Property in the UK has generated capital returns of almost 10% during the course of the past year, much higher than other investment classes.
- Average property values in the UK have increased by 9.7% over the past 12 months
- Analysts and investors expect property prices in the UK will continue to grow at a strong pace in the future
- High demand and low supply of property are also resulting in record rental yields
UK property investment has generated almost 10% capital growth in the past 12 months.
New research from Halifax shows between September and October house prices increased by 1.1%, contributing to quarterly growth of 2.8% and annual appreciation of 9.7%.
The average property in the UK is now priced at £205,240 and more than two-thirds of Britons expect it to rise over the next year. Just 5% believe prices could fall.
When compared to other assets, such as bonds or equities, 10% annual growth and so much confidence that prices will rise further, makes property a portfolio must-have. This is one of the main reasons that investors from all over the world seek to secure UK property.
A simple examination of the investment criteria in the UK shows that while demand is increasing, supply of new property is at a record low. Halifax’s research revealed new instructions by sellers declined in September for the eighth successive month.
Martin Ellis, Halifax’s Housing Economist, said: “Improving economic conditions and household finances, together with sustained low mortgage rates, have boosted housing demand during 2015. Strengthening demand is filtering through in to higher sales levels, although the ongoing shortage of supply is acting as a significant constraint on activity.”
“The imbalance between supply and demand is likely to persist over the coming months, maintaining upward pressure on house prices,” he added.
As well as the capital growth on offer, the supply and demand dynamics are also underpinning the rental market in the UK, with investors receiving record average yields of around 5%.