If there is one financial takeaway from the last two years of significant change, it’s that UK property is a resilient asset. UK property prices continue to rise in a buoyant property market, with undersupply remaining the strongest factor. At the beginning of 2022, demand for property was nearly 50% higher than during the same period in 2018 through 2021. However, the supply of properties to market was lower by 15%, making property auctions a hot spot for keen investors.
Property market demand
The UK government’s plan to build a million more homes by 2025 does little to meet the country’s demand, and so our ‘generation rent’ continues to grow. With this frenzy of demand, the standard risk of void rental periods is greatly reduced and the potential for higher rents is increased.
Property market forecast
Whilst fears circled around a market correction at the beginning of the year, the long-term forecast is positive. Year-on-year growth over the next 5 years could see property prices up to 20% higher than in the current market, an exciting prospect for UK property investors.
Looking even further into the future, the UK population is set to reach 74 million by 2040, and so demands for rental property will only increase over time. Expanding a property portfolio now could lead to substantial returns not just next year but into the next two decades.
Where to invest
Despite older tenants evolving as a growing demographic of the rental market, young professionals continue as the strongest. Young professionals typically rent for 3 years+. With more people working from home, commuter zones have been stretched even further from the inner cities. This budding expansion creates an exciting larger catchment area for rental property investment.
With the market evidently on the up, it’s time for serious investors to get their ducks in a row. For those not at the mercy of high street lenders and increasing variable-rate mortgages, UK property could be the best investment in 2022. Check out our PAA auction guides to consider your next investment opportunity.