UK’s rising population ‘to support property investment returns’

UK’s rising population ‘to support property investment returns’

Moody’s believes future returns associated with the UK property market will be dictated by strong supply and demand dynamics.

Summary:

  • UK property market to be supported by strong population growth
  • Moody’s believes the rising population will be faced with a shortage in available property
  • The UK’s PRS already consists of over 4 million households and record growth has pushed yields to all-time highs

Property investment in the UK will be supported by population growth and a strong underlying economy.

This is the conclusion of a new report from Moody’s Investor Services, which assessed the future investment potential of numerous European countries. Investors from all over the world want to purchase property in traditional safehaven markets and the research, titled Rising Population Will Support Housing Markets in the UK, the Netherlands and Ireland, compares population forecasts with domestic housing markets.

“In our view, the rising population in these countries combined with a housing supply shortage and robust economic growth will support house prices and therefore help reduce losses on residential mortgage loans,” explained Gaby Trinkaus, an Assistant Vice President and Analyst at Moody’s.

She explained that the Eurostat data shows the size of the 25-35 age bracket, which forms the core of the first-time buyer segment, is expected to remain largely stable in the UK, although it may shrink in other European countries.

Not only will this support demand for home purchases, but the burgeoning private rented sector (PRS) in the UK, will continue to see growth. As the PRS has grown to over 4 million households, demand for rented accommodation has escalated and yields have increased accordingly. With the size of this key renter demographic remaining stable, yields in the UK will continue to be higher than those found in other countries.

Moody’s also added the UK projected experience population growth of 3.2% over the next five years will support the wider growth of the country’s economy.

Find out why international demand for UK property investments has never been higher in our latest ebook:
"Investing in UK Real Estate"

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