Biggest Challenges Facing UK Property Buyers
While investing in property can be a most lucrative venture, you must realise that the property market, like every other market, is greatly influenced by the laws of supply and demand. Moreover, in the property market, you also have other factors coming into play such as the availability of credit and the state in which the local economy stands. All these factors are constantly fluctuating and that is what makes the UK market rather volatile at the moment.
As things stand now, market experts are predicting that some of the biggest challenges that UK property owners are facing now and will continue to feel the effect of in the future include three major issues:
- The recently debated EU referendum and Brexit
- China’s slumping market
- London’s stagnation
The EU Referendum and Brexit
A few months ago when former Prime Minister David Cameron said that he would hold a referendum on whether or not Britain should leave the EU, many experts predicted a whole lot of doom and gloom should the Brexit vote win. Now that it has come to pass and Britain has voted to leave the EU, the immediate effects have been felt across the economic board and the property market wasn’t spared.
Due to nervousness by investors and property owners, property prices in the UK have taken a sharp fall. This is because the exit vote triggered a wave of discounts as owners try to offload their properties onto a buyers’ market that is looking for better and better deals to protect itself from further price falls. Experts expect that there will continue to be a downward trend in house sales for the foreseeable future as investors bid their time to weather the uncertainty that Brexit has brought about.
China’s Slumping Market
Two years ago, in 2014, China’s economy experienced its slowest growth rate in 24 years (it grew by 7.3%). The following year in 2015, its stock market started declining and by January of 2016, China’s stock market had fallen by an astonishing 40%. The Chinese economy has essentially slowed down forcing it to rely on its cash reserves and cut back on some of its foreign investments.
As things stand, China is the biggest investor in the UK property market. With this slump, it means that Chinese investors are not as actively investing in the property market as they used to or as was projected and that has weakened the property prices in the UK. It also means that more wealthy Chinese investors looking to purchase property in the UK as a foreign haven for their wealth will be forced to cease and desist from doing so. It is these very investors who have, till now, helped drive up property prices to unattainable levels. By their pulling out, it is very likely the prices will come tumbling down.
With the new stamp duty levies, higher property taxes and a marked increase in home prices, London has almost become a no-go-zone for new investors. Property investors and developers are now looking for other, ‘lesser markets’ in which to invest. Businesses are now strongly considering establishing their headquarters outside of London and new would be buy-to-let investors are discouraged by the new tax proposals with which they would have to contend.
All these issues are driving investors out and that will eventually drive property prices down. Assuming that you can offload them at all.
Can You Still Profit In Property Investing?
So do these factors mean you can no longer make money in property? Not at all! It’s good to understand general trends so you can plan out the appropriate strategy. If you’ve attended property investing sessions with Rick Otton, you’d probably have heard him speak about rising markets, flat markets and falling markets. And in these different scenarios, there’s always a strategy that can be applied so that you’re always making profit. Rather than focus on the things you can’t control, it’s always best to prioritise on the things you have control over to take advantage of any given situation. At the end of the day, a problem can always be an opportunity if you find a solution to it!