Investing in the UK Property Market

The United Kingdom may rank 79th in geographical size, but it happens to have the fifth largest GDP in the world. It doesn’t need a rocket scientist to tell you that the real estate and property market in the country are some of the most expensive in the world. The whole market is buoyed by the sheer about of people looking for homes to rent and buy.

External forces such as a strong pound sterling, governmental regulation, very high demand and lack of quality skilled labour and raw material have led to a crisis which has seen prices skyrocket. With
London being the financial capital of not only Great Britain, but the entire European Union as well, it is not surprising then that the UK and London in particular afford some of the most expensive property market prices in the world.

A major factor driving these price rises is low interest rates. As banks reduce interest rates, it becomes more and more prudent to invest in real estate, and this land grabbing has led to the current scenario of high prices but the demand is driven mostly by immigrants to UK. With other factors including divorce rates leading to less people living under one roof, it only compounds the problem. As well as this, lax regulations by the government have also made the situation worse.

It is but natural that the wealthy can afford these and any prices, but what about the majority? When it comes to investment, the best course of action to take would be to invest in real estate in second and third world countries, as the prices are still relatively very and the prospects for growth are very high. It is also seen that UK investors are actively wooed by many developing countries, most notably in the Middle East.

Investing overseas is ideal for the cash-strapped Briton and the trend of investing in real estate overseas is proven by the fact that today the majority of foreign-held real estate in the Philippines, for example, is held by British people.

But closer to home, there have been conflicting reports on the future of the UK property market. Some analysts claim that an increase of 7-9% is possible, while others insist that a decrease of 35% is on the cards. It is obvious that in the long run, real estate is bound to bounce back and the best bet would be to invest in the UK if the (usually volatile) prices are down, and to invest overseas depending on budgetary constraints if they are somewhat higher.

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