10 Reasons to Choose Property Investment 2023
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As we venture into a new year of economic uncertainty and significant political instability on both a domestic and global level, 2023 may not initially present itself as the year to invest in the UK property market.
However, amid this tumultuous period, a number of factors have combined to create a perfect storm when it comes to investing in property this year. Here are 10 reasons to seriously consider property investment in 2023.
1.) 2023 Property Market Forecast
While earners across the UK are increasingly feeling the pinch in terms of the cost of living, and nationwide strikes appear to be continuing with no resolutions in sight, it would be reasonable to assume that the property market forecast for the coming year could be a bleak one.
Interestingly though, this period of widespread financial difficulty could make 2023 an optimum time to invest in property, prompting the question that many already expect they know the answer to:
Will Property Prices Fall in 2023?
Put simply, yes. According to property experts Savills, property prices could fall up to an average of 10% across the UK this year. The London market is expected to be hit the hardest with a potential price drop of 12.5%. While the North West along with Yorkshire and the Humber will experience a lesser but still significant fall of 8.5%.
This comprehensively answers the question – ‘will property prices drop in the UK 2023? – presenting a bleak outlook for this year’s property market, especially after the sustained levels of growth that have characterised the post-pandemic years.
However, a nationwide decrease in property values to this extent presents a major opportunity to investors who have the financial means, especially when we consider the market predictions for the next five years, bringing us to our next point.
2.) Predicted Value Growth
Financially, investing in property is one of the most lucrative ways to earn a return on investment. But if investors really want to reap the full rewards, they should treat it as a long-term strategy and consider future market forecasts.
Following this year’s expected slump, experts predict UK property values to increase by an average of 6.2% by 2027. While London will still not have fully recovered within this period, there are some other regional winners, most notably the North West, which is expected to see a price growth increase of 11.7%. This presents a major capital growth opportunity for investors to earn big returns by purchasing property for much less this year.
3.) Rental Growth
One of the main reasons for investing in property is the regular rental income that it provides, and going by the UK rental value growth forecast for the next five years, it’s good news if you’re considering an investment.
Between now and 2027, Savills predict a rental value growth of 18.3% across the UK, with a 6.5% increase in rental values forecasted for this year. Along with a significant drop in property prices, this makes property investment 2023 an even more desirable proposition.
4.) Two Types of Investment Returns
As well as being highly lucrative, buy to let property is also a fairly secure and versatile means of investment. This is because it presents more than one way of making sizeable returns.
In times like these – those of economic turmoil and political instability – investors can opt to hold onto their property until markets stabilise and its value again begins to increase. They can then choose to sell their property for much more than it was initially purchased, earning them major capital appreciation.
However, the true beauty is that during the low periods, investors will still earn a regular rental income. From a current investment perspective, this is exactly the type of opportunity that 2023 presents.
5.) Supply & Demand
Another factor making buy to let property a secure investment proposition in 2023 is the current ratio between supply and demand. In a recent article, the Guardian highlights that demand for rental accommodation in the UK has risen by 23% since 2021.
Driven in part by unaffordable mortgage rates forcing first-time buyers to hold off on their plans to purchase a home, demand for rental property in the UK now vastly outweighs supply. For potential investors, this means that any buy to let property will be easily tenanted, providing an immediate rental income and accommodation to those that need it.
6.) Range of Investment Opportunities
One of the perks of the property market is that it presents a wide range of investment opportunities. While one and two-bed residential apartments may be what initially come to mind, student and commercial properties present equally promising propositions.
For instance, the UK student accommodation market is currently valued at £4.2 billion and with increasingly popular and more affordable student destinations like Liverpool and Manchester struggling to meet the demand for rental accommodation, there are huge investment opportunities here. Additionally, purchasing property from different markets allows investors to diversify their portfolio meaning external economic factors will be less impactful.
7.) Off-Plan Investment
As an add-on to the previous point, there is more than one way to purchase investment property and that’s where off-plan investing comes in.
This is when investors purchase property before it’s been completed, usually for below market value. In addition, property investment companies often offer investors a range of flexible payment structures, allowing them to pay instalments at different points up until completion.
At a time when the answer to the key question – ‘will property prices fall in 2023’- is almost certainly yes, off-plan investing is an excellent way to invest in property as by the time the property is complete, it will almost certainly be worth more than it was initially.
8.) Lower Risk Strategy
Although investing in property brings with it a certain degree of risk, it is one of the safer, more assured investments out there. Compared to investing in stocks for instance, which can fluctuate in value by the hour, the property market is less influenced by external factors and is easier to predict.
Property investments can also provide a degree of financial security during periods of high inflation. When the prices of goods and services rise, property and rental values often follow suit, offering investors protection against challenging economic circumstances.
9.) A Truly Passive Income
Unlike many other passive income streams which require a lot of time and effort to get off the ground initially, investment property can be completely passive from day one.
This can be achieved by hiring a property management company to handle all landlord duties. Inevitably, this will come at an added cost, but if the goal is for the property to generate an immediate passive income then it is well worth it.
10.) New Investment Hotspots
Due, in part, to the recent market developments highlighted above and the fact that London property is becoming less and less affordable, a number of new investment hotspots have quickly established themselves across the UK in recent years.
Key among these are the thriving North West cities of Liverpool and Manchester, where property prices are an average of 40% lower than those in London. Rental yields in the North West currently sit at an average of around 6%, while property values are expected to grow by 11.7% by 2027.
The buy to let property market in the North West is growing faster than anywhere else in the UK and currently offers a much more affordable investment opportunity than London, yet another reason to enter the market this year.
Is Property Still a Good Investment in 2023?
All things considered, 2023 looks set to create a unique and rather unlikely opportunity in terms of property investment.
With property prices set to fall this year before quickly getting back on track in 2024, investors should seriously consider acting on this major capital growth opportunity.
Additionally, it is well worth paying close attention to the North West buy to let property market as an area of lucrative investment.
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