Emily Hill from Mortgage Advice Bureau explores the significance of emerging trends in the property investment space.
Thinking of purchasing a buy-to-let property any time soon? You may be wondering how you’re going to get the most significant return on your investment. By getting a steer on the emerging trends in the property sector, you’ll be able to make a more informed decision for your financial circumstances – as well as one you’ll be able to capitalise on for years to come.
Mortgage affordability
Although mortgage rates remain high, it’s important to gain some perspective in terms of how things are faring in the current market. At the time of writing, rates are lower than they were compared to the same period last year, and are expected to continue to gradually lower further throughout this year and into the next.
Furthermore, as inflation moves back towards its target and we return to a stable base rate, things are set to continue gradually improving in terms of affordability.
Factors like economic growth, wage increases, and a persistent housing shortage will likely drive prices upwards – albeit at a more moderate pace than in previous years. According to Savills, property prices in the UK are set to increase by an impressive 21.6% by the end of 2028.1
This significant growth underscores the robust nature of the market and the potential for substantial returns on a property investment. Similarly, rental growth is forecasted to rise by 17.6% over the same period, reflecting strong demand for rental properties and the ongoing attractiveness of the UK as a rental market.2
Sustainability
Sustainability has quickly become a central pillar for landlords and renters alike. Both parties are recognising the value of properties that not only meet regulatory standards, but also appeal to a growing segment of environmentally-conscious buyers and tenants.
Over the next five years, we expect to see a marked increase in eco-friendly and sustainable properties.3 Developments incorporating green spaces, energy-efficient designs, and sustainable building materials will also gain an increasing amount of popularity.
Properties aligned with these principles are likely to command higher valuations and attract environmentally-conscious tenants, so are well worth considering as part of your search for a property investment.
The rise of build-to-rent
As homeownership becomes less attainable for many, the demand for high-quality rental accommodation is on the rise. This shift towards renting is driven by factors such as job insecurity, rising house prices, and a preference for flexible living arrangements.
Build-to-rent is gaining traction, offering investors the opportunity to develop or acquire large-scale residential properties for rental purposes. These developments cater to the rental generation by offering modern, well-designed apartments with communal spaces, such as gyms and shared working areas.
Flexible working
Given the rise in flexible working over the last four years, it’s no surprise that more tenants are potentially looking for increased living space to accommodate a place to work at home. This includes the integration of workspaces in short-term rental properties, like Airbnb, catering to the needs of remote workers.
Furthermore, cities undergoing substantial regeneration and those becoming educational and technological hubs are advised as high-potential property investment areas.
Property investment challenges to consider
While these property trends present exciting opportunities, investors must also be mindful of the challenges they present. Rising interest rates, economic uncertainty, and regulatory changes can impact property values and rental yields.
A robust understanding of these factors is therefore crucial for navigating the complexities of the property market and making informed property investment decisions.
By keeping in the loop with the latest market updates, you’ll be able to successfully navigate this dynamic market and capitalise on these trends to maximise the potential of your buy-to-let property investment.
References
1 Yahoo Finance, 2024
2 Statista, 2024
3 Pitchbook Property, 2024
