Over the course of the last few years, the UK’s real estate market has well and truly demonstrated its seemingly bulletproof status. Even throughout the height of the COVID-19 crisis, the vast majority of UK homes skyrocketed in value, and demand for quality homes in desirable regions remained high.
Today, the overall financial picture in the UK is about as bleak as it has ever been. Inflation has reached its highest level in 40 years, triggering a cost-of-living crisis the likes of which most people alive today have never been forced to endure. With further interest rate hikes and more devastating inflation on the horizon, each and every business and household across the UK is feeling the pinch.
But even while all this is going on, the housing market is going from strength to strength. In fact, almost 65% of property experts believe that the next 12 months will bring nothing but positive outcomes for the real estate sector.
In the dynamic UK rental market, prospective tenants can explore a diverse array of housing options, as there are various types of property to rent in the UK, including apartments, houses, and unique living spaces catering to different preferences and lifestyles.
That is according to the results of a Countrywide Surveying Services poll, which indicates widespread optimism among most market-watchers.
“Just as the UK thought it had negotiated Brexit and navigated the worst of COVID-19, little did we know, there was further uncertainty around the corner,” said Eli Korman, head of development finance and CIO at TAB.
“The Bank of England has reacted by raising rates, which is again expected to keep increasing. More recently we have seen disruption in Parliament leadership take its toll on the economy, too.”
Korman suggested that given the lingering effects of COVID, the escalating economic devastation of Brexit and the ongoing crisis in Ukraine, both inflation and the cost-of-living crisis will continue to worsen into 2023.
However, he also suggested that the UK’s property finance market will most likely come out of the whole thing unscathed.
Property Prices Up Once Again
Average property prices across the UK are still increasing, according to the latest figures published by Nationwide. Compared to the same time last year, the average price of a UK home in July was up approximately 11%.
In addition, separate figures suggest that the housing market in London performed more strongly during the first six months of this year than at any time since 2014.
“Demand for finance remains high as illustrated in unregulated residential bridging loans making up a significant portion of our loan book,” said Korman.
“The undersupply of UK housing, coupled with construction costs having seemingly levelled out, meaning I expect to see more property developments come to fruition, and subsequently more development finance. Indeed, our development finance loan book has been increasing recently.”
He went on to suggest that despite predictions of doom and gloom throughout the COVID-19 crisis, in particular, faint echoes of a High Street renaissance are gradually growing in strength.
“The revival of the high street and a newfound passion for the local community means businesses that have navigated through COVID-19 have begun to stabilise. The office market looks like it might be rebounding, too,” Korman said.
Even in an era where homeworking and hybrid-working have become the new norm, Korman suggested that employers are investing more heavily than ever before in wellbeing-focused office infrastructure. Businesses are buying up commercial premises in record numbers, while those who already own their own promises are overhauling their interiors, for the benefit of their employees.
“Record months of demand for our bridging and development products suggest there are plenty of opportunities out there for property investors,” he said.
