Why choose residential property?
Smart, informed residential property investment has the potential to provide lucrative returns.
The biggest asset class in the UK, the residential sector is valued at
circa c£4,224bn, while the value of the commercial sector is estimated to be around £820bn. Residential property is one of the strongest performing asset classes, with figures showing that over the past ten years, residential property has “been the best performing investment asset over most timeframes over the past thirty years.” For some investors, buying residential is a means to diversify an existing portfolio, while for others it is their sole means of wealth generation and even retirement planning. Many people choose to buy residential in addition to commercial, and they would be wise to do so, as this sector has delivered strong returns on investment over the past decade. Over the past ten years, the UK residential
property has provided a total annualised return of 9.6 percent compared to the 6.9 percent returned by commercial.
There are numerous opportunities to be had within this property sector as well. Ground rents, purpose-built retirement or student accommodation, social housing, HMOs, new developments and regeneration projects all provide plenty of opportunities. Whether you wish to buy and flip or buy-to-let, there are a number of different ways to generate wealth through residential property investment.
In addition to strong returns, there is also the case of supply and demand, especially in prime markets such as London, Manchester, and Edinburgh. Elevated property prices, increased demand and tightened mortgage lending criteria has relegated many first time buyers to the rental market; the average first-time deposit is now in excess of £26,000, a figure that has double from £13,000 ten years ago. It is now a figure that is roughly 79 per cent of the average annual income, meaning saving this sum is out of reach for many.
As such, Britain’s rental market continues to boom, putting investors and landlords at a distinct advantage.