Perfect storm brews for investors looking at the UK

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July 09 2019
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A perfect storm of Brexit, falling interest rates and subdued housing growth is creating an attractive entry point for investors eyeing the UK property market.

Australians are finding bargains through some satellite cities in England, which are becoming increasingly built up and gentrified as business move from expensive quarters in London.

Speaking with Nest Egg, L1’s investment specialist Wayne Murray and chief investment officer Kee Gan discuss how Aussie investors can get ahead by investing funds in the UK.

Housing prices are (relatively) low

Australia and the UK have undergone incredibly different price cycles in the property market since the GFC.

While the Australian market continues to grow on average, this is not the case outside of UK’s London.

“London house prices have almost doubled since 2008, relative to other tier 1 cities, house prices haven’t really moved since 2007,” said Mr Gan.

“If you take a step back, they dropped around 10 to 15 per cent in 2008-09 during the GFC, they then did not move for the last eight years, with recovery starting in the last three or four years at 4 to 5 per cent per annum,” continued Mr Gan.

Prices are tipped to increase

The median house price outside of London ranges between 125,000 to 175,000 GBP, which is roughly $315,000.

There is set to be increased demand, against a backdrop of restricted supply, in various residential markets.

“The UK needs about 300,000 new homes per annum to keep up with population growth and in the past 10 years have only yielded about half that amount,” said Mr Gan.

“The typical rental yield outside of London is 7 per cent. People can buy a house at 1.5 to 2 per cent mortgages, making it much cheaper to buy a home instead of renting,” continue Mr Gan.

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About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

About the author

Cameron is a journalist for Momentum Media's nestegg and Smart Property Investment. He enjoys giving Aussies practical financial tips and tricks to help grow their wealth and achieve financial independence. As a self-confessed finance nerd, Cameron enjoys chatting with industry experts and commentators to leverage their insights to grow your portfolio.

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