Closing out 2022, many of you in the property industry would be forgiven for feeling a little punch drunk.
2022 seemed to be disaster after disaster. We emerged from a global pandemic, saw Ukraine enter into a war, witnessed our shortest ever-serving prime minister in Liz Truss, the passing of Queen Elizabeth II, our longest-serving monarch, and finally, the inevitable conservative leadership race to select a new prime minister, the third in as many years.
Despite this, there are plenty of positives to take into the New Year.
We’re going into the New Year with a progressive government and a business-friendly prime minister who’s stated getting Britain back on its feet and providing a platform for businesses to thrive is a priority. We’re also hopeful to see a positive conclusion to the war in Ukraine. The knock-on effect of this is the falling of energy prices, helping to control fuel-based price inflation. As well as lowering interest rates and stability in returning to the mortgage market long term. Buyers were reluctant to purchase at the end of 2022 due to uncertainty around mortgage products, hobbling the sales market for several months while banks repriced their offerings.
2023 will be positive but there will remain headwinds in the marketplace. Interest rates will take their time falling as the Bank of England wrestles with inflation, and mortgage products could take even longer.
The UK economy may fall into a recessionary cycle as business and output growth slows. Inflation will still be a factor for households as higher prices erode savings and wage inflation doesn’t keep up with the real cost of living. For the property market, the effect of inflation could be upward pressure on prices. As the incentive to save is diminished, many people will look to transfer their savings into tangible assets.
We expect 2023 to start as 2022 left off with regard to prices and stock levels. We’ve seen historically low levels of stock for the last six months, prices in the lettings market are close to 40% up on the lows of the pandemic and sales prices remain strong on the back of a lack of available property.
Our advice for 2023 is as always quality, quality, quality.
If you’re thinking of investing in a buy-to-let property, always purchase the best property your budget allows. This may seem obvious, however, many fall into the trap of buying a compromised property for the extra space thinking bigger is better. This isn’t the case. When it comes to void periods and property liquidity, a premium one-bedroom apartment on a good floor will always outperform a compromised two-bedroom property on a poor road or lower ground floor, for example.
If you buy premium, you will always do well.
We’ve seen a period of a weaker currency, making London a good value investment for overseas inventors. London continues to be a world financial capital bringing companies and employees to the capital each year. The English capital also boasts five of the world’s top educational establishments, this brings thousands of students from the far east and across the world into the city’s rental market.
At Landstones, we’re bullish on the long-term outlook for property in prime central London.