Home Property What does the housing market crash mean for property investors

What does the housing market crash mean for property investors

by LLP Finance Reporter
16th Dec 22 10:42 am

Mortgage lender, Halifax, announced last week that UK house prices saw their biggest drop in 14 years in November – falling 2.3% compared to 0.4% in October.

November marks the third month in a row that house prices have fallen, making the average UK house price now £285,579 down from £292,406 the month previous.

After two years of inflated house prices, the slowing down of the housing market was somewhat expected, however the cost-of-living crisis – among other factors – has meant the market is much more volatile than predicted.

Annually, UK house prices have still increased – but now at a rate of 4.7%. However, the UK’s largest lender, Lloyds predicts that UK house prices will fall 8% in 2023.

Whilst this looks bleak, it can be an opportunity for property investors, says Property Investment firm, Redmayne Smith.

For those who make an income from property investment, the fall in house prices might appear like a big problem, but coupled with the UK’s current housing shortage, it could actually result in lower purchase prices for investors.

Systematic house building shortfalls and a rapidly growing population has meant that there is also a low supply of houses in the UK. With the UK Government missing new build targets for the last three years, the need for new housing is extreme with the National Housing Federation suggesting England needs 340,000 new homes (including 145,000 affordable homes) until 2031 to meet demand.

The housing shortage, cost of living crisis and a general struggle to find a mortgage lender means the demand for rentals is likely to increase. In fact, the rental market is booming, making it a good time to invest for those looking to expand their property portfolio whilst prices are low, and make a good monthly income.

With a lower cost of acquisition for property investors, and with less people moving or buying homes the demand for rental property will remain strong. Therefore, investing in buy-to-let and off-plan property looks set to continue being beneficial.

Gordon Dutfield, CEO at Redmayne Smith said, “We expect to see investors continuing to add to their property portfolios despite the falling house prices, as we know there is still exponential demand for new housing in the UK.

“Unfortunately the housing shortage looks set to continue, and that is a fantastic opportunity for property investors to provide the housing needed through investing in pre-construction homes, which they can get for favourable prices currently.”

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