Your search results

5 Reasons To Invest In UK Property In 2024 Instead Of Saving

Posted by Jayson Ang on February 8, 2024

| 0

TLDR

Investing in UK property in 2024 offers significant advantages over saving due to the potential for long-term value growth, protection against inflation, stable investment opportunities, additional income streams, and high demand exceeding supply. Comparing investment scenarios between now and 2026, acting now could yield an additional £25,000 by 2026. Consulting with a knowledgeable advisor can help you navigate the current real estate market and make informed decisions tailored to your unique situation.

In the realm of property investment, timing is a crucial factor. Many investors are currently on standby, hoping for mortgage interest rates to drop back to 4-5% in the foreseeable future. However, a deeper analysis of the numbers suggests a potentially more profitable strategy could be investing this year itself.

Stick with us as we reveal five persuasive arguments for taking the plunge and investing in property now, rather than allowing your funds to lie dormant in a savings account or pushing back your plans till 2026.

We aim to highlight the prospective gains for those bold enough to act now, in contrast to those who choose a more deferred approach.

1. Property Has Value Growth In The Long Term

The value of real estate in the UK has been on a steady upward climb over the years, demonstrating a reliable pattern of growth. Ten years ago, the standard price for a house was around £167,716, and today that figure has risen to an impressive £268,489. Despite periods of political and economic instability, the overall trajectory of property values has been positive.

Investing in real estate is often viewed as a secure long-term strategy. As such, choosing to liquidate your investment in the future could yield significant profits due to the consistent rise in property prices.

Furthermore, rental income serves as another advantage of owning rental properties. Even during times when interest rates are high, this income can help balance out mortgage payments and other expenses.

2. Safeguard Your Capital Against Inflation

The Times reports that the returns from savings accounts are visibly lagging behind inflation rates. In contrast, The Guardian indicates a consistent rise in real estate values parallel to inflation. Thus, as inflation takes place, the value of your property is likely to escalate.

This results in the potential for higher long-term returns from real estate investments compared to the interest earned on savings accounts.

3. Property Is A Stable Investment

Leveraging a mortgage to fund your investment allows you to contribute just a portion of the total expense. This way, you stand to gain from the possible increase in the value of a property that you didn’t wholly finance. When it comes to buy-to-let property investment, your rental earnings can essentially cover your mortgage installments, facilitating a smoother repayment process.

4. You Get An Additional Income Stream

Besides the general rise in your property’s value, owning a buy-to-let asset comes with an extra perk – an extra source of earnings. This revenue, which originates from your primary investment, serves as a form of passive income. Consequently, it can be smartly used to further expand your collection of properties.

5. Property Demand Beats Supply

In the United Kingdom, there is a strong need for properties available for lease, especially in large urban areas. When you invest in a property with the intention of leasing it out, you’re tapping into an existing market demand which guarantees a return on your investment. The significant market need further solidifies property investment as a reliable choice.

But Why Invest Now And Not When Interest Rates Decrease?

Let’s delve into the figures to comprehend the financial gains of property investment today versus a time when interest rates drop. We can expect rates to settle around 4-5% by 2026.

With the present scenario featuring a 2-year fixed rate hovering at approximately 6.5%, let’s use a property valued at £200,000 as a case study. This will allow us to ascertain the potential return on investment if you were to invest at this moment, in contrast to investing in 2026 when rates are projected to fall.

Investing Now

The prospect of an unstable market presents an opportunity for a potential discount on properties. For instance, imagine acquiring a property valued at £200,000 for a reduced price of £180,000. When you consider a deposit of 25% that amounts to £45,000, and a Loan to Value (LTV) ratio of 75%, your mortgage comes to £135,000. With an interest rate pegged at 6.5%, your annual mortgage payments become £8,775.

Now, let’s factor in a yield of 6% from rental income, which translates to £12,000 annually.

After deducting the mortgage payments, we get left with £3,225. Let’s not forget the capital growth, typically around 3%, which when added to this amount gives us an annual income of £9,225. Over a duration of two years until 2026, the cumulative sum totals to £18,450.

Remember, the £20,000 saved from the initial purchase discount acts as equity. Hence, by the close of 2026, your total earning from this investment would stand at an impressive £38,450.

Investing in 2026

By leaving your £50,000 deposit tucked away in a bank for two years until 2026 and earning a modest interest rate of 1%, you would successfully accumulate an additional £1,000 over this period. However, should you decide to invest in a £200,000 property during the same year, the benefits of any potential discounts would be non-existent due to the robust and resilient property market.

With a loan-to-value ratio of 75%, your mortgage amount will stand at £150,000. Assuming an interest rate of 4.5%, your annual mortgage payments would equate to £6,750.

Yet, even with these commitments, a promising 6% yield from rental income can still provide you with a handsome £12,000 per annum.

