool for example. This North-West city has seen an average price growth of over 40% in the last five years. This beats bigger cities like London and Manchester by a considerable amount.
This growth is set to continue into the future as well, with property experts Savills predicting that the North-West is set to see a rise in house prices of 11.7% by 2027. This is the highest growth rate of any region in the UK. Why not read more about the Financial Experts advice in our blog news section.
A Thriving Rental Market
Seeing as though the other main form of income from property investment is rental income, it is important to also keep an eye on how the UK rental market is performing.
It’s a good thing that the rental market is performing to a similarly high standard in 2023, with massive demand being seen for rental properties.
This is due to the underperformance of property developers in delivering the number of new homes needed to meet the massive demand that the UK has seen in recent years. Zoopla reported recently that demand is up by 16% compared to pre-pandemic levels.
Statistics have shown that the levels of homes for rent are anywhere between 20-40% below pre-pandemic levels, depending on the area they are in.
This has seen rental prices skyrocket in the first half of 2023, with landlords seeing this increased demand lead to higher returns across the nation.
Hometrack’s rental market report reported inflation of the market of over 10% in the last year, the 15th consecutive month that rental inflation has hit double digits.
This shows that the rental market is thriving in 2023, with rents expected to rise in the future. For property investors, this means they can expect stronger returns from rental income over time.
Incredible Stability and Resilience
Because property is a physical asset, it is much more stable and resistant to crashes compared to more volatile liquid assets like stocks or cryptocurrency.
Houses do not rise or fall in value rapidly, which means that in times when the property market looks to face an uncertain future, it is much easier to sell your portfolio without being hurt by increasing risks.
This makes it an ideal investment strategy for those with a lower risk tolerance, and for those who prefer long-term gains over short-term ones.
In times of financial uncertainty where other asset classes face fluctuating prices, property has proven its ability to be resilient and endure tougher conditions.
For example, during the COVID-19 pandemic when other forms of investing struggled to adapt, the housing market not only weathered the difficult circumstances but actually thrived as the nation recovered.
With this in mind, it’s no wonder why property investment is at the top of many investors’ lists when it comes to investment strategies in 2023, as it has an incredible balance of security, growth potential and high returns that few can match.