Many investors and indeed most of the population of the UK are hunkering down just trying to ride out the highest inflation for a long time. It has just been announced that food inflation at 9.3% is the highest for a decade. Unprecedented fuel increases have added to the tightening of everyone’s belts. Undoubtedly, the war in the Ukraine has affected prices and Covid didn’t help matters. This isn’t the first time we have seen these sorts of hikes in the cost of living and as a global economy. It certainly won’t be the last.
In the property arena, the rents are also rising and with the amount of disposable income dwindling, people, especially first time buyers are struggling to get on the ladder. If you add in the rise in the population which is not being reflected in the number of homes being built over the last decade, you have a very competitive market for rental homes.
American financier, Russell Sage said “Everyone wants a piece of land. It’s the only sure investment, it can never depreciate like a car or a washing machine” and he is right. Now is the time to hold your nerve and realise that while the safe course of keeping your money in the bank and waiting for things to improve seems the most attractive course, an investment in property is for the long term and history has shown us, that dips in the economy are hiccups, better times will follow.
The Census and the Department for Levelling Up, Housing and Communities determined in the 10 years up until 2021, the population grew at 6.6% while the number of dwellings grew at 8.4%. However, what this figure doesn’t show is the regionality so yes, in some areas, the ratio is more equal but, in many areas, the population growth far outstripped the housing stock. We also need to remember that the as a country, we have had a shortage of housing for decades.
When you look at the whole country, almost half of our local council boroughs have a population growth rate similar or considerably higher than the growth in housing. For example, Barking and Dagenham Housing Leader says
“There is a £20m shortfall in funding from central government and as such we cannot have enough homes built because we do not have the necessary infrastructure in place. Despite this, we are still the largest house builders in London.”
This is a similar scenario to many areas around the country with population growth shooting up in commutable areas close to major cities.
Where some investors are leary of continuing to invest their money in property and are “getting out of the game”, a savvy investor will hold his nerve and snap up the properties that are coming onto the market.
A very rich and successful man once said ““Don’t wait to buy real estate, buy real estate, and wait.”. Long term you won’t lose.