After accounting for mortgage payments, you are left with a neat sum of £5,250. Add to this a 3% annual capital growth (£6,000) and the initial £1,000 bank interest, your total return on investment would reach a satisfactory £12,250 by the close of 2026.

So, What Does This Mean?

Invest now, despite the increased interest rates, and you could see an additional £25,000 by 2026 compared to if you postpone until rates decrease. Don’t delay—begin your property investment venture today.

Schedule a consultation with me to discover how we can guide you towards success.

Should You Buy, Sell or Wait?

If you’re reading this, you must be trying to figure out the best course of action right now: is it the right time to buy or sell?

It’s difficult to give an exact answer since everyone’s situation is unique and what works for one person may not necessarily work for you.

I can bring you a wealth of on-the-ground experience and a data-driven approach to provide clarity and direction. From beginners to experienced investors, our top-down, objective approach will help you on your real estate journey.

I can help you by:

Offering Strategic Real Estate Advice – I can help create a comprehensive plan to guide you through your property journey.
Connecting Your Home with the Perfect Buyers – Through stunning visuals, an effective communication strategy, and an in-depth knowledge of the market, we’ll ensure your home is presented in the best possible way to fulfill your goals.

You May Also Like …

Mandarin Top 5

The Future Of Singapore Property Investing: 5 Trends To Watch Out For

Jayson Ang – July 10, 2024 –

The future of Singapore's property market is shaped by several emerging trends that reflect cautious optimism, enviable locations, and sociable...

All Buying Tips

Tips for Young Adults to Begin Saving for Their Future Home

Jayson Ang – August 5, 2023 –

TLDR When aiming to purchase a home, it is crucial to gain knowledge about the buying process and track your...

All Blog Posts Opinion Selling Tips

6 Reasons to Think Twice Before Hiring a Friend or Family Member as Your Agent

Jayson Ang – October 31, 2024 –

TLDR In Singapore, hiring a friend or family member as your property agent can be risky. Disclosing sensitive financial details...

All Buying Tips Opinion Selling Tips

Learning Hard Truths in Property Investment: Timing the Market Can Hurt

Jayson Ang – August 29, 2024 –

TLDR The blog post delves into the complexities of market timing in property investment, highlighting the risks and challenges associated...

Mandarin Top 5

Top 5 Considerations : Uncover the Secrets of Buying Older Properties – What They Won’t Tell You!

Jayson Ang – November 25, 2024 –

Buying an older property can be a dream come true for many homebuyers, as these homes often come with unique...

Mandarin Top 5

Top 5 : Best Karting Circuits in Singapore

Jayson Ang – December 21, 2024 –

Singapore, a bustling city-state known for its modern architecture, cleanliness, and vibrant culture, is also home to a thriving karting...

All Blog Posts Buying Tips

What to Do Before Exercising Option to Purchase?

Jayson Ang – July 19, 2023 –

TLDR Home buyers are advised to thoroughly research property values using online tools, secure an ideal home loan package early...

Mandarin Top 5

Top 5 : Singapore’s Most Desirable Properties: A Look at the City’s Most Coveted Real Estate

Jayson Ang – October 5, 2024 –

Singapore, a bustling city-state known for its impressive skyline and thriving economy, is home to some of the most desirable...

All Blog Posts Buying Tips

Discover 7 New Condos Close to an MRT Station in 2023

Jayson Ang – January 25, 2023 –

TLDR When it comes to finding the perfect home near MRT stations in Singapore, several exciting new launches stand out...

Mandarin Top 5

Why Property Investing is the Key to Early Retirement in Singapore

Jayson Ang – April 28, 2024 –

Investing in property is a popular way to build wealth and achieve financial freedom in Singapore. With the right strategies...

Mandarin Top 5

Top 5 Fine Dining Restaurants in Singapore if You are Visiting Us!

Jayson Ang – June 2, 2023 –

Top 5 Fine Dining Restaurants in Singapore if You are Visiting Us! Singapore is known for its diverse and delicious...

Mandarin Top 5

5 Tips : How To Negotiate A Good Deal When Buying A Singapore Property

Jayson Ang – July 12, 2024 –

When looking to buy a property in Singapore, it's essential to know how to negotiate a good deal. Here are...

All Buying Tips Opinion

4 Key Factors to Consider When Purchasing a Private Property for the First Time

Jayson Ang – August 27, 2023 –

TLDR When considering buying or selling property in Singapore, it's crucial to understand factors like Additional Buyer’s Stamp Duty, Loan-To-Value...

All Buying Tips Opinion

Three Singaporeans Share Their Experiences of Co-Owning a Property with Friends

Jayson Ang – March 18, 2025 –

TLDR In Singapore, some individuals venture into property investments with unrelated partners, driven by opportunities and personal circumstances. Jim, leaving...