The Brexit process, in which the UK is leaving the European Union, is one of the most significant changes in the global economy for decades. It has left many people around the world studying their investment portfolios and wondering where to put their money next. Does Brexit mean a period of instability, or is it in fact an opportunity to secure long-term returns in the UK even more impressive than those which were on offer before?
All signs from the UK housing market point to serious capital appreciation being on offer in the coming years. February saw “surprise” growth in house prices, far above anything that was anticipated by most experts previously – showing that the underlying strengths of the market remain unaffected by both Brexit and Covid-19.
As reported in the Financial Times, the average price of £231,061 recorded in February was the highest on record, and followed an average price of £229,748 in January.
Robert Gardner, chief economist at Nationwide, said: “This increase is a surprise. It seemed more likely that annual price growth would soften ahead of the end of the stamp duty holiday, which prompted many people considering a house move to bring forward their purchase.”
This followed earlier reports that the UK’s Brexit deal will lead to house price increases of 8% by 2023, as reported in Arabian Business. The major reasons for this include the ongoing weakness of Sterling and low interest rates, both of which leave buyers in a strong position in spite of any supposed Brexit concerns or a post-Covid international slowdown.
“House prices are likely to rise in line with household incomes and will be supported by low interest rates. As a result, we think prices in Britain will rise 2.5% in 2022 and 3.5% in 2023, with increases across all regions. This puts house price growth over the next four years at 8% across Britain,” said Aneisha Beveridge, Head of Research at Hamptons International.
However, it is a well known fact that not all UK regions are created equal when it comes to searching for the property value growth potential. The same report from Arabian Business notes that more affordable regions where populations are set to grow rapidly will see growth far and away higher than London and the South East.
As is often the case in the UK buy to let sector, Manchester takes a lot of the headlines for the above reasons – it is a hotspot thanks to the ideal conditions present. The latest Cities House Price Index from Hometrack backs this up, noting that Manchester has seen no shortage of demand over the last 12 months, despite the national and international circumstances.
Over the year to January 2021, the average property price growth for UK cities was 4.3%, according to the Index. For Manchester over the same time period, prices went up by 6.3% - a huge and superior margin. Overall, demand is up by 12.4% annually and there are no indications that this will slow down across 2021 and beyond.
As the report notes: “Robust levels of demand signal the continuation of a trend that we have highlighted since the summer last year.
“While the stamp duty holiday has prompted higher levels of activity, there is still a cohort of buyers and movers who are looking for a new home after a reassessment of how and where they are living after repeated lockdowns, and the rise of working from home. The data points towards a ‘search for space’ among some buyers.”
It is clear that the UK buy to let housing market is not only strong, but that its best days may be ahead of it following the Brexit deal. Manchester in particular is demonstrating that post-Brexit investment in UK property can provide the long-term capital gains and stability that all investment portfolios need to thrive, now more than ever.
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