Property Investment Trends 2023
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UK Property Investment in 2023
2023 has been an economic rollercoaster so far, which has had wide-reaching effects on the year’s property investment trends.
The big news is that The Bank of England has raised interest rates for the fourteenth consecutive time to tame inflation, hitting mortgage holders hard. Property investors must contend with other pressing issues for the year, such as the government’s drive towards energy efficiency.
So, how are property investors overcoming these challenges and moving with the times in 2023?
Read on to learn more about property investment in 2023
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Biggest Property Investment Trends for 2023
Trend 1: Investing in Off-plan Property
The rising interest rates have been financially punishing for buy-to-let property investors, as buy-to-let mortgages already have higher rates than a standard residential mortgage.
Because of this, property investors are doing what they can to avoid buy-to-let mortgages, and off-plan property has provided one alternative financing solution.
Firstly, off-plan properties sell for less than the market price, as they are still in the planning or construction phase, making them more affordable.
Secondly, investing in an off-plan property means investors can use payment plans rather than apply for a buy-to-let mortgage. This means they can pay in affordable chunks and won’t have to cough up the total price of the property until the project is completed.
New builds are generally rising in popularity, as they are more attractive to renters and are usually more energy efficient, future-proofing them from any net zero government measures. But financial flexibility, without needing a mortgage, is driving this trend even more towards off-plan property for the rest of 2023.
Confused about any of these terms? Learn more with our updated Off-Plan Development guide.
Trend 2: Investing in Eco-friendly Properties
Another big topic for investors is the rise of eco-friendly properties. The issue of energy efficiency is a pressing one, as the UK government has put forward some ambitious proposals in order to achieve their goal of net zero by 2050.
Households are one of the major contributors to the UK’s carbon emissions, so the property industry is firmly in the government’s crosshairs.
Landlords are eligible for various grants, but investing in a property’s eco-friendliness can be expensive. In particular, retrofitting old properties can be difficult and pricey, so those who support new builds have an advantage in this case.
With the government proposals in mind, the developers of new builds are future-proofing their properties by building with sustainability at the forefront of their designs. Some new buildings even have cutting-edge technology, such as air source and ground source heat pumps, rainwater recycling systems, mechanical ventilation heat recovery systems, central building management servers, and more.
Eco-investing is a big trend for 2023, and it looks set to grow even more popular. Get more details about the effects of sustainability on the property sector in our Liverpool Regeneration guide.
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Trend 3: Investing in Serviced Accommodation
The serviced accommodation market is another property sector that is growing fast in the UK. Serviced accommodation consists of a fully-furnished property with added amenities such as housekeeping and WiFi and basically everything a tenant may need for a short-term stay.
This type of property is rising in popularity with buy-to-let investors as there is more flexibility than a traditional rental property. Serviced accommodation is perfect for short-term lets, meaning an investor can easily charge different rates depending on the season, and profits can be much higher, provided the property is consistently booked.
You can learn more about how Serviced Accommodation works with our free guide.
Investors also don’t have to wait long periods for tenancies to end in order to sell the property.
But running costs are usually higher as a fully furnished property requires more upkeep, and the cost of provided amenities must be considered. Local restrictions on short-let properties can also be a problem, such as London’s 90-day rule.
Projected annual rental income as high as £28,345 and predicted £86,929 capital growth by 2030. Interested?
Enquire about Fox & Foundry today, our latest addition to Liverpool’s fastest-growing regeneration area, with prices from £189,950. Growth prediction based on North West projected capital growth, Savills.
The Current State of the UK Property Market in 2023
Rental Property Deficit Set to Continue
In the past few years, demand for rental properties in the UK has skyrocketed and pushed rental inflation to climb higher and higher. According to the BBC, average rents have risen by more than 10% compared to last year. This trend seems set to continue for the rest of 2023, as the private rental market is chronically undersupplied.
This is good news for buy-to-let investors as it ensures a consistent flow of potential tenants and high rental income. Rental demand is especially high in major regional cities such as Manchester and Liverpool, where a strong employment sector for young professionals and a sizable student population means there just aren’t enough rental properties to go around.
The rising interest rates aren’t just affecting property investors; they are also keeping more people in the rental market as mortgages become less affordable. This is adding further to the need for rental properties, and it seems this high demand won’t subside soon.
Sluggish Property Market Not Predicted to Last
High borrowing rates, high inflation, and the continued cost of living crisis have resulted in a sluggish property market this year. According to Zoopla’s July 2023 UK House Price Index,UK property’s average annual growth rate was just 0.6%, with house prices going down slightly in some areas, such as London and showing modest growth in the North of England.
But this current stall in growth is not forecast to continue long term. Property experts Savills predict that property prices in the UK are set to grow 6.2% over five years to 2027. Some regions are believed to grow at a more rapid rate than the UK average, such as the North West, which is predicted to rise by 11.7%.
According to JLL, the current slowed growth shouldn’t be considered as leading to a potential crash but a property ‘discount’. This means 2023 can be a good time to invest in property at a lower price before normal growth resumes.
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Find the Perfect Investment for you.Property Investment Trends in 2023 and Beyond
Some of the best property investors have a few significant challenges to contend with in 2023, but there are also many positive trends. The rising interest rates and concerns about proposed energy efficiency measures may be on many investors’ minds, but the property market is evolving to accommodate these issues.
Want the latest market analysis? Stay up-to-date with RWinvest! Consider reading some of our latest buy-to-let guides below:
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