Invest in UK Property

With a growing population set to reach 70 million by 2035, Europe’s second-largest economy has grappled with a persistent challenge of meeting housing demand. Cheap finance, population growth spurred by record levels of net migration, and challenges in building new homes due to a rigid planning system has led to a demand-supply imbalance, underpinning long-term growth in house prices and rents. With the oldest uninterrupted democracy in the world, a robust legal system and strong currency, the UK is seen as a safe, transparent, and politically stable market. The UK also benefits from a mature property market, which experiences low levels of volatility and high levels of liquidity, offering a stable investment that can be sold easily to crystalise returns. At the same time, world-class education and a business-friendly environment attracts overseas purchasers looking to put down roots for children studying or to facilitate international business. These factors make the UK one of the most attractive locations in the world for residential property investment, and that is unlikely to change any time soon.

As of 2024, demand for rental property has eased from its peak but remains 32% higher than the five-year average, highlighting the strength of the market. UK rental growth was reported at 9.7% in October, highlighting the strength of the market. With demand outstripping supply, rental growth across the UK is expected to continue, albeit at a slower pace as incomes continue to be squeezed by higher living costs.

The OBR forecasts GDP growth of 0.8% in 2024, rising to around 2% in the middle of the decade. Throughout the forecast period unemployment rates are expected to remain historically low. The ONS forecast unemployment to peak at 4.5% in the last quarter of 2024, before falling back to 4.1% by 2028. Average pay growth is expected to halve in 2024 from the 30-year high of 7% at the end of 2023, but remain above the 3.29% average between 2001 and 2023.

The UK’s residential property market is grappling with a significant demand-supply imbalance. The government has targeted 300,000 new homes per year by the mid-2020s, yet new housing figures have consistently fallen short. Approximately 233,000 new homes built in 2021/22 and this shortfall is exacerbating affordability issues, particularly in London and the South East. This is encouraging priced-out young professionals and families to look elsewhere expanding markets in commuter towns and cities in the north with good employment opportunities